The St. Louis County Budget

Posted on by David Stokes

The St. Louis Post-Dispatch recently ran an article on St. Louis County’s budget situation that was lacking, in my opinion. St. Louis County is trying to address a $40 million budget shortfall, and the article quotes county budget director Paul Kreidler and other county officials about the current predicament. This is the 2023 budget, and they are claiming that financial hits from 15 years ago and Missouri’s Hancock Amendment are some of the causes of the county’s shortfall. As the article puts it:

And it’s [the Hancock Amendment] one of the reasons St. Louis County’s budget situation looks so dire, county officials say.

The [Hancock] amendment forces local governments to adjust their property tax rates to avoid excess revenues. When the county saw a sudden increase in assessed property values around 2007 and 2008, it couldn’t collect the windfall. . . . Then sales tax revenues also plummeted because of the Great Recession—about 10% of revenue from residents buying cars and shopping vanished.

As to the part about not being able to collect the property tax windfall, I hardly know where to begin. First of all, the reassessment process is not and never was intended to lead to tax increases (although it often does). Requiring tax rates to roll back is a good thing and should be more strictly enforced than it is. But in fact, St. Louis County government (and many other local governments) are getting just such a windfall this year from increased personal property taxes (which are exempt from rollback rules). St. Louis County will get almost $4 million more in revenue this year simply due to used cars increasing in value.

I also disagree with the article’s statement that the county “couldn’t collect” the windfall in rising home values. Over the past decade, total assessments in St. Louis County have increased 29%, with the bulk of that being home values. During that period, property tax rates have only been reduced by 10%, leading to a 14% increase in total property tax collections over the past decade. As for the “sudden increase” the county experienced in 2007 and 2008, the county did not lower its tax rate in those years. So, it did enjoy the benefits of the increase! (See page 167 in this CAFR.) When the county did lower the tax rate in 2009, it only lowered the debt rate, not the general fund rate. When assessed valuations started to fall in 2009, the county could have raised its property tax rate without a vote of the people to offset those losses, but it chose not to do that. Maybe they should have, and maybe they shouldn’t have, but the Hancock Amendment didn’t prevent St. Louis County from taking such action.

That 14% increase over the past decade does not include the current car-tax bonanza, and next year’s reassessment is likely to be substantial given the large increase in home values seen in 2021 and 2022. Yes, home values have leveled off the past few months, but assessed valuations will be set as of January of 2023, so any real decline in 2023 will not be captured. Combine that with the high inflation rates that local governments will use to reduce their rate rollbacks, and next year is likely going to be very expensive for taxpayers.

St. Louis County’s elected officials can ask taxpayers for a property tax increase at any time. Just because politicians don’t want to ask that, or voters may choose not to approve it, does not mean that the Hancock Amendment is a problem for local government. It is anything but. Just look at what has happened in Kansas City, where the school district is the only local government exempt from Hancock rollback rules. Assessments have skyrocketed in recent years, and taxes have not decreased at all in the Kansas City school district. That’s the reality without the Hancock Amendment, and it’s one I’ll pass on.

 

Note: The original version of this blog post incorrectly stated that the decrease in sales-tax revenue during the Great Recession was less than the approximately 10% that the county claimed. However, county’s figure (as reported in the Post-Dispatch) was correct. I had overlooked a sales tax increase approved by the voters during that period that accounted for the difference.  I thank Paul Kreidler from the St. Louis County Budget Office for pointing out my mistake.

 

What’s the Rush, Chesterfield?

Posted on by David Stokes

Chesterfield leaders have scheduled a special city council meeting for Wednesday, December 14, to vote on (and likely approve) the $300 million-plus subsidy for the Chesterfield Mall (and surrounding area) tax-increment financing (TIF) plan. The special meeting is unusual and likely relates to reports I have heard from multiple places that the proposal has to be done in 2022. These sources indicate the developer is behind this push.

In most instances, the timing of the TIF project would not matter. It would start when passed by the TIF commission and city council and last up to 23 years from that date. But apparently, it really matters here, as the special city council session indicates. Why?

Probably because the work on the project has already begun, and if the work has already begun, there is risk of the property being assessed at a higher value in the looming 2023 reassessment cycle. If it is assessed at a higher value, that limits the size of the tax subsidy available. Don’t get me wrong, it would still be an enormous TIF project, but hey, every few million dollars counts.

