Counties, Not Cities, Should Determine TIFs

Posted on by David Stokes

A 2007 change to state law granting more authority to county tax increment financing (TIF) commissions within the Saint Louis-area, at the expense of municipal TIF commissions, has led cities within Saint Louis County to initiate a lawsuit attempting to overturn the change. The suit was filed on Feb. 15 by six cities along with their umbrella organization, the Saint Louis County Municipal League. Municipalities within Saint Louis and Saint Charles counties have been enacting tax incentives, particularly TIF, with much greater frequency — and much less fiscal prudence — than the counties themselves. Unfortunately, if this lawsuit succeeds, the detrimental impact of these tax giveaways will continue unimpeded.

In fairness to the cities, the changes to the law are indeed unclear. An open reading makes one wonder whether any future TIF projects must be passed by both a municipal and county TIF commission, or just one of the two. According to lawyers familiar with the issue, bonds for upcoming projects will not be issued until these questions are settled. While I have no personal objection to seeing our area’s latest strip mall proposal face bonding problems, the General Assembly should nonetheless return to the statute language (RSMo 99.820) to rectify these issues. It should clarify the statute in the direction of more authority at the county level, though, and less at the municipal level.

Which level of government should really be making these decisions about tax increment financing or other types of tax incentives? The debate tends to weigh two sides: cities that presumably know what is best for their city and their residents, or higher levels of authority that can hopefully consider the larger picture — which generally affects much more than just the cities. I believe the county level works best here. After all, county government is local government by every measure. I trust that the powers that be in Saint Louis County are not so far removed in their Clayton skyscrapers that they have no idea what is best for the people of Saint Ann.

Counties are also large enough to put proposed tax incentives into perspective, making decisions outside of a municipal vacuum. If these incentive decisions were made at the county level, cities would no longer face the fear and pressure to “remain competitive” with surrounding cities by issuing generous incentives. Cities would certainly maintain a voice in the process, along with school districts, through rotating appointments on the county TIF commission that would be determined by the locations of future proposals.

In their lawsuit, the cities claim that the new statute is unconstitutional because it treats Saint Charles, Saint Louis, and Jefferson counties differently from the state’s other counties.  This claim strikes me as absurd. Our statutes contain numerous laws written especially for one county or another. Because the lawsuit involves six cities from Saint Louis County, I’ll give two — out of many — examples where Saint Louis County is treated differently from the rest of the state. The legal process for municipal annexations and incorporations is different, and more controlled, in Saint Louis County than elsewhere, and only taxing districts in Saint Louis County are allowed to declare varying tax rates for multiple property classifications. Are these laws, and the many others like them involving cities and counties throughout the state, all also unconstitutional?

If judges and elected officials ultimately determine the commission power rests at the county level, we could expect an end to TIFs and similar giveaways in Saint Charles, and a reduction in their use in Saint Louis and Jefferson counties. The tremendous fiscal discipline shown by Saint Charles, while still experiencing great economic growth, demonstrates why these decisions should be made at the county level. And while it has not been quite as sagacious as Saint Charles, Saint Louis County has been more discriminating in its use of incentives than have many of the municipalities within its borders.

All of the prominent abuses of TIF in Saint Louis County — most famously at the West County Mall — have occurred within municipalities, rather than in the unincorporated areas. Similarly, the ugly case of tax incentives and eminent domain abuse that was recently heard by the state Supreme Court occurred in the city of Arnold — not unincorporated Jefferson County. I believe the residents of all three counties would be better served by having countywide commissions and elected county officials responsible for tax incentive determinations.

David Stokes is a policy analyst at the Show-Me Institute, a Missouri-based think tank.

 

Hell Hath No Fury Like a Bureaucrat Scorned

Posted on by Justin Hauke

A new bill would create a 24-member panel to study autism in the state and recommend policy actions (KMOX coverage here).

This baffles me. The fiscal note (an estimate of the fiscal cost to the state) for this legislation is nearly identical to the anticipated costs of the Special Needs Tax Credit. But, in true bureaucratic fashion, lawmakers would rather spend money on “analyzing” the problem (maybe they’ll issue a report!) instead of actually helping those affected.

Sarah Brodsky wrote a great op-ed about this topic. Why not let parents decide what’s best for their autistic children? Considering the idiosyncrasy of the disorder (it affects individuals in vastly different ways), any general approach to addressing it will prove difficult anyway. It’s better to let parents deal with their children’s condition on an individual level.

