The Best-Laid Plans …

Posted on by Sarah Brodsky

Bringing preventive health care to poor Missourians is a laudable goal. But going through health insurance is the wrong way to do it:

The Insure Missouri plan, which would allow qualified participants to sign up for a number of private health insurance plans, would cost $631.2 million by fiscal 2010 and be funded through a combination of state funds and federal money that goes to hospitals to help pay for indigent care.

The purpose of health insurance is to protect your other assets, such as your house, so that you don’t lose them if you have unexpected medical expenses. It’s not meant to pay for routine preventive care. When we make people pay for routine expenses through insurance, insurance becomes more expensive for everyone.

So why are politicians always trying to sign people up for insurance? Robert Fogel explains in this book that taxes on insurance create an incentive for lawmakers to expand insurance programs. Governor Blunt seems to have fallen into that trap.

Decision Time for Clay County Taxes …

Posted on by David Stokes

The Clay County Commission meets this afternoon to decide what to do with its property tax rate. One option on the table is to do nothing. The Kansas City Star has the update.

Here’s a quick recap: Several years ago Clay County decided to rely on sales taxes only (very cool); some cities and road districts sued, claiming the county still had to fund certain transportation projects through property taxes; a judge agreed with the road districts and ordered Clay County to fund them (all my writing on this has assumed that the judge made a correct and appropriate decision). Now, the Clay County Commission is trying to decide if it should: a) attempt to continue funding the road and bridge improvements, as ordered, through a higher sales tax to be approved by voters; b) set a property tax low enough to cover only the ordered road funding; or, c) set a higher property tax and end the experiment of relying only on sales taxes. There, I think I summed that up pretty well! From the Star:

"An outside auditor is recommending the county set aside as much as $6.1 million from its 2008 general operating budget to pay money it will owe for road and bridge maintenance, Barton said."

I think that "a" and "b" are both fair and reasonable options. But if the citizens of Clay County wish to continue their sales tax plan, as it appears they do, than "a" is the best option. However, if the commission decides to go with "a," and then the people of Clay County reject a higher sales tax at the balllot to pay for the road and bridge funding, then Clay County could be in serious financial straits.

While I think the voters of Clay County can be trusted to make a financially responsible decision, especially since many people from outside the county would help them fund road improvements via a higher sales tax, the possibility of a rejection and the resulting serious financial situation must be at least considered. It will be very interesting to see what Clay County decides.

As I said before, I think the county commision should be commended for trying very hard to respect the will of the citizens and keep the local tax rates as low as possible, while still meeting all its fiduciary responsibilities. I look forward to its final decision…

Choice Against the Odds

Posted on by Sarah Brodsky

Here’s a moving story in the Post-Dispatch about a girl who’s had to work hard to attend private schools:

Jeleesa had wanted to be a lawyer. Cole opened the phone book and started writing letters. She figures she sent one to every law firm listed. Then she wrote to companies — big ones, like Monsanto, the former Ralston Purina Co., and Anheuser-Busch.

Cole’s life became a hunt for connections. She scribbled names on scrap paper at meetings, at work, at school. She came away with lists of charities, foundations and businesses. She tracked down the Knights of Columbus, Catholic Charities and even pro football players.

Low-income families shouldn’t have to work as full-time fundraisers just so their kids can get a high-school education. But the positive side of this story is that it shows how beneficial parental choice can be. When Jeleesa had to improve her grades in order to stay at her new private school, she excelled beyond everyone’s expectations.

A 50 Basis Point Cut? Try 50,000 …

Posted on by Justin Hauke

Yesterday, Attorney General Jay Nixon and several legislators called for reform to Missouri’s payday loan industry, arguing that it engages in predatory lending practices targeted at uniformed consumers. As evidence, Nixon cites the fact that Missouri lenders charge an average APR of 422 percent on payday loans, with some companies charging as high as 1,950 percent.

Nixon would enact legislation to cap payday loan interest rates at 36 percent and eliminate the practice of renewing outstanding loans, a practice that consumer groups argue traps borrowers in a vicious cycle of spiraling debt.

I have no doubt that some payday lenders engage in morally questionable lending behavior, but capping the rate of interest is not going to solve this problem. Consumer interest rates are primarily determined by credit risk, and if the Legislature caps the rate at which lenders can charge interest on their loans, lenders will be forced to issue fewer of them. And since payday loan consumers have the highest risk of default, they are the people most likely to be priced out of the market.

Moreover, it is likely the case that if borrowers are in such desperate financial straits as to borrow money at a rate of 1,950 percent, they will find a lender — whether legally with a payday lender, or illegally in the black market. And at least with a payday lender, default is settled by foreclosure on some kind of collateral. In the black market, it usually involves a crowbar.

In short, payday loan reform is one of those “feel good” legislative issues that does little to fix the problem it is targeted to address. If legislators are concerned with predatory lending practices, they should work to increase consumer education, rather than pricing consumers out of the market entirely, forcing them to obtain funds under much worse conditions. Capping the rate of interest is simply bad policy.

