A Hit Against Your Property Rights

Posted on by Nicholas Loyal

The Missouri Supreme Court handed down a 6-1 decision yesterday in favor of "development" trumping property rights in the matter of City of Arnold v. Homer Tourkakis. According to the decision (summarized nicely by one of the outlets throughout the state) the city is justified in using the power of eminent domain to seize the office of Dr. Homer Tourkakis, a dentist who was the lone holdout resisting the city’s unjust taking of property, because (according to the opinion summary prepared by the Communications Counsel):

[T]he constitution does not limit the legislature from giving such cities authority to use eminent domain for redevelopment purposes, the state’s tax-increment financing act is constitutional, and the trial court erred in dismissing a non-charter city’s condemnation action against private landowners.

The courts’ decision, authored by Judge Russell, reversed the previous decision by the trial court, which had held in favor of Mr. Tourkakis (also from the summary; link added):

The trial court erred finding that article VI, section 21 limits the entities that may exercise the power of eminent domain for redevelopment purposes and in dismissing the City’s condemnation action. The City is authorized under several statutes, including the TIF Act, to exercise eminent domain.

It should be noted, though, that the court failed to rule on the controversial nature of Missouri’s "blight" definition, which has allowed municipalities in the past to condemn pristine areas and doom them to economic failure. Also, as reported by the Post-Dispatch, the court left open the issue of whether Arnold’s status as a non-charter city brought any bearing to the issue at hand:

[O]ne of the dentist’s attorneys, Tracy Gilroy, said she believed the Supreme Court had failed to address whether the state’s Tax Increment Financing Act actually sets out a procedure for nonchartered cities like Arnold to use the power of eminent domain.

"We may need to request a rehearing on that matter," Gilroy said.

This particular point was highlighted again by Judge Teitelman in the lone dissent to the majority opinion:

[A]rticle VI, section 21 provides that with respect to non-charter cities, "laws may be enacted" that provide for the exercise of eminent domain for redevelopment purposes. Article VI, section 21 does not expressly authorize the wholesale delegation of such power to third-class cities. Instead, it provides only that the legislature may enact a law allowing the use of eminent domain for a redevelopment project. In this case, the General Assembly has enacted no law authorizing the City of Arnold to exercise the power of eminent domain for redevelopment purposes.

Three tragedies result from this ruling. The first, and most direct, is that Homer Tourkakis will almost certainly lose his office, and that any payment he will receive will be a pittance compared to what the property is worth, in terms of both financial and sentimental value (read more about Dr. Tourkakis’ story).

Second, the ruling in favor of the city of Arnold leaves the door open for other municipalities throughout the state to go forward with plans to seize private property for private use through the power of eminent domain. As explained by Show-Me Institute policy analyst Dave Roland, the Missouri Supreme Court had an opportunity to strengthen citizens’ rights:

The Court could side with the city and its commercial developers, meaning that virtually every home, business, and house of worship in the state could be condemned and given away for the profit of a government-chosen owner. Or the Court could turn the tide in favor of individual liberty by deciding that the state Constitution’s protections for private property still have meaning.

But obviously, the court watched that opportunity sail right by.

Finally, I leave you with this story. In a time when the economy is sliding and half-million dollar homes are being abandoned because of defaulted mortgages, what right does the city of Arnold have to call the pristine, entrepreneurial office of Homer Tourkakis — which was doing nothing but an honest service to the community — a blight?

Something to think about.

Two New Cities Considered in Franklin County

Posted on by David Stokes

We have a new leader in the "most boring headline ever" competition here at SMI. The only way anyone is ever going to click on this post is if my friend Gus W. stops by the site. But anyway …

There are two new municipalities being considered in Franklin County. The Post-Dispatch has a good article on the debate today. One of the proposed cities, Lake St. Clair, has gone about the process the right way, and one, Stonewater, has taken advantage of the controversial "village law" passed last session to attempt to bypass the normal rules. It should also be noted that there is only one resident of Stonewater, and nobody can reasonably be so pro-property rights that they think any single individual should be able to incorporate their property into a new political entity on a whim.

