On the Road Again …

Posted on by Matt Simpson

Over at Prime Buzz, Brad Cooper laments the lack of funding for MODOT:

Like Kansas, Missouri is significantly short of meeting all it’s transportation needs. Both states combined have about $60 billion in needs over the next 20 years.

At a recent transportation summit in Mexico, Mo., where MoDOT released a booklet (warning: PDF) detailing the challenges facing Missouri’s transportation system. Included was a list of projects that MoDOT deemed essential.

After detailing some of these projects for the KC Metro area, Cooper remarked:

Just how we fund any of these project no one knows for sure. But expect voters to be asked sometime in the next couple years for some kind of tax increase to fund roads.

Over here at the Show-Me Institute, we always have a few suggestions. David Stokes presented a policy study at the Mexico transportation summit detailing many of them. One is tolling. If the infrastructure improvements are really all that necessary, then people would be willing to pay fees for them when they actually use them, rather than only up front in the form of taxes.

In conjunction with this, public-private partnerships can help as well. Governments aren’t good at much more than actual governing, so instead of having the government take on the financial risk building a new toll bridge, for example, let the private sector do it. If the bridge is likely to be profitable in the long term, firms would be willing to pay for the right to build and operate government-owned infrastructure. This provides another source of revenue that can be used for projects that aren’t as easy to contract out to the private sector.

The best thing is, no new taxes are needed to fund projects this way. With tolling, the only people who have to pay for the projects are the people who use them. I can’t imagine anything that would be more fair.

Something for Which Our Governor and Legislature Deserve a Lot of Credit

Posted on by David Stokes

The economic health of state government is good — maybe even too good. The Kansas City Star has a story about the state’s substantial budget surplus. Gov. Blunt and the General Assembly deserve a lot of credit for this. They don’t deserve credit for creating a good economy; the people of Missouri do that (although passing and signing tort reform helped greatly). But the governor and the legislature do deserve credit for holding the line on spending, to allow economic growth to overtake spending increases and grow both the state’s economy and the state budget surplus.

The size of the surplus is huge. The state begins its year with a balance of $833 million over and above the legally required reserve of $557 million. I’m no math genuis, but that equals $1.39 billion, with a “b.” The state should do two things with this surplus, and holding it back for a rainy day is only for the $557 million. The $833 million should be used for infrastructure and cutting taxes. One legislator sees that clearly:

Senate Appropriations Committee Chairman Gary Nodler said it makes sense to spend some of the surplus on one-time projects, such as building construction and maintenance and computer equipment and software.

There are also some comments in the article from cradle-to-grave socialists who give the standard talking points about not spending enough on health care and education, and that this whole surplus was built up on the backs of the poor. These are the type of people who consider dependency on the government by large segments of the population to be a good thing, rather than a bad thing.

With the $833 million, I would also recommend helping MoDOT meet the state’s transportation needs in allowable capacities (I am fully aware of the legal funding differences there). I would also cut taxes. It would be wonderful to see the state reduce its income tax from 6 percent to 5 percent, to see the effect it would have. The net effect would not be a 17-percent reduction in income tax revenues, although that would be fine with me. More money in Missouri taxpayer pocketbooks would also lead to more sales tax collections, aside from helping improve the climate for economic growth. I won’t go so far as to predict an immediate increase in tax revenues if Missouri did the above, but it would be good for taxpayers and the economy, in both the long and short terms.

An alternative idea would be to increase the extremely low amount of earnings for which income taxes kick in, the increase the level at which the highest rate (6 percent) kicks in. That would benefit everyone, but particularly the poor who would see less of their income get taxed. Of course, we could also just get rid of Missouri’s income tax entirely.

The Odds

Posted on by Audrey Spalding

In April 2000, the Warren County School District asked its voters for a 54-cent property tax levy increase. More than 1,900 people showed up to vote, and the majority said no. Later that year, in November, the school district asked again. This time, about 5,800 people showed up and, once again, the vote was no.

Last week, Cynthia asked whether November elections would get more people to vote on school issues. We looked at Missouri school district tax levy elections from 2000 through 2003, and, not surprisingly, the answer is yes.

It’s a strong yes. Like Warren County, four out of the five remaining school districts that held both an April and November tax levy election during that period, saw nearly twice as many voters show up in November, if not more. If you want more voters, November is the month to put a tax increase on the ballot.

But if you want a school district’s proposed tax increase to pass, you have a better shot in April. And, whatever the reason, that’s the month most school districts put financial proposals on the ballot.

Continue reading “The Odds”

Hanushek Interview

Posted on by Sarah Brodsky

Eric Hanushek, who participated in the Show-Me Institute’s conference on school finance, appears this week on Econ Talk. He discusses several court cases, and compares U.S. public education with education systems in East Asia.

Hanushek makes some particularly good points during the last 10 minutes of the podcast, when he describes how current funding systems reward failure by directing resources to failing schools — in essence, giving schools an incentive to fail. He also discusses the complex relationship between choice and accountability and explains why one can’t succeed without the other.

The podcast and a list of related readings are available online.

From Frugal to Flush: The Benefit Boost

Posted on by Cynthia Juedemann

This morning, I randomly selected a stack of superintendent contracts from Audrey’s files, in addition to a sampling she had already given to me. She’s talked about some specific cases and oddities (like the $50,000 bond St. Louis requires its superintendents to post) and she’s laid out the basic format of superintendent contracts.

Some contracts are sparing with benefits, others chock full of them. But how big is the benefit boost?

