Illinois Legislators Jump on the Sales Tax Holiday Bandwagon

Posted on by Sarah Brodsky

I should be more careful about what I say on this blog, because when I make crazy suggestions, people take my advice. When I asked whether longer sales tax holidays might be better than three-day ones, that was a rhetorical question. But now Illinois legislators are proposing a 10-day sales tax holiday to help people out with their back-to-school shopping in August. I predict that people will rearrange their shopping days to buy things during those 10 days, rather than later in the month. Kind of like how they react to Missouri’s sales tax holiday, only spread over a longer time period.

I hope Missouri and Illinois aren’t going to engage in an arms race of longer and longer sales tax holidays. If a state decides its sale tax is too onerous, it can lower the rate. That would help people and the economy all year round, and people wouldn’t have to change their shopping schedules in August.

Missouri’s Kelo

Posted on by Dave Roland

The nation was stunned in 2005 when the United States Supreme Court ruled that the United States Constitution allowed the City of New London, Conn., to force its citizens out of their homes simply because the city thought it could generate more taxes if their modest residences were replaced with luxury condominiums and high-end retail stores. The popular outrage against the Supreme Court’s decision resulted in a widespread effort (in which the Show-Me Institute’s director of policy, Jenifer Zeigler Roland, played a major role) to make sure that Kelo could not happen in other states.

Unfortunately, as has been demonstrated by a recent court decision, Missouri was among the states whose eminent domain reforms merely rearranged deck chairs on the Titanic. Unless the Missouri Supreme Court proved willing to restore the property rights guaranteed by the state’s Constitution, cities and agencies across the state could continue to take perfectly normal properties in order to give them away for the profit of a governmentally preferred owner. With last week’s unfortunate decision in City of Arnold v. Tourkakis, (and kudos to Nick for an excellent post on this topic) it seems unlikely that the Missouri Supreme Court is willing to prevent the eminent domain abuse that currently plagues this state.

This abandonment of property rights is deeply unsettling. As a nation — and as individual states — Americans adopted Bills of Rights in order to make sure that certain essential liberties would never be subject to restriction or elimination. Among those freedoms is the assurance that governments have no right to take away someone’s property unless it is required for the construction of a road or public building. The real-life consequences when the government does take someone’s property illustrate why this power mustbe tightly limited.

Eminent domain is rarely threatened against wealthy people or those who can fight back. Instead, the usual targets are communities composed of minorities, the poor, and/or the elderly. In the middle of the 20th century, cities so regularly used eminent domain against black neighborhoods that the practice was commonly referred to as "Negro removal." That offensive label eventually fell out of use, but poor black communities continue to be condemned far more frequently than white communities. A 1989 study estimated that of 10,000 families that Baltimore displaced in the name of removing blight, fully 90 percent were African-American. Mindy Fullilove, an expert on the impact of eminent domain on minority communities, estimates that more than 1,600 black neighborhoods have been destroyed nationwide.

But then there are elderly people. In Kelo v. New London, Wilhelmina Dery was an 87-year-old still living in her family home, in which she was born. All she wanted was to live out her final days in those beloved, familiar settings. She eventually did get her wish, but only because she died before the city got its chance to kick her out of her home.

In Norwood, Ohio, the city took the residence of Carl and Joy Gamble, an older couple who received their condemnation notice just days after they were finally able to retire. They were uprooted from the home in which they had raised their family and built their American Dream, and separated from their nearby family and friends, after which they moved into a small apartment with a daughter in Kentucky. After a grueling three-year legal war, the Ohio Supreme Court vindicated their rights, but the stress drove Carl to his grave and left Joy in such delicate health that she couldn’t return to the home she had sacrificed so much to save.

I was recently told about an elderly couple in Rolla who weren’t physically able to cope with a move when they were threatened with eminent domain. The wife had Alzheimer’s disease and the husband was terrified to complicate her dementia by moving her to an unfamiliar environment. Unmoved by their plight, the city tried to make it look like they were just holding out for more money. One councilmember said they should just move to a nursing home.

