Board of Education Makes the Right Call

Posted on by Dave Roland

Janese Heavin at the Columbia Daily Tribune reports that the Columbia Board of Education has wisely decided not to channel any more taxpayer money into a lawsuit that tries to force Missourians to foot the bill for more than $1 billion in additional educational funding.

Ever since Judge Callahan handed down his thorough, well-reasoned rejection of the claims brought in CEE v. Missouri, school districts all over the state have been declining to add to the more than $4 million of taxpayers’ money that has already been spent in pursuit of this case. As Board Vice-President Darin Preis said regarding the judge’s
written opinion, "[I]t makes sense to me. It doesn’t look like we have
a good case."

Thus, despite last-minute pleading from one of the attorneys who had been absorbing much of the money spent on the case (and who stands to collect much, much more if the suit continues), Columbia now happily joins a growing list of school districts in agreeing that Judge Callahan’s decision was correct.

New Study Questions Missouri’s Individual Income Tax

Posted on by Eric D. Dixon

I’ve been remiss. I already post less frequently on this blog than I should, but last week I neglected to mention here the release of a new study by R.W. Hafer, "Should Missouri Eliminate the Individual Income Tax?" I got wrapped up in the release of the study to the press, and posting everything online at our primary website, and simply forgot to include the blog in our study release.

So, for those of you who get your Show-Me Institute news from this blog alone, please check out the study. It takes a particularly valuable look at how an income tax distorts labor markets, leading to lower employment levels and dead-weight economic loss. While the study keep a tight focus, stopping short of prescribing a specific alternative to an income tax, it acts as an important piece in the mosaic of economic analyses that we’re building here at the Show-Me Institute.

Also be sure to listen to Missourinet’s brief interview with economist Joe Haslag, of the University of Missouri-Columbia. Haslag is now the Show-Me Institute’s director of research, and his comments are perceptive as always.

The Odds of Education Reform

Posted on by Sarah Brodsky

There are lots of ideas out there about how to improve education. Some are wackier than others. This article in the New York Times reports on some students and a professor at Harvard who think kids should be encouraged to play poker starting in sixth grade. A student explains the benefits:

“I see poker as one tool to develop the kind of cognitive abilities that a lot of people don’t seem to be developing on their own, whether because those skills aren’t taught effectively in school or because they’re not learning it from their parents,” Mr. Woods said. So many of his Harvard Law classmates were or had been serious poker players, he said, “that I had to wonder what role poker played in all of us getting here.”

How does poker achieve this success, you might ask? The poker advocates note that the game is "probablility-based" and "requires risk assessment" (a fancy way of saying it’s a form of gambling). Don’t get me wrong — I have no problem with teachers occaisonally using games of chance to demonstrate math concepts — but these claims about poker sound far-fetched. I think Mr. Woods is confusing correlation and causation. I too knew lots of people in college who played poker, but I doubt it had much effect on their SATs. Poker is popular right now with young, upper-class people who go to private universities like Harvard. Thirty years ago it was bridge. Those games don’t cause students to do well. They’re just an indication of socio-economic status.

Cell Phone Tax Windfall Is Another Reason to Roll Back Tax Rates

Posted on by David Stokes

The Post-Dispatch reports that AT&T has agreed to settle the lawsuit brought by cities for back taxes from cell phone bills:

The proposed agreement with more than 300 Missouri municipalities could end six years of litigation between AT&T Mobility, a division of AT&T Inc., and the cities’ gross receipts tax.

This is on top of previous settlement agreements with Verizon and US Cellular. Here is a link to the list of cities and how much they are getting from AT&T alone. Courtesy of Senator Mike Gibbons, here is a list of cities within St. Louis County that did not roll back their tax rates in response to reassessment this year, because they were below the authorized cap.

If your hometown is on both lists, you should consider asking them some serious questions about why they are receiving more money from reassessment, along with this cell tax windfall, and still not rolling back tax rates.

What’s It Worth?

Posted on by Sarah Brodsky

Thanks go to Combest for linking to this silly news report about "price-gouging." The Missouri Attorney General’s office is warning us to watch out for it. Here’s a quote:

Several businesses including hotels, a gas station and a hardware store settled claims they charged customers more than market value for their goods and services following January’s ice storm.

What do they mean by "more than market value"? If some people are willing to sell and others are willing to buy at a price, then that is the market price. This reminds me of one of my first econ courses, in which I had to read Aristotle and other ancients, who thought goods had several different values: the price they sell for, how useful they are, their intrinsic goodness, etc. I guess defining value is an interesting philosophical question, but since philosophers haven’t solved it in a few thousand years, I doubt the Missouri Attorney General will make much progress before the next ice storm.

We don’t want state officials fixing the price of goods for us, especially in times of shortage like right after storms. That’s so former Soviet Union.

A Disappointing Article on Hazelwood

Posted on by Sarah Brodsky

The Post-Dispatch usually publishes balanced articles about education issues, but this is really disturbing. The article reports on "white flight" from the Hazelwood School District and predicts the district’s decline, all because of the skin color of the students:

The problem is that whites are leaving the district in droves as blacks are moving into it. They are leaving despite schools that are meeting most state performance standards, despite that the blacks moving in are mostly middle- and upper-middle-class, and despite attempts by Clark-Jackson and other administrators to talk them into staying.