Saint George: Symptom of a Larger Problem? Or Is It a Smaller Problem?

Posted on by David Stokes

Traffic ticket hotspot St. George, Missouri, is still on people’s minds after that ugly incident with the police officer last week. Charlie Brennan has been talking about it a lot on KMOX, and today the Post-Dispatch ran an interesting article on the problems small police departments can have. Here’s a key statement of interest to me in the article:

St. Louis County alone has 64 departments among its 91 municipalities. Only Cook County, Ill. has more departments in one county.

Cook County has five times the population of St. Louis County, by the way, and not too many more municipalities (about 130 to 91). By my nature, I am inclined to strongly prefer small government, but at some point it just gets ridiculous — and 91 municipalities and 64 police departments in one county is more than ridiculous. The amount of unnecessary tax money we spend on redundant positions, the amount of bull$&!t tickets written by small police departments to finance city services, the ability of tiny cities to throw a wrench into major transportation projects for the entire area, like Westwood almost did with Conway Road and I-64 … at some point, small government becomes too small.

I admire Jackson County, with its 18 municipalities — including Kansas City. I also like the parts of unincorportated St. Louis County, where over 300,000 people live without a city government and the county does a fine job of providing services at lower tax rates than most nearby municipalities do. I don’t want state mandates to force consolidation, although that would not be terrible. What I want for is the residents of these tiny cities, with their own police forces, to just disincorporate on their own.

Let’s keep the largest 40 or so towns in the county, and even allow them to grow via mergers. At some point, though, we need to have fewer St. Georges and Velda Villages in St. Louis County.

I Was Honored To Meet Wendell Cox Last Night

Posted on by David Stokes

I had the great honor of meeting Mr. Wendell Cox yesterday evening. Mr. Cox is an international expert on issues of land use, transportation and mobility, property rights, and the housing market. We spoke for about an hour and he was just terrifically interesting, fun and friendly. He is affiliated with dozens of think tanks around the country, and, since he lives in the St. Louis area, we here at the Show-Me Institute look forward to having an opportunity to work with him on issues of mutual interest. I encourage everyone to check out the websites he operates, which have voluminous information on all sorts of issues.

Gasp! People Actually Move to Low-Tax States!

Posted on by David Stokes

File this article under "Like we said …" The Kansas City Star had an article last week about the fact that people really do move from high-tax states to low-tax states. The point of the article is more "How to do it and avoid an audit," but here at the Show-Me Institute we have already pointed out the benefits of repealing Missouri’s income tax. In fact, this story uses the same expert we did:

It isn’t clear how many people move exclusively or mainly for tax reasons. But from April 2000 through June 2006, there was a net migration of 2.3 million people moving from states with income taxes to states with no income taxes, an average of more than 1,000 people moving per day, says Richard Vedder, an economics professor at Ohio University in Athens, Ohio, based on an analysis of census data.

If Missouri were to enact some combination of long-term spending restraint and sales-tax increases, we could eliminate the income tax in our state without major cuts to government services. Combine the absence of a state income tax with our very affordable housing markets (see p. 31), and Missouri could truly become a magnet for Americans looking to move.

But why would we want that? We wouldn’t even know where all these new people went to high school …

Clay County Tax Decision Awaits …

Posted on by David Stokes

As best I can tell, Clay County will decide tonight as to their tax rate for 2007. At least, it is on the agenda, although it could of course be tabled to be acted on at a regular meeting rather than a work session. Every local council runs slightly differently, so I don’t know exactly how they run things there. That aside, the Kansas City Star published a good editorial last week calling on Clay County to let the voters decide whether they want to choose between continuing the sales-tax-only system via increasing sales taxes to meet the new road demands, or reinstituting a property tax. If the road and bridge demands on the county, coming out of the recent lawsuit, can be met by a moderate increase in the sales tax, than I agree that should be given very strong consideration — as opposed to reinstituting the property tax.

The citizens of Clay County have elected to try something very interesting in choosing to rely only on sales taxes to fund county services. The county should do all it can to continue that decision.

It will be interesting to see whether any other counties elect to go that route. The county in the Saint Louis-area for which this plan might make the most sense would be St. Charles County. They have plenty of retail outlets in St. Charles to, perhaps, make it work. Somebody in St. Charles government should run those numbers. Perhaps I will — should I get just stupendously bored one day.

Great Moments in Film-Related Think Tank History, Part 1 (Probably of 1)

Posted on by David Stokes

So, my wife and I are watching the all-time classic Say Anything this weekend when I heard something I never realized before, probably because I didn’t work at a think tank when I saw the movie before. Anyway, as this is one of my favorite movies, and one which I sometimes reference (will not waste time searching for a past reference — we unfortunately don’t catalogue our posts by "pop culture allusions"), it was cool to hear that the fellowship that school valedictorian Diane Court was going to London for was, to quote her dad, "an international think tank." Pretty neat, huh?

The other highlight of seeing the movie again was catching a very young Ari Gold as one of the characters hanging out at the Gas ‘N Sip trying to get Lloyd to go to a kegger with them. "Bitches, man!"

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