I actually don’t have too much to add from the article’s coverage of the decisions of the Franklin County Board of Commissioners. It seems correct to me that the residents of Lake St. Clair form a new city, and it seems more than reasonable that Stonewater was denied:

Stonewater is 40 acres of almost entirely vacant ground off Holtgrewe Road southwest of Washington. Ferguson, a developer in the county, is the site’s only resident.

Just because Wikipedia has a terrific article on micronations does not mean you have to grant political autonomy to every jerk who wants his own city. ‘Nuff said.

Christmas Comes to an End in Kansas City

Posted on by David Stokes

I would like to commend the leadership in Kansas City for seriously addressing the budget situation there. The Star has been closely covering the debate and discussion as city officials try to close a substantial budget gap. The great news to come out of this is that they are doing the single best, and most difficult, thing they need to do: They are proposing to lay off hundreds of unnecessary city workers. Now, if this sounds callous of me, let me tell you that:

  • A) I don’t care; and,
  • B) I was fired from a government job once, too (for reasons of a party change of control), so at least I know of what I speak. Trust me, it’s not hard to recover.

When I read that the mayor wanted to eliminate more than a hundred middle managers, including both vacant positions and lay-offs, I was admiringly stunned. I am perpetually aghast, but not at all surprised, that so many people just sort of hang on in government jobs even though they are not needed. It may be the same way in parts of corporate America, but that hurts the shareholders — not the taxpayers.

So I commend the mayor and City Council for making the tough decisions! I will post more about this subject soon. … Isn’t that exciting!

Driving the Snakes Out of Politics (St. Patrick’s Day-Themed)

Posted on by Justin Hauke

There is a dangerously misleading letter to the editor in this morning’s St. Louis Post-Dispatch regarding Missouri’s Special Needs Tax Credit Bill (HB 1886 and SB 993).

Devotees will recall that Dave Roland, the Show-Me Institute’s education policy analyst, testified in Jefferson City several weeks ago regarding the constitutionality of these bills. Because he’s currently on vacation, however, I’ll take it upon myself to address some of the more pernicious segments of today’s letter (and I won’t even comment on the author’s politically loaded rhetoric).

Investigating a similar model program in Florida, the Palm Beach Post reported that "77 percent of participating schools have no special programs for disabled children." […]

In St. Louis County, the Special School District provides more than 1,300 private school students with special education services not available from their private schools, and contracts with qualified private agencies for the small number of students whose needs are not met by public school programs.

Great! That’s the whole point of choice. If parents are happy with their current arrangement, there’s no harm done. Providing parents with additional educational options can only improve their situation. Even if only 1 percent of families chose to take advantage of a special needs tax scholarship, the other 99 percent who chose to remain in the current status quo would be no worse off. State funding would be exactly the same and their learning environment would be identical to what it was before. And the 1 percent who did chosoe to leave their current schools would also be better-served.

State revenue lost through tuition tax credits would be better invested in reducing the local property tax burden, by supporting public education programs and expanding the available public assistance for children with special needs.

This statement is completely irrelevant, since the Special Needs Tax Credit is revenue-neutral, meaning that the decrease in tax revenue is directly offset by the decrease in per-student state contributions to the public school. If the parents of an autistic child were to decide that their child was better-suited to an alternative school and withdrew from their district, the decrease in state spending would be matched by an equivalent tax credit scholarship. Arguing about better uses for special needs funding is simply a non-sequiter for the bills under consideration.

Personally, I agree with state Rep. Rodney Hubbard’s (D-St. Louis) comments on the merits of the special needs tax credit bill: “Either you’re for autistic kids, or you’re against autistic kids.”

Which side is today’s letter-writer on?

Gouging for the Green

Posted on by Nicholas Loyal

It’s raining in St. Louis on this St. Patrick’s day, so I wouldn’t be surprised if today’s Ancient Order of Hibernians Parade were less well-attended than usual (which is fine by me, because I managed to combine my celebration with exercise at a previous event this past weekend). However, the controversial outside alcohol ban enacted around the parade (and previously commented upon by Mr. Stokes) gained another dimension this morning after this report was issued by the Post-Dispatch.