Continue reading “From Frugal to Flush: The Benefit Boost”

Concrete: A Real Kick in the Asphalt

Posted on by Matt Simpson

Are rising oil prices all bad? Well, they certainly increase the price of many things. We have already seen car companies take huge hits because of the increasing scarcity of oil. But this effect isn’t uniform across all industries. For example, the concrete industry is booming. One of the executives at J.M. Marschuetz Construction Co. tells us why:

“Who would have thought in a million years that concrete would cost less than asphalt?” asked Jason Marschuetz, the company’s vice president. “The oil prices are ultimately helping us because even though we’re getting hammered once — for diesel — the asphalt companies are getting hammered twice — for diesel and asphalt.”

Concrete and asphalt are substitutes for a variety of applications, including paving roads and driveways. When oil prices rise, concrete gets a little bit more expensive while asphalt gets much more expensive. The result? People use concrete instead of asphalt whenever they can. We should see this trend across the economy — goods and services which are relatively less dependent on oil should become cheaper relative to the oil-guzzling competition.

This is just one of the many ways in which we are less dependent on oil than one might think. Oil may be the cheapest alternative for a variety of applications at $130 a barrel, but if the price increases much, there are numerous ways to achieve the same ends that use less oil. In econo-speak, the demand for oil is more elastic than it appears.

Finally, keep in mind that all the people in the concrete industry see their incomes rise during the oil-induced boom. New jobs are created in the industry as well, because new plants are coming online — such as the plant in Ste. Genevieve. Chrysler workers may be out of a job because of rising oil prices, but new opportunities are opening up because of the same cause.

How Free Are We, Part Two

Posted on by David Stokes

Continuing a series of blog posts that began in April 2007, and which was on hiatus until now, let us again consider the numerous atrocious ways government has entered our lives, from the most overreaching nanny-state activity to more complicated financial instruments. Sometime in the mid-’90s, Bill Clinton declared, “The era of big government is over.” How wrong he was.

The International Herald Tribune has a kick-to-the-gut article about how it is now the responsibility of the federal government to buy people a home and send kids to college. I am by no means an expert on these issues, but I find it offensive that the government steps in to save everyone from themselves. In this entire mortgage imbroglio, it always gets overlooked that people bear the responsibility for taking on too much debt to buy a house. Nobody forced them to buy more house than they could afford at an adjustable rate mortgage with no money down. And why is it now the federal government’s job to guarantee all the student loans for college? It just sickens me that so many people are so happy to have the government take care of them.

Now, we’ll go into the think tank world for Reason’s newest video from Drew Carey. I have had discussions with plenty of people who support these types of health mandates / control freak laws. (I, myself, can even see the benefits of a few of them, like smoking bans.) The crazy thing, to my mind, is that many supporters argue that because the public pays for the health costs of so many people, the government has a right to regulate the way we live — i.e., banning trans fats or forcing people to wear helmets when they ride a bike. The insane thing is that this argument always comes from people who support greater government involvemnt in health care (i.e., socialism), so they put themselves in the perfect circle of arguing for more socialism in health care out of some moral imperative, and then arguing for the right to control our lives out of fiscal responsibility in health care. The idea that maybe we should let people live their own lives and then let them deal with the consequences of their actions — which, in come cases, will be negative — does not seem to enter their mindset. That would, of course, be too much freedom.

How does all this connect to Missouri? Well, we are the nation’s leader in saggy pants ordinances, so we have struck a blow for decency and telling kids we don’t want to see their boxer shorts. It’s also a nice excuse to stop them and check them for drugs, while we’re at it. It’s all very depressing, and my mood is not helped by the fact that the Cardinals will now be playing in Stella Artois Stadium.

Control

Posted on by Audrey Spalding

A little while ago, a Cole County judge ruled that Missouri gives enough money to public school districts. A main argument was that more money spent in a school district doesn’t itself increase student achievement, and that Missouri’s education spending was growing too fast.

The goal has always been to spend money to help students. The court ruled that Missouri was spending enough. Based on the ruling, what we would expect to see over the course of the next few years is a leveling of total spending on public education in Missouri. If the state was the only one handing out money for education, we would see just that.

But schools don’t receive state funds alone. Though state spending is not growing as fast as before, school districts can always ask their communities for more money.

As I’ve been looking over election results for school financial issues, occasionally I’ll stumble across a recent news article about a district’s election. When I do, superintendents are often quoted as saying that a property tax increase is needed because the state just isn’t providing as much money as the school district had counted on. In the lawsuit, more than 240 Missouri school districts had joined together to charge that they weren’t getting enough from the state.

And, while the court ruled otherwise, school districts have proven that they can get money in other ways. It’s not just the state that controls the public education finance spigot.

Continue reading “Control”

If You Give a Mouse a Cookie …

Posted on by Sarah Brodsky

… He’ll ask for a bakery license from the state.

The trend toward occupational licensure seems to be hard to resist, even for mavericks like mice … or midwives. Midwives in North Carolina, where practicing tocology is currently a misdemeanor, are asking the state to license them:

“If there was licensure in place, there would be more midwives trained here, and there would be a selection. No one’s going to move to a state that’s not friendly to midwives,” said Kreutzer, a member of the North Carolina Friends of Midwives.

It looks like North Carolina could be the next state to legalize midwifery, which would be great for the midwives who want to work there and patients who’d like to choose this option. But “friendly” and “legal” doesn’t have to mean “licensed by the state.” I hope North Carolina will follow MIssouri’s lead and allow a private organization to certify the midwives. In fact, the ideal scenario would be several licensing organizations competing with each other.

If the North Carolina midwives want to increase their numbers, they should avoid state licensing. That tends to keep people out of the profession by creating lots of bureaucratic hurdles to jump over. It won’t bring new people in. (You don’t see geologists flocking to Missouri to be licensed here, do you?)

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