And historically in this region, when white flight has occurred, school districts have failed.

Well, there could be many factors at play here. The whites may be moving to districts that do better than Hazelwood on the state tests. It’s true that "white flight" has often preceded (or coincided with) districts’ declines, but if there’s any causal relationship it must have something to do with socioeconomic composition. The article states that the new residents are "mostly middle- and upper-middle-class," so why is this case of "white flight" a problem? Surely no one thinks white people improve school districts with some magical property of their skin color!

The aspect of this article that is most offensive is its labeling of nearly everyone quoted as black or white (in some cases even specifying whether one parent is black), as though people’s opinions about school district quality can only be understood in the context of their race.

The article is so fixated on race that it overlooks other reasons residents might want to leave. For example, it mentions as an aside that Hazelwood still doesn’t meet state standards in graduation rates and college entrance exam scores, two crucially important indicators of district performance. Maybe Hazelwood’s poor academics, rather than racial animosity, drive long-time residents away. The district should focus on improving instruction and graduating more students, instead of counting students by skin color.

City Manager on Hot Seat in Kansas City

Posted on by David Stokes

Did you know that Kansas City is one of the largest cities in the United States that has a city manager and makes use of the council-manager form of local government? (I did, but I get paid to know things like this.) The Kansas City Star is reporting that Mayor Funkhouser has chosen not to renew the contract of City Manager Wayne Cauthen. Now, I am not going to touch the politics of the situation. No, my role here is much, much more boring. I am going to use the controversy to segue into a discussion of city managers, which is known in media terms as a "hook," although successful "hooks" generally don’t involve heavy use of the term "city manager."

I searched but was unable to find a list of the largest cities in America that use a city manager. Kansas City has to be right at the top, though, making Mr. Cauthen sort of a star in the industry. Cincinnati is well-known for being a forerunner in this form of government, but most large cities, like St. Louis, still use the more well-known mayor-council form. The job of city manager is also notoriously unstable, as Mr. Cauthen is seeing right now.

38 cities in Missousi use the council-manager form of government, including my home of University City. The essential points of this system are that the elected mayor and city council leave the day-to-day operations of the city to the manager, usually someone with a background in government and degree in a related field like urban planning. The mayor and council then focus on the larger issues, and give final approval to those decisions of the manager that require legislation, such as contracts. One rule often held in council-manager cities is that it is improper for the elected officials to contact municipal employees directly — they must go through the city manager. Often, the single most important decision a council makes is whom to hire as city manager.

Approximately 150 Missouri cities use the closely related city administrator form of government. This form is used in cities such as Kirkwood, Arnold, St. Charles, Jefferson City, Chesterfield, and Raytown. In this form, the mayor and council appoint a professional city administrator to run the city, but the mayor and council retain more control of certain operations. In reality, the daily jobs of city managers and city administrators are very similar, but city managers rank higher on the occupational totem pole.

I have generally been very impressed by the people I have met who are city managers and administrators. In my opinion, the key to the job is not falling too much in love with government itself, and to recognize and accept the limits of what government can do. In most cities, the city manager or administrator is extremely powerful, because part-time elected officials just do not have the opportunity to know everything there is to know. This is, of course, sort of the point, but if the city manager or administrator falters, it may take awhile for the council to become aware of it. Something like that happened in Crestwood a few years back, if I recall correctly.

I have no idea what will happen to Mr. Cauthen in Kansas City. In the larger cities that use city managers, like KC, and have full-time mayors, it is no doubt imperative that they be able to work together. I would love to see some type of city manager system brought to St. Louis, but I might as well wish for Microsoft, Exxon, and the Bank of England to relocate here while I am at it, for all the good it will do.

Personal Property Taxes, Those Lexus Christmas Ads, and Free Tax Advice

Posted on by David Stokes

It is that time of year again when Lexus starts trumpeting its Christmas sales event. To those of you out there who are actually considering buying a car for Christmas, I must tell you that if you live in Missouri, DON’T. In fact, from a tax perspective, buying a car for Christmas is about the dumbest thing you can do.

The reason is simple — if you wait just one week to make the purchase in January, you can save a lot of money in personal property taxes. Now, Lexus knows this, which is why the sale is extended to January 2. Not all states have personal property taxes, so you Illinois readers can car shop on Christmas Eve all you want. But in Missouri, the law states that you pay personal property taxes on vehicles you own as of January 1.

So if you buy a car for Christmas in December of this year, the personal property taxes on the new purchase will be due December 31, 2008. If you merely wait until January 2, 2008, just one day after Mizzou beats Arkansas in the Cotton Bowl, to buy the new car, you will not have to pay personal property taxes on the new car until December 31, 2009. The personal property taxes you pay at the end of 2008 will be for the car you are presumably trading in for the new Lexus. And that car being traded in will almost always have substantially less in taxes due on it, as personal property taxes are set by Blue Book value.

Here is some additional good advice if you are considering making some sort of purchase with an enormous red bow around it. And also, in assumed compliance with some regulatory law somewhere, I should probably tell you I am not a CPA.

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