According to the Post, parade organizers set up a checkpoint system to prevent parade-goers from bringing in outside alcohol without remembering that there was still one non-bar establishment within the checkpoints from which alcoholic beverages could be purchased:

But the Hibernians forgot about Patrick’s. The store is inside a
city-designated "festival area," only the perimeter of which the
security guards will patrol.

Bob Kraiberg, the city’s excise commissioner, said that the city has
lifted its usual ban on street drinking for the parade and that nothing
is to stop liquor store customers from drinking their purchases
outdoors.

Thus, in a land of $8 beers, thousands of wet, drunken parade goers will have a single refuge where gallons of a certain locally brewed product can still be obtained in the aluminum format St. Louisans love so much:

Patrick Wrzesinski, the store’s owner, said there’s a good chance this
year’s sales could set a record. On Friday, he said, he was stocking
500 cases of beer.

Although I won’t be at the event, I can certainly understand the appeal for all parties of a within-checkpoint liquor store where purchases can immediately be consumed outside on the street. Although the issue of protectionism was already commented upon in the previous post by our resident redhead, it seems that  Mr. Wrzesinski has suddenly been presented with a wonderful practice point in market economics.

When you go to a ballgame at Busch Stadium, you’re not paying $8 for a beer because that’s how much it costs the good people on Pestalozzi Street to make — you’re paying that much because naming a building after your company pretty much gives you a monopoly over the market. If you could get it cheaper, you would — but instead, you fork over the cash. Patrick’s now has the luxury of benefiting from restricted supply and heightened demand, and they are perfectly within their right to do so. After all, if the beer is $8 outside, what’s to stop Patrick’s from doubling its prices to take advantage of the situation? This practice has been defended before in this space, and I see no reason why it shouldn’t again be applied here.

So go forth, lucky lone liquor store, charge $10 for six cans of Bud Light! Everyone will thank you for it … except for every other alcohol retailer within five miles — they’ll still hate your guts.

A Terrible Idea for Electrical Licensing ? Or Is It?

Posted on by David Stokes

As regular readers of this blog may recall, I loathe occupational licensing. In the vast majority of cases, it is nothing more than using the government to block competition, usually under the catch-all guise of "safety." I was pleased that I had not seen any legislation creating new licensing systems before our current legislative session, but that changed today when I came across Senate Bill 1093. So I am supposed to hate this bill, right? Well, yes, but a careful reading of it at least made me realize there are two sides to this story.

A couple of key points jumped out at me. First of all, it is sponsored by Senator Loudon, who is a true free-market guy, so I had to wonder why he was proposing this. Second, as you read it, you see that the suggested state licensing board will include reps from the Independent Electrical Contractors, or IEC, who are the non-union guys and whom I would not normally expect to be pushing licensing. Further reading and research, by moi, makes it clear that this is an attempt to normalize electrical licensing rules across the state by the IEC, and trump the current union-favoring local systems established in some of our larger counties. The bill is clear that the statewide license would have to be allowed in any county, or city, in Missouri. Local governments could still continue their own local licensing, but they would have to allow someone with a state license to work even if they don’t have the local license. It is also important to note that non-licensed electrical contractors could still work in counties that do not require a local license. So if you are an electrician who lives and works in a rural county with no licensing, this would really not affect you.

I fully understand that the licensing systems in many of our larger counties are set up to favor union members and union contractors. This bill is really about politics and fairness, not about the economics of licensing systems. I would prefer that its supporters change the local, unfair rules before they take licensing statewide, but I am sure they would respond that they have tried that and failed. I recognize that the current political situation in many of those larger counties is not going to change, as the irrigation contractors found out in 2006 when they attempted a very minor, and perfectly reasonable, change to the St. Louis County plumbing code as it related to backflow prevention devices.

