Saint Charles County Grows Without TIFs

Local governments throughout Missouri continue their neverending quest to lure favored businesses and keep the chosen ones they already have within their boundaries, by granting tax abatements, tax increment financing (TIF), and tax exemptions. Yet not every government entity in Missouri is playing this game. One local government in particular has vociferously opposed TIFs, and has been extremely careful with its use of other development tools. How has it worked for them? The government in question, Saint Charles County, has been the fastest-growing county in the state for three decades.

While governments constantly seek to both raise tax revenues and lure businesses, too often they first enact burdensome tax codes and regulations, then give away the store to the select businesses they want to lure in. Wouldn’t it be much easier on everybody to create a favorable tax and regulatory climate across the board, and trust that it will lure businesses and development to your community? Saint Charles has chosen the latter plan, and the economic growth in the county speaks for itself.

Saint Charles has not only refused to use TIFs, it has actively fought court battles when cities within the county have attempted to use them. The cities within Saint Charles know they will have a fight on their hands every time they attempt to enact a new TIF. The result is that only 491 parcels of property in Saint Charles are involved in a TIF, compared to 1,808 in Saint Louis County and 2,293 in Saint Louis city. The fact that all of the TIF parcels in Saint Charles and most in Saint Louis County are within municipalities is a strong argument for having these decisions made at the county level.

An analysis conducted by business consultants for the Saint Charles Economic Development Council in 2004 stated, “TIF financing [sic] is often not easy to get approved,” citing this as one of the few drawbacks to the county’s business climate. Of course, the consultants — who are in the business of getting incentives for their clients — relied on the constant canard that maintaining a competitive edge requires increased use of government incentives. Recent history has demonstrated that Saint Charles has done just fine, thank you, with very limited use of incentives.

The county has also refused to issue tax abatements and exemptions, while it has judiciously managed the use of tax-free revenue bonds for projects. Basic economics teaches that a wider tax base enables lower rates for everyone, and these low taxes are certainly one of the reasons the population of Saint Charles has increased from 145,250 in 1980 to 348,844 in 2007. Comparing property tax rates across boundaries can be tricky, but one tax levy in particular compares directly and consistently. The commercial surcharge that is added to commercial property tax bills in every Missouri county totals $1.64 per $100 of assessed valuation in Saint Louis city, $1.70 in Saint Louis County, and just $0.53 in Saint Charles. Clearly, when taxes are this low, you don’t need to dole out tax breaks.

Obviously, many other factors explain the tremendous growth throughout Saint Charles, and some of the county’s cities have aggressively used TIFs and other incentives for their own developments. Has the use of incentives by municipalities like Saint Peters and O’Fallon had a greater impact on the area’s economic growth than the county’s prudence has? One might argue that, but the county’s general low-tax and pro-business policies have been in effect for three decades. The use of incentives by cities has come too recently to explain most of the growth.

Like an arms race, local governments throughout Missouri fear unilateral TIF disarmament would put them at an economic disadvantage. Saint Charles County has shown that it is possible for a local government to avoid the use of tax giveaways and still be a growing, thriving community. I hope other governments throughout Missouri will learn from this example.

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

 

Scarlet-Letter License Plates

I’m all for preventing drunken driving, but I don’t think scarlet-letter license plates are going to solve the problem. Here are a few reasons I doubt they’ll be so effective as some legislators hope:

1. Drivers will start paying more attention to the license plates around them when they should be paying attention to traffic signs and signals. This distraction could itself cause accidents.

2. In many families, two or more people takes turns driving one car. It’s unfair to subject relatives of a drunk driver to scarlet-letter license plates. This also makes the plates less useful, because no one will know whether they indicate a convicted drunk driver or just a family member.

3. If a car is swerving or otherwise behaving erratically, police should pull it over — whether or not the driver has been convicted previously. As for all the previous offenders who apeear to be driving normally, it’s unlikely that the police will be able to track them all down by their license plates and keep close enough tabs on them to prevent accidents. If convicted drunk drivers are so dangerous that police really need to see that on their cars, then those people should not be driving at all.