Of course, the fact that the work has begun before the TIF proposal is finalized is important, because the justification for this abomination of a TIF project is that the area is “blighted” and that the project would not happen at all “but for” the tax subsidy. It is hard to claim that it would not happen “but for” the subsidy when construction has already started before the subsidy is approved, but this appears to mean nothing to Chesterfield, the St. Louis County TIF Commission, and the various planners and lawyers who are all in on the tax subsidy largesse. (See appendix C of this document for the relevant affidavits.)

There’s another way to interpret construction starting on this project before the money was even approved. The developers were so confident that the TIF commission and the Chesterfield City Council would approve the money that there was simply no need to wait. This attitude, if true, would conform with the broader subsidy culture in our state, where local governments often just rubber stamp tax subsidy requests.

Will the city further contort itself to do the bidding of the developer and get this all approved before 2023 when the reassessment clock will strike midnight? Or will the city protect taxpayers and the other affected taxing jurisdictions, such as the Parkway and Rockwood school districts, by dealing with the reality that the developers used the system to extract taxpayer money for a project that never needed subsidies to begin with?

Missouri vs. Tennessee: An SEC Showdown

Posted on by Avery Frank

A month ago, the Missouri Tigers rolled into Neyland Stadium to face the high-flying Tennessee Volunteers. While the Tigers should definitely be taking notes from Tennessee on how to run an elite offense, there is also helpful policy Missouri should bring back from Knoxville: a comprehensive teacher evaluation system.

The Tennessee Educator Acceleration Model (TEAM) was implemented in 2012 with the goal of providing educators with a model that helps them continuously improve their practice. By using announced and unannounced in-class observations, academic growth data, and student performance data together, TEAM calculates a teacher score (1–5 scale) and allows teachers and school leaders to have an ongoing dialogue about how what happens in the classroom impacts student performance.

In 2011, student performance in Tennessee was lagging behind Missouri. In 4th grade mathematics and reading, Missouri was 7 points and 5 points ahead of Tennessee on the National Assessment of Educational Progress (NAEP). In 8th grade math and reading, Missouri was 8 points ahead. In 2022, Tennessee is now 4 points and 1 point ahead of Missouri in 4th grade math and reading and tied in the same subjects for 8th grade. While TEAM is certainly not the sole reason for this rapid growth (as a plethora of free-market policies have been implemented), Tennessee education researchers regard this system as beneficial in refining the Tennessee teacher pool.

Show-Me Institute researchers have repeatedly demonstrated how teacher quality is one of the most important factors for improving student performance, and TEAM allows for more informed hiring decisions and growth in teacher’s skillsets. By assisting teachers in developing their full potential, and showcasing high-scoring teachers, TEAM allowed for teacher quality to improve by coaching less-effective teachers and retaining high-quality ones. This is not simply theoretical; lower-performing teachers were more likely to exit Tennessee public schools, and stronger teachers were more likely to be retained.

However, TEAM is not simply a hiring and firing tool for schools, but more importantly, it’s an improvement system that helps coach teachers to enhance their skills and strategies. Through individual observations and one-on-one pre- and post-lesson conferences, an outside observer identifies key strengths from their lessons and asks teachers to self-analyze. Asking questions such as, “When developing lessons, how did you decide on the pacing so sufficient time is allocated to each subject?” allows teachers to reflect on their own strategies and brainstorm areas to improve. These evaluations work; teachers in schools with more robust TEAM evaluation systems (frequency of observation, number of evaluators) improved their students’ math scores faster than those with less robust systems.

Missouri teachers have expressed discomfort with increased accountability programs, but they need have no fear. Tennessee teachers certainly had reservations when TEAM was introduced with only 28 and 38 percent of Tennessee teachers believing that TEAM would improve student performance and teacher performance, respectively. Now those numbers have reached 71 and 76 percent.

It’s understandable that some teachers may have reservations about increased scrutiny on job performance—many may feel the same in their own jobs. In Tennessee, teachers are improving, the best teachers are staying, and teachers believe in the system. This evaluation system is one we should emulate, and we cannot let fear interfere with providing our children with the best education possible. Too much is at stake.