I am not going to sit here and write that I support this proposed law, or believe it to be a good idea.  However, I know the frustration many non-union contractors have with the biased systems in place in many of the larger counties. To that end, I understand why they are attempting this change and I sympathize with their goals. If I may mix my metaphors, it’s like they want two bites at the apple, and to eat it too. With this bill, we would have more statewide licensing for electrical contractors, but the licensing would be more level and fair. Since this is one profession where I understand some manner of licensing may be needed, perhaps wide and level is better than limited and biased? But probably not …

It Must Be a “Mc” Thing

Posted on by Justin Hauke

The U.S. Senate rejected today a proposal which would have placed new restrictions on congressional “earmark” bills.

Earmarks are line-item requirements in the federal budget that direct federal agencies to provide funding to specifically targeted organizations. This year, the average U.S. senator brought home more than $180 million in earmarked projects to their constituents ($28 million for representatives).

Earmarks are a huge problem at the federal level, because the benefits from such projects flow to small groups of interested individuals while the taxes used to pay for them are spread across the entire population as a whole. This diffusion of cost encourages the earmark practice, because it allows politicians to bring money to their constituents without putting the cost on them directly. The result is an ever-expanding federal budget, which this year passed the $3 trillion mark — or more than $10,000 per U.S. citizen.

Sadly, the U.S. Senate overwhelmingly rejected the bill’s earmark restriction. From Bloomberg’s coverage of the vote:

The proposal ran into opposition from senators in both parties as lawmakers said it would merely shift authority to make spending decisions to anonymous bureaucrats in the executive branch.

Fortunately, six Democrats and a handful of Republicans did vote for the bill’s adoption, including Missouri’s own Claire McCaskill, who has been a strong opponent of congressional earmark proposals. And to the best of my knowledge, only McCaskill and Sen. John McCain (the bill’s sponsor) were true to their vote, refusing to direct federal dollars into earmarked projects in any of the legislative bills they sponsored last year. That’s much better than the (transparent) electioneering support by Sens. Clinton and Obama, who voted for the bill, yet oversaw $342 and $98 million in earmarked projects last year, respectively.

The 29 senators who voted to approve the legislation should be commended for their commitment to reducing governmental spending on pet projects. It’s a shame that more elected officials don’t share their commitment to fiscal discipline.

Official ________ of the State of Missouri

Posted on by Sarah Brodsky

I’ve suggested that encouraging students to nominate state symbols is a bad idea because it’s a slippery slope. I felt that my concern was validated when a legislator proposed that the state declare Budweiser its official beer. But the News-Tribune has a different take on it:

As far as we know, the idea was not initiated by a group of students. Thank goodness for that.

The origin of the idea gives evidence that young people sometimes think more clearly than the adults who govern them.

So the students are actually coming up with better ideas for symbols than the adults are. Maybe we should turn over the rest of state business to them, too.

Why Did the Sales Tax Cross the Road?

Posted on by Sarah Brodsky

To try to stimulate the economy, Missouri may get another sales tax holiday:

For three days in June, the GOP is proposing to exempt any product costing up to $600 from state or local sales taxes.

"The hope is the state can give a little boost to get people out spending," said the plan’s sponsor, Rep. Mike Sutherland, R-Warrenton.

I’ve already argued against sales tax holidays and failed to convince. But I’ll try again. If a sales tax holiday is a good thing, then why limit it to school supplies? Why not include anything under $600? Why not get rid of the limit? If a three-day holiday is a good idea, wouldn’t three weeks or three months be better? How about all year?

Would people go crazy buying stuff all year round if we got rid of the sales tax entirely? Probably not. They might buy a bit more because things are cheaper. They might be a little more likely to buy something in a store than to order it online. But we would also see a drop in tax revenue, and there wouldn’t be a 365-day shopping spree to make up for it.

So why do people run out to the store for a three-day holiday if they wouldn’t do that for a longer one? If, for example, people are going to buy school supplies sometime in August anyway, they might as well do that during the sales tax holiday. So everyone postpones their trip to the store until those three days and buys all the stuff they would have bought during the week before. To legislators, that looks like a magical economy booster. To me, that looks like switching around people’s shopping days for no good reason.

I guess this year we’ll see whether it works any better in June than in August.

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