Repealing a Constitutional Evil

Voters in the state of Florida will have the opportunity to eliminate a provision of their constitution that (according to a recent appellate court’s ruling) requires religious discrimination. The provision is a Blaine Amendment, named after James G. Blaine, a congressman who drove an effort to amend the U.S. Constitution so that Catholics would be excluded from certain public benefits. His efforts were unsuccessful at the national level, but 37 states — including Missouri — still have a
Blaine-type amendment within their constitutions. Most of these, though, have been rendered only marginally effective toward their original purpose, because the states have either modified them through amendment or the Supreme Court has interpreted them in such a way as to render them inactive.

Here’s the story of how all this came to pass:

The 19th century saw the United States inundated with waves of immigrants, many of whom were members of the Roman Catholic Church. The nation had been, up to that point, almost uniformly Protestant in its religious composition. The influx of hundreds of thousands of new citizens who, it was feared, would challenge the religious orthodoxy and look to Rome for political instruction was more than many Americans were willing to tolerate. Nativist societies emerged whose purpose was to limit the volume of immigration and to regulate the nationality and class of persons allowed to enter the United States. The anti-immigrant attitudes eventually coalesced into support for the American Party, formed in 1843, also called the "Know-Nothings." By the middle of the century, the
Know-Nothings had realized significant political success, winning more than a hundred congressional seats and coming to dominate some state governments.

At the same time that these Nativist attitudes were fermenting, activists such as Horace Mann were pushing for the growth of "common schools" in which the youth of the nation could be taught in matters of faith, as well as in fundamental courses of study. These educators sought to find a sort of moral "common denominator" — a set of basic Christian principles to which all Protestant denominations could agree, and which would then be used as part of the curriculum. It was assumed that such a system should be considered "non-sectarian," because no one denomination could exert any special authority for its doctrines and, as a result (according to Mann himself), "[the] system earnestly inculcates all Christian morals; it founds its morals on the basis of religion; it welcomes the religion of the Bible; it allows it to do what it is allowed in no other system, to speak for itself."

To be sure, Mann’s schools required daily reading of the King James Bible, but he viewed this as no more than neutrally presenting the text and allowing the students to draw their own conclusions from it. In the minds of the Protestant majority, this distinguished the educational practice of the common schools from "sectarianism," in which a religious authority indoctrinated the students by exegeting the text for them.

The groundswell of Catholic students posed a serious problem for the common schools, however, because the religious convictions the immigrants brought with them from Europe were not easily compatible with the standardized Christianity advanced by the schools. The conflict is exemplified by the situation New York faced in 1842. As was the case in Mann’s Massachusetts, it was the policy of the New York Public School Society to have the King James version of the Bible — which was forbidden by the Catholic Church — read in their classrooms, and certain textbooks included historical characterizations that were repugnant to Catholics. The Catholics, under the guidance of Bishop "Dagger John" Hughes, demanded public support for their own schools. They initially won some concessions from the Public School Society, but ultimately the legislature created a City Board of Education to establish new public schools and acted to bar the public funding of "sectarian" schools.

A decade later, similar Catholic efforts in other states were labeled as attempts to "destroy public education" or "subvert basic American principles." These accusations coincided with the rise of the Know-Nothing Party during the election of 1854. Its action against Catholic interests was wide-ranging and swift where they had gained the necessary authority. After their sweeping victory in Massachusetts, the Know-Nothings proposed constitutional amendments that would have denied Roman Catholics the right to hold public office, and limited the franchise to males who had lived for at least 21 years in the United States. They dismissed Irish state-government workers, banned foreign-language instruction in the public schools, and established a special committee charged with the task of liberating women believed to be held captive in convents and nunneries, targeting as well "acts of villainy, injustice, and wrong […] perpetrated with impunity within the walls of said institutions."