If we’re going to spend taxpayer money on autism, shouldn’t the money actually go to those that are affected?

Athletes And Entertainers Get Special Love, And Special Tax

Posted on by David Stokes

Combest links to an article by Shawn Clubb in today’s Suburban Journals of St. Louis that discusses the athletes and entertainers tax, and its use to fund various special causes in Missouri. (Please note that I said special causes, not bad causes.) Why is this article important? Well, for many reasons — not least of which is that I am quoted in it — as well as its citation of an op-ed written by our former editor, Tim Lee. Joe Edwards of Blueberry Hill is also quoted in it, so I am pleased to be in good company. Please take a moment to check it out. And it really is a stupid tax…

Interesting Ideas About Downtown Parking in KC

Posted on by David Stokes

The Kansas City Post has a very interesting piece (link via Prime Buzz in the Star) about parking in downtown Kansas City. I don’t agree with everything in it, but I recommend the piece highly. The economic analysis strikes me as very good, but I can give him one very vibrant area that benefits heavily from having a large amount of free parking: The Loop in University City. The Post piece is based on the situation in KC, but its arguments apply to any downtown area in the state. It’s thought provoking, which is one of the highest compliments in blog world.

Mother Government Is Our Provider and Our Caregiver

Posted on by David Stokes

An op-ed by Amy Blouin of the Missouri Budget Project has been making the rounds. Combest linked to it in the St. Joseph News-Press a few weeks ago, and the St. Louis Business Journal ran it last Friday, although we can’t link to their version. Her op-ed deserves a careful review.

It begins with her driving her children somewhere and them complaining about taxes from the back seat. Really? Is this believable? Young children riding in the back of a car complaining about sales taxes, giving their mom an opportunity to explain the importance of taxation? I don’t buy it, and so I’m calling b/s on the opening premise of the article. (As my infant grows, if he ever out-of-the-blue says to me, "Dad, I look forward to one day receiving a license from the government to work in whatever occupation I choose," thus giving me an opportunity to tell him about the harm occupational licensure does, then I shall retract my call of b/s and offer a full apology.)

She then lists the many important things taxes do:

Taxes pay for the fireman who one day might carry your spouse to safety; the public school teacher who spent extra time teaching your child algebra; the road that transports your business’ products to customers […]

All of these are, of course, completely true. The fun is in what she leaves out. Taxes also pay for the unnecessary city employee who does nothing all day, but is some committeeperson’s brother so they keep him on the payroll. Taxes pay for subsidized giveaways to developers and professional sports teams that don’t need or deserve them. Taxes pay for the transfer programs that are one day going to bankrupt this country. Taxes paid for the welfare state and Great Society that cured poverty created a cycle of dependency and didn’t reduce poverty rates, despite spending enormous amounts of money.

She then considers the low-tax nature of Missouri:

Missouri is already one of the lowest tax states in the nation, ranking 40-something in nearly every category. As a result, our services have slipped dramatically.

She gives no evidence of which services have slipped, but I have to be fair here — op-ed word limits are tight. There are two assumptions that underlie everything she writes. First, that it is the proper role of government to solve every problem and provide every service (health care, poverty, retirement money, cheap higher education, etc.), and second — and just as important — that the government does a good job in providing these services.

She then gets specific as to the low-tax nature of Missouri, but not as to why this is a problem:

Missouri now ranks 46th lowest for state and local spending per capita; 44th lowest for K-12 education spending; 46th lowest for higher education spending, causing tuition at public universities to skyrocket; and we have one of the lowest eligibility levels for health care for working parents in the nation, resulting in a 15 percent increase in the number of uninsured in the last year alone.

I personally think it is a good thing that we have a strict eligibility level for state-provided health care. That makes it more clear to me that the people who need it the most are the ones receiving it. Just because someone out there may have a need, it does not follow that the government must provide that need. I also fail to see why tuition at our universities can’t rise in order to pay for the eduction of the people who will benefit from it. It is still far lower than the costs at most private universities. As for the rise in the uninsured (at least she gives factual evidence here), there are innovative ways for that to be addressed that don’t involve government benevolence and control.

I could go on, but blog posts — like op-eds — have size limits or people would just stop reading, which most of you likely already have. She sums up her point with this:

What Missouri leaders should instead focus efforts on is not how to reduce taxes, but how to create a tax structure that is both equitable and adequate to meet our needs.