Someone’s home represents their stability and shelter, both in physical and emotional ways. It is the centering location in their life, the place to which they should be able to return each day and know that they have their own place in the world. These things are especially precious for people who can claim ownership of very little else. But rather than protecting the rights of these citizens, both courts and legislatures have been content to sacrifice their security in the name of "progress," or — more coarsely — so they can be replaced with a wealthier, "more desirable" class of people.

Eminent domain abuse is not just unconstitutional — it is unjust, immoral, and abhorrent. And, assuming that Missouri’s lawmakers and courts will continue to stand by as more and more home and business owners are wrecked by these abuses, the people of this state will have no choice but to
amend the state Constitution in the hopes of restoring the security that should be an American birthright.

Markets Develop, Even When Suppressed (and when you’re a kid)

Posted on by Justin Hauke

To combat childhood obesity, school districts across the country have adopted ever-more-draconian measures to ensure that students are provided with a “healthy diet” throughout their school day.

While I take no issue with schools encouraging healthy eating habits (certainly, I think this is a good thing), I do object to some of the more stringent measures that schools have chosen to take, such as zero tolerance policies. Mostly, my objections stem from the fact that I am fundamentally opposed to omnipresent “father knows best” statist policy, in which the state tells people how they should or should not run their lives. But it’s not just that I object to the terms of such measures, it’s that enforcement of such standards is practically impossible. Schools should recognize that it is up to parents to instill good eating habits in their children, and not the responsibility of the schools themselves. Because despite school districts’ best efforts to prevent “unhealthy food” in their schools, where there’s a will there’s a way.

Case in point: A California-based newspaper details the ever-growing black market for candy among grade-school students. Of course, this is old news to young’ns like me. I remember my own candy racketeering in middle school. Of course, I was only a candy runner in those days (I helped deliver it), not the actual candy supplier (that is, I didn’t keep it in my locker … those kids got suspended).

If SMI addressed social issues, I might argue that this logic unfortunately carries forward to the adult world, as well. But mostly, I think it is interesting how even children understand fundamental economics. That is, when schools (or government officials) limit supply amid strong consumer demand, they make it very profitable for black-market suppliers to deliver their product.

Good Thing It’s Not Called “Freetown”

Posted on by Justin Hauke

Frenchtown, a historic French quarter of St. Charles, is the latest challenger of spurious eminent domain abuse.

In 2006, the St. Charles City Council voted to designate 15 acres of land in the Frenchtown area as “blighted.” Once again, the rationale for the “blight” designation had little to do with actual urban decay. Rather, it was ostensibly seen as little more than a policy tool to award property tax break incentives to wealthy developers. For a review of Missouri eminent domain abuse, I remind readers to check out Tim Lee’s comprehensive study.

The worst part of the story, however, is the shameless defense by the city’s eminent domain advocates:

Supporters of the measure argued that a large-scale effort was needed to combat longstanding decay and that a piecemeal approach […] wouldn’t work. They said eminent domain was a last-resort tactic that probably wouldn’t be used in most cases.

And yet these same advocates argue that eminent domain should be used in this situation. But what keeps future developers from appealing to the same logic? Surely, the eminent domain advocates recognize the slippery slope they have created. If property rights aren’t constitutionally protected, then there’s no reason to believe that any developer’s assets will be any more secure than the property they originally usurped.

What incentive do businesses have to relocate to a district that has already set a precedent for eminent domain abuses? What about the Homer Tourkakises of the world? Entrepreneurs who invest their time and savings into developing a vibrant business in St. Charles are now at the mercy of future political whims. Eminent domain doesn’t strengthen property values, it destroys them.

Who is the better steward of land resources: the vested individual with a business interest, or an unelected bureaucrat with a vision?

KC Budget Crunch Continues; Payroll Still Padded

Posted on by David Stokes

The Kansas City Star continues its thorough coverage of the budget situation in KC with a clarifying and honest article about the background of the budget problems — albeit one presented in a mildly annoying Q&A format. Don’t get me wrong, the strengths of the article far outweigh the format, and at least Q&A is better than the worst writing format of all: the pathetic "5 myths about something or other." But back to the budget.