The anti-Catholic sentiment carried on beyond the demise of the Know-Nothings, though it was not as prominent during the Civil War and Reconstruction eras. James G. Blaine arrived on the national political scene in 1863, having ridden a wave of anti-Catholic, Nativist support from his home in Maine to a seat in the House of Representatives. He served in the House for thirteen years, acting as the Speaker of the House from 1869-1875. True to his base of support, Congressman Blaine made it a personal quest to see that the doors of the public treasury were finally and unquestionably closed to Catholics who wanted money to establish tolerable alternatives to the Protestant-dominated public school system. When, in September 1875, President Ulysses S. Grant called for the passage of a constitutional amendment that would deny public funds to religious organizations, Blaine responded by proposing the constitutional amendment that would come to bear his name, and which he hoped would catapult him to the Republican Party’s presidential nomination in 1876. It read:

No state shall make any law respecting an establishment of religion, or prohibiting the exercise thereof; and no money raised by taxation in any State for the support of public schools, or derived from any public fund therefore, nor any public lands devoted thereto, shall ever be under the control of any religious sect; nor shall any money so raised or lands so devoted be divided between religious sects or denominations.

Despite Blaine’s failure to get his amendment added to the federal Constitution, the influence of his cause did not disappear; it simply changed form. While Blaine’s supporters could not command the votes necessary for a federal amendment, they
did have the requisite votes to set the terms for new states’ admission into the union. In some incoming states, popular sentiment alone led to the passage of a Blaine Amendment. For others, however, Congress utilized its continuing anti-Catholic sentiment by requiring territories applying for statehood to include a provision in their new state constitution that would echo the restrictions of the Blaine Amendment.

These constitutional provisions are relics of anti-Catholic bigotry. They reflect some of the worst impulses in the human character — exclusion and discrimination against those who may think or believe differently from the mainstream — and they are directly contrary to the ideals of the First Amendment, which guarantees a right to the free exercise of religion without exclusion from generally available governmental benefits.

Post-Dispatch Up and Gets Free-Market on Us …

The St. Louis Post-Dispatch editorial board is certainly capable of surprises, and this morning’s editorial about Amtrak is one such instance. I don’t have much to add; mostly, I just wanted to highlight it here because, you know, we get a lot more traffic than some old dead-tree newspaper. As they put it:

As to the rest of it, that should be Amtrak’s problem, not the taxpayers’. Taxpayers already are paying 80 percent of the cost of hauling an Amtrak passenger across the state. That’s enough. Outside of the crowded eastern corridor, passenger trains no longer make economic sense.

Facts are facts, unfortunate as they may be to someone who loves trains, like I do. It would be fabulous to somehow fix the problems and allow Amtrak to be on time with its trains, but I don’t see why taxpayers, rather than riders, should fund those fixes. It’s hard enough to argue in favor of keeping the subsidy at the current level, as the romantic in me supports, but increasing it would be wholly irresponsible.

’47 Cheval Blanc … to Your Doorstep!

Amazon.com, the world’s largest Internet retailer, recently
announced its intention to sell wine through its online marketplace, a venture
that is sure to bring good, cheap wine to the masses and establish the
Seattle-based company as one of the country’s largest wine retailers. This
fact is great news for oenophiles in Missouri,
as the states’ direct-shipment laws allow for any out-of-state retailer or
manufacturer to ship up to two cases of wine per month to any customer without
restriction (and more if a special excise license is procured, which it almost
certainly will be).

However, what if wine just seems a little too “fancy” for
your next adventure across the Lake of the Ozarks Community Bridge to a certain section of Camden County, and you don’t want to deal with the hassle of
visiting your neighborhood gas station/pharmacy/liquor store/grocery store to
pick up a few cans of Missouri’s official beverage? Can’t it just be delivered to your home?

Actually, no. Anheuser-Busch (along with every other brewery
and distillery in the state) cannot ship directly to consumers. The reason
for this happens to be the same reason that people in Kansas and Utah won’t be able to take advantage of Amazon’s most recent business venture: After
prohibition, almost all states in the union moved to what is now known as the
three-tier distribution system, composed of manufacturers, distributors, and
retailers of alcoholic beverages. This system was designed to ease the states
back into alcohol consumption, and to further regulate companies like A-B.
However, its separation has led to the notion that producers cannot sell
directly to consumers. In Kansas,
this means that wine can’t be delivered directly to your home. In Missouri (thanks to the
input of a remarkably powerful wine lobby) it can, but you still have to buy
your beer at the store, because the beer lobby is more concerned with other things. This isn’t a big deal if you want to get a Budweiser,
but if you’re in Kansas City and you want to sample the latest Schlafly Reserve, or you’re stuck in Saint Louis without a
special kind of Boulevard, you’re out of luck.