Creat a tax structure that is both equitable and adequate? I couldn’t agree more.

Some Positive (and Not-So-Positive) News for Missouri Homeowners

Posted on by Justin Hauke

Forbes Magazine has ranked Kansas City fifth in its “Best Cities for Home Sellers” list.

This is good news for Kansas Citians, who have been largely spared from the harshest wrath of the current housing “correction.” Saint Louis residents haven’t fared nearly as well, with the latest housing price index indicating year-over-year price declines of 5.2 percent. In fact, Forbes lists Saint Louis as number 4 in its “Riskiest Real Estate Markets” list.

Leading Kansas City on Forbes’ list were San Jose, Calif., San Francisco, Calif., Salt Lake City, Utah, and Austin, Texas.

The Missouri Health Transformation Act: Everything AND the Kitchen Sink

Posted on by Justin Hauke

The Missouri Health Transformation Act of 2008 (SB1283), which would implement several state health care reforms, has passed the Missouri Senate and is now headed toward House approval.

This bill is a perfect example of bureaucracy at its finest. Considering the amount of administrative minutiae in this bill, I’d be surprised if anyone in the Senate other than the bill’s sponsor actually read it.

So what exactly will be “transformed” under the new bill? I’ve spent the better part of the past hour trying to figure that out. Apparently, one “transformation” would be the creation of a new Department of Redundancy Department, which would consist of the existing members of the current state health care agencies. Apparently, this new body is supposed to “coordinate health policy collaboration” across the state by issuing “official state recognition” to employers that promote “healthy workplaces.” The new cabinet also hopes to express its approval of “telehealth” — health advice provided over the phone.

But if that’s not enough, the bill would contain a litany of additional health care “fixes,” such as providing tax credits to private homeowners who modify their homes to be “accessible” (no description of what that means), providing a $400,000 grant to create a “website,” and a $350,000 grant “to be used for the establishment of a study to assess the feasibility of [health] pilot projects in the greater St. Charles area.”

I just don’t understand who this bill is supposed to appeal to. The provisions it would implement are mostly superficial or redundant. The one bright spot is the creation of a state income tax deduction equal to the premium paid by taxpayers for high deductible health care plans purchased through a health savings account. But that benefit seems superfluous when the bill simultaneously expands the Missouri Consolidated Health Care Plan coverage to include benefits such as marriage counseling at the taxpayers’ expense. Considering the degree to which MCHCP is currently underfunded (stay tuned for the future release of our study about Missouri public pensions), this seems like shooting yourself in the foot.

The only thing this bill might “transform” is creating a greater conviction that an expanded role for government management of health care would be a huge mistake.

St. Louis County’s New Tax Commission Is Welcome Gift to Bloggers

Posted on by David Stokes

It looks like I am not going to have any trouble finding things to blog about as long as this new commission is in operation. St. Louis County has put together an ad-hoc committee to look at potential new revenue enhancements — or "taxes," in regular speak. The Post-Dispatch has the story here. This is not automatically a bad thing. "But Dave, you stupid commie pinko, new taxes are always a bad thing!" you might say to me, and indeed new taxes are usually a bad thing. But there are several reasons why I have faith in this commission and am not reflexively opposed to its very existence. Those reasons are:

  • First and foremost, Skip Mange is in charge of it. Skip is truly one of my favorite people. He was a great county councilman and a dedicated public servant. His engineering background will come out here. He is going to have to see a genuine need, hard facts, and a legitimate purpose before he supports any new taxes. (That is just my belief; he didn’t tell me that.) Skip certainly struck a note of temperance with his quote in the article:

Skip Mange, a Republican and former County Council member, is chairman of the commission. He said that supporters of the tax proposals "need to know which are not viable. They should not anticipate that all of them are politically available."

  • The fact is that St. Louis County does have a great deal of room under its bonding authority at present. My initial opinion here is that if something has to be done (and the Family Court Building really does suck), then issuing bonds and extending — but not increasing — the property tax to pay off the bonds is the best way to do it.
  • Finally, and very importantly, thanks to the Hancock Amendment no tax increase of any size will go forward without a vote of the people of St. Louis County. As the article states, several of these proposals have already been voted down. I am confident that the voters will make a good decision again regarding whatever this commission decides to support, if anything.
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