The most important part is right in the beginning (emphasis added for all following excerpts):

Q: How did the city get into this mess?

A: The bottom line is that, for years, Kansas City’s expenses have grown faster than its revenues. Since the 1970s, the city’s population has dropped from more than 500,000 to about 450,000. Its infrastructure needs have increased substantially, and revenue growth has not kept pace with inflation. The city provides millions of dollars for indigent health care and other social and cultural services that the suburbs don’t have. Since early 2000, Kansas City has also taken on mounting debt obligations and guaranteed incentive payments to developers.

Meanwhile, gasoline costs are skyrocketing and the city must spend more for pensions, health care and salary raises. Although the city downsized in 2003, the work force has crept back up from 4,344 in 2005 to 4,678 currently.

Too many TIFs and too many city employees are obviously a recipe for budget deficits, but I object to the theoretical aspects of the problem just as much as I object to the budget realities. Too many government employees are there intentionally, as part of political machines, designed to be kept on the payroll for the benefit of the governing faction. This is true even in civil service positions, because civil service employees are usually going to want to grow government for their own benefits as much as patronage employees do. (Do not take this as a criticism of civil service rules; they are clearly preferable to patronage.) Too many TIFs, or other abatements, play into the idea that the government — rather than the market — knows what the economy of Kansas City needs, by granting favors to certain plans but not others. Next point in the article:

Q: What are the main proposals to cut spending?

A: Funkhouser would slash the zoo and Liberty Memorial subsidies, eliminate 220 jobs, and close the jail and the animal shelter. At the same time, he would add $10 million for street paving, hire 20 new police officers and spend $200,000 on a citywide education summit.

City Manager Wayne Cauthen initially recommended using a $14.6 million wireless telephone settlement and across-the-board department cuts to help balance the budget. Critics said Cauthen papered over the city’s problems; he has since submitted alternatives.

Last week, Finance Committee Chairwoman Deb Hermann and Vice Chairwoman Jan Marcason submitted a compromise that pared back Funkhouser’s harshest cuts but cautioned against Cauthen’s optimistic revenue projections. It includes many difficult choices. A committee narrowly sent that plan on to the full council.

I commend the mayor for his proposal to cut government jobs, for reasons discussed above. If a job is not necessary, you should eliminate it rather than just keep someone on for the benefit of the machine — or to be nice, on the taxpayer’s dime. I think that outsourcing such things as the jail and animal shelter are worth strong consideration, but I don’t know enough about the exact details of both to argue for or against closing them. And I don’t think that now is the right time to fund a new summit of any kind, be it talking about education or climbing Taum Sauk.

Certainly, the cell phone settlement will help — as well as provide regular revenues in the future — but using a one-time windfall to close a problem just moves the problem to next year, when it may be even greater. By making the tough choices now, the Kansas City administration and council are doing what they were elected to do. I find it very impressive.

Bills About Internet Bullying

Posted on by Sarah Brodsky

An article in the Post-Dispatch summarizes the various proposals on cyber-bullying that the Missouri and Illinois legislatures are considering. Like all the other proposals I’ve seen on this issue, these would be difficult to enforce and probably wouldn’t have prevented the Megan Meier tragedy had they been law in 2006. Here’s an example:

One lawmaker has suggested making it a felony for any adult to have electronic contact that "demonstrates a knowing disregard for the health, safety and welfare" of the child.

How can you tell whether the disregard is knowing or not? But at least that proposal just forbids bad behavior (albeit ambiguously) — other ideas out there would establish new programs and requirements only tangentially related to what happened to Megan Meier. One bill would require public schools to institute policies about online bullying, never mind that Megan’s alleged harasser was an adult woman outside of the control of public school administrators.

These legislators are well-intentioned, but the most effective protection against online bullies are watchful parents.

Internship Applications Due

Posted on by Eric D. Dixon

Today is the application deadline for summer internships at the Show-Me Institute. But, because we’re so nice, we’ll continue to accept applications through Monday.