The only solution to this problem? Eliminate the three-tier
system
and allow manufacturers to sell directly to customers. This will keep
prices down for consumers and allow for more freedom for direct-delivery
purchases, for both beer and for wine. I really doubt anyone at A-B would be
sad if they were able to sell direct, both because revenue would skyrocket and
because no midlevel jobs would be lost — distributors of A-B products are all
monopolistic in their sale of the company’s products as is. Meanwhile, all of Missouri’s smaller
breweries would no doubt see an increase in business as their distribution
areas grew. How can this not be a good thing?

Kansas City Considers Regional Jail: Bad News for Criminals, Good News for Taxpayers

There’s an interesting article in the Star today about the proposal for a shared, regionally built jail for the Kansas City area. I think this is a great idea and an opportunity for shared investment. Regional jails have worked very well in Saint Louis County and city. The county jail in St. Louis, which was initially paid for by the county via a bond issue but is used by all the municipalities, has worked out great. In St. Louis city, there are two jails. The new city jail is just for the city itself, although I think the feds pay to house some prisoners there on a temporary basis. But the lower-security city workhouse up on Hall Street houses low-risk prisoners who can’t pay their fines or restitutions from others counties, too, and that works out well for the city’s finances.

Jails are one of the few areas where I would generally be against privatization — although some services within jails should certainly be outsourced and privatized, such as the pharmacy. Consolidation is the key to efficient use of tax dollars for jails, and it’s great that the Kansas City area may be moving in that direction. Just as St. Louis County put its jail right next to its other government buildings, I think Kansas City should build a 20-story art deco jail right next to City Hall and the courthouse. Now, that would be sweet.

Prudence and the Columbia School Board

Thanks to Janese Heavin’s excellent coverage on her Class Notes blog, I’ve been keeping an eye on the drama surrounding the Columbia School Board’s pursuit of an 11-percent increase in the district’s school tax levy. Much of the controversy has been rooted in the fact that the school board drew $10.3 million from its reserves to pay first-year salaries for 70 newly-hired positions, knowing that the salaries could not be sustained without an increase in the levy.

But the whole story took a rather baffling twist with remarks made by one of the school board’s members at a recent forum for school board candidates:

“We didn’t think it would be prudent to come to taxpayers and ask for
an increase with” $36 million “in reserves,” he told about 20 attendees
at an NAACP-sponsored forum for school board candidates. “We spent them
down purposefully. We did that with the full understanding that we
would have to make decisions about how to cut costs or seek a levy. …
It was a prudent decision to spend down reserves first.”

This is a classic case of the "better to ask forgiveness than permission" mentality. The school board knew that Columbia’s taxpayers would not willingly shoulder an additional tax burden, so they hired first — hoping the move would force taxpayers to accept an increase in taxes. With the hires made and the new personnel already present in the schools, the board was betting that the citizens would not call its bluff.

As appalling as this tactic is, there is a rather mystifying point that also needs to be highlighted: Columbia’s School Board, surprisingly, seems to be quite good about meeting its budget on a year-to-year basis. The district has ended nine of the last 10 years with a surplus, building its reserve from about 13 percent in ’96?’97 to nearly 25 percent before last year’s $10.3-million hiring spree. To be sure, the budget itself is bloated by certain unnecessary expenditures, but I would be thrilled if other public school districts consistently kept within their budgets. April’s election in Columbia will tell us whether the city’s voters are sufficiently impressed with the school board’s stewardship that they’ll overlook the shady planning of the board members.

Sales Tax Holidays ? Ineffective Economic Medicine

An editorial in the Southeast Missourian (link via Combest) compares the proposed sales tax holiday to cough syrup:

A statewide proposal to create a sales-tax holiday in late June to stimulate the economy is drawing criticism. You might compare the idea to taking cough syrup; it may not taste very good to some, but overall it will leave the economy feeling better.

This is an apt comparison, although not for the reason given in the editorial. Cough syrup temporarily makes you feel better, but it just masks a symptom; it doesn’t make your cold go away or improve your health in general. Likewise, a sales tax holiday appears to help the economy for a few days, but without doing any long-term good.

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