If you know any college students who may be interested, be sure to let them know. If you’re a college student currently on the fence about whether you should apply, perhaps this testimonial from our former intern Steve Bernstetter will push you over the edge:

Seriously, these guys do great work, are really nice people, and are spearheading a movement with great promise for affecting positive change. Whether you’re a naive young grad student like myself, looking to change the world for the better, or a grizzled cynical veteran of the politics game simply looking for a breath of fresh political air, you’d be a fool to pass up this opportunity.

Well said, Steve. Again.

Bad Bill, Bad Teachers

Posted on by Justin Hauke

There are several bills in the General Assembly this session concerning teacher pay. Generally, I find these bills fairly annoying because they have few qualifying requirements (such as merit pay, etc.).

A new proposal by Rep. Denis Holsman (D-Kansas City) appears, at first glance, to address teacher pay — particularly in rural districts — without providing across-the-board pay increases. Upon further reflection, though, it fails to fundamentally address the root incentive problems.

Among the bill’s merit provisions (from the Post-Dispatch’s coverage):

  • A voluntary grant given to school districts based on test scores and teacher performance. A majority of teachers in each district would have to vote to accept the grant.
  • One-time $5,000 stipends for teachers in small schools who have reached 10 and 20 years of service.
  • Recruitment bonuses of $5,000 for new teachers in small or unaccredited school districts. Math and science teachers would receive $7,500.
  • Retention bonuses ranging from $2,500 to $10,000 for teachers who stay at a small school district for 5, 10 and 20 years.
  • A $2,500 stipend for teachers in a district that moves from being unaccredited to accredited by the state Board of Education.
  • Monthly bonuses for retired teachers older than 75 whose cost-of-living adjustments are capped.

The first point is a throwaway provision to satisfy the merit-pay advocates. Individual teachers should be able to decide whether their compensation is based on their individual performance; it should not be left to the discretion of a monopolistic cartel. The majority of teachers will not vote to accept merit pay, because without merit pay, bad teachers will receive the same pay as good teachers — a tragedy of any state-run enterprise. Worse, this provision provides perverse incentives for good teachers because it discourages them from remaining in a profession where their performance quality is under-recognized. And if Missouri’s aggregate public school performance is any indication of teacher quality, there are far more bad teachers in the state than good.

The retention bonuses are also a mistake. Research indicates (as evidenced by Dr. Hanushek, the nation’s foremost education scholar) that there is little improvement in teacher performance past the two- or three-year mark (in fact, the relationship may actually be negative). So there’s little reason to reward teachers’ tenure without a corresponding performance metric. This is really the critical juncture in the teacher compensation problem. Good teachers should be rewarded for their efforts, and bad teachers should not. The teacher unions have spent years hypothesizing that tenure is a measure of teacher success, when in fact there is little evidence to suggest that this is true.

The math/science recruitment bonuses are a step in the "market" direction. If these skill areas are the ones that need the most improvement, it makes sense that these should be the areas where more money is spent. But, again, basic math and science skills should be a fundamental part of Missouri education — not something achieved only at a premium.

The worst provision, in my opinion, is the monthly bonuses for retired teachers. How will increasing retirees’ pensions improve the quality of education in Missouri?

There are some good elements of this bill (it does, nominally at least, address the merit issue), but on the whole it does nothing but increase costs without linking them to improvement in quality. Missourians — and Missouri teachers — deserve better.

Great Moments In Free-Market Theory at the St. Louis Board of Aldermen

Posted on by David Stokes

This category may well be as small as an Airplane-style leaflet, but we had an example last week with the defeat of the proposed Segway ordinance by the City Board of Aldermen’s Parks Committee. The West End Word has the story here and here. Alderman Kacie Starr Triplett lays it out very nicely:

"Alderman Krewson’s bill is extremely protectionist, and that’s not a good precedent to set in the city," said Sixth Ward Alderman Kacie Starr Triplett.

Unfortunately, I think the precedent for protectionism in the city is well established in the code, but that’s not Alderman Triplett’s fault. If this statement and the defeat of the Segway bill are an indication of the views of Alderman Triplett and other young members of the board, politics in the City of St. Louis may well have a very bright future.

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