Lead Us into Battle for Academic Development

Posted on by Avery Frank

I still find myself thinking about the Missouri Commissioner of Education’s vague comments following Missouri’s dismal scores on the National Assessment for Educational Progress (NAEP). To paraphrase the quotes: The poor scores are an indication that high-quality instruction matters, and we need to continue accelerating post-pandemic learning.

If we are in a hypothetical war with low test scores, Missouri’s Department of Elementary and Secondary Education’s (DESE) actions do not effectively inspire me to charge up the hill. We need our leaders to formulate concrete strategies and implement real changes to improve our education system. For an example, look no further than Tennessee Governor Bill Lee, and the Tennessee Commissioner of Education, Penny Schwinn.

Policy is guided by leadership, and Tennessee’s education-focused leadership has instituted free-market policies that would help Missouri students succeed.

Parental rights are paramount in Tennessee. New laws were enacted in 2021 for curriculum transparency and 2022 for protection against inappropriate materials in school libraries and classrooms. Show-Me Institute analysts have advocated for a parental bill of rights in the past, although Missouri failed to commit to this idea in the past legislative session.

Governor Lee has stated that: “We can fund public schools and provide alternate opportunities for children at the same time if we are committed to funding students and not systems.” In early 2022, Lee pledged to add $1 billion to education initiatives, including teacher salary raises (tied to accountability measures), increased funding for 110 statewide charter schools (in Missouri, about 60 charter schools exist and they are located exclusively in St. Louis and Kansas City), learning initiatives (e.g. new phonics program), and career and technical programs. This increased funding was conditioned on changing the state’s 30-year-old funding formula.

This past session, Lee’s pledge was fulfilled, as a bill with the additional money and the changes to the funding formula passed. Tennessee’s education funding is now calculated by student, not by system. Under the new formula, per-pupil expenditures are set at a base level of $6,870, and then additional funding goes toward individual student needs: special education funding, personal tutoring, or helping disadvantaged kids in rural and urban areas, as a few examples. This type of “backpack funding” assists schools that serve students with additional needs, helping districts and teachers. This type of funding system also helps pave the way for the expansion of comprehensive school choice, as parents who choose a new school for their children more easily have their funding follow them to their institution.

The actions of Tennessee’s leaders are generating results. Missouri used to be far ahead of Tennessee in terms of academic achievement. In 2011, Missouri scored about 8 points better on the NAEP in every category. Tennessee is now (as of 2022) four points ahead in 4th-grade mathematics, one point ahead in 4th-grade reading, and tied in both 8th-grade reading and mathematics. Missouri leaders could learn a lot from Tennessee.  We need concrete action, not just vague rhetoric about the problems in Missouri education. If something doesn’t change soon, Missouri students will end up getting left further behind.

Some Thoughts on “Pre-Filing Eve”

Posted on by Patrick Ishmael

For many of us, the beginning of December marks the beginning of the Christmas season, kicking off a monthlong period of mirth and Mariah Carey music. From Bing Crosby to Justin Bieber, the sound of December feels simultaneously old and new, ushering out one year and ushering in another.

But December 1st is also an important day for the legislature. That’s because it’s the first day legislation can be submitted for consideration before the chambers reconvene in January. Known as “pre-filing,” the process generally signals what the top priorities are going to be for legislators in the next legislative cycle—with the fastest filers getting the lowest-numbered bills and the sometimes dubious bragging rights of being the first to bring policy ideas to the legislative table.

What will be in the queue? In no particular order, here are some of the ideas that have been getting a lot of talk this fall and will probably be hot topics when the legislature reopens in 2023:

  • Open enrollment is the idea that students in the state should, in some form or fashion, be able to enroll in a public school outside their home district. It appears that this will be a major priority in the House. My colleague Susan Pendergrass has talked about the issue at length, and it seems like she will probably do so again in the upcoming session.
  • The Missouri Parents’ Bill of Rights, or MPBR, looks likely to make a comeback. The bill would guarantee parents a stronger role in their kids’ education and require curricular transparency from schools and districts that currently doesn’t exist.
  • School board reform has been a popular topic of legislative debate during the break, including potential changes to when elections are held and transparency around who board members are and how they can be contacted by the public.
  • Lastly in education, there may be a push to clarify who can participate in girls’ sports.
  • The corporate income tax made a cameo in this fall’s special session, with a cut to the tax being stripped at the last minute from the individual income tax legislation that eventually passed. With a regular legislative session afoot, a push to cut or even phase out the corporate income tax appears likely. As with the individual income tax, I am a strong supporter of the reduction and elimination of the corporate income tax and am looking forward to hearing that debate in 2023.
  • Property tax reform and changes to the Hancock Amendment will likely receive an outsized amount of debate, especially in the House. Both deal with the size of government and the tax burden government can impose.
  • There also appears to be interest in the Clean Slate Initiative both inside the legislature and outside it. National organizations appear primed to get involved with a push to expunge certain criminal records, with conditions, to better integrate former inmates back into society. The exact language of the proposal remains in flux, but when it’s finalized, I’ll definitely weigh in on it.

‘Tis the season for policy. Let’s hope it’s a good one.

Columbia Still Making Simple Things Complicated

Posted on by David Stokes

Columbia city government is taking additional steps toward finally solving a problem of its own making. After rescinding the city’s absurd ban—yes, it really was a ban—on trash roll carts (The horror! A roll cart!) the council is now considering getting rid of the equally ridiculous requirement that residents only use city-approved trash bags with a city logo on them. Requiring the logo prevents you from simply buying trash bags when at the store like everyone else in America does. (Yes, I get that certain stores sold the special bags, but I mean, you know, any store. We’re talking trash bags here, not Rembrandts.)

If Columbia gets rid of the special logo-only trash bag rule (I can’t believe I just typed that phrase), Columbia will be well prepared to do an amazing thing: to collect trash just like most other cities in Missouri do, by having people put the roll cart out on the street once a week and go pick the trash up. It really is that simple. Recycling rules, weight limits on bags, and special days and fees for more/oversized trash can still apply, but watching Columbia make an overly complex mess of its trash system has been painful the past few years. Sure, it’s been a bountiful topic for think-tank pundits like me and radio talk show hosts, but that doesn’t mean it’s good for everyone.

Once it adopts roll carts, Columbia can take the next logical step and contract out the entire trash service to the private sector, just like many other cities already do. Then I can finally stop talking about this issue. (But I probably won’t; I like it too much.)

How Easy Is It to Commute KC without a Car?

Posted on by Patrick Ishmael

The Kansas City Star has an interesting article out today that looks at something called the “Green Commute Challenge,” a now-14-year-old program that encourages Kansas Citians to take six weeks to use alternative forms of transportation in an effort to be more environmentally conscious. That includes bikes and scooters, of course, but for a city like ours that is now entering the winter months, covered transportation like the city’s buses and streetcar are of the most interest to me. And assessments of the city’s public transit system by regular users present a mixed bag, at best.

In October, RideKC buses served just under one million riders, while the streetcar served around 142,000 riders, according to city data. Less than 3% of workers in Kansas City, and 1% in the metro, use the bus to commute. [Emphasis mine] Earlier this year, Kansas Citians told the Star that there was a lot they love about RideKC, but infrequent or unreliable service and too few routes can make the system difficult to count on.

“It’s really a 50/50 for me,” rider Aaron Griffin told the Star over the summer. “Sometimes it’s good and on time, other times it’s late or early and leaves before it should. Every day is different.”

The article has a lot of really interesting reactions from Challenge participants this fall, and as someone who used public transit heavily at different points in my life, I can relate to many of the cheers and jeers of their transit experiences shared with the Star. Of course, your mileage may vary on the purpose of a “green” initiative like this, but in practice, the challenge also serves as an insight into the challenges that Kansas City’s physical layout can present to people without their own motorized transportation.

From the perspective of affordable housing, which we’ve discussed previously, widely available public transportation can be a mitigating factor to rising apartment and home prices, bridging the space between Kansas Citians and their jobs, their families, and their friends if their affordable housing is comparatively distant. Notably, Kansas City has adopted a zero-fare initiative for its buses that will run through 2023, so one hopes that people on fixed or very limited incomes are able to take that factor into account as the look for housing that meets their financial needs.

But as the article teases out, unreliable transit that’s free is almost as good as no transit at all – especially if it means you can’t get to your place of employment reliably and on time. It goes without saying that if your poorest residents are reliant on a public system that could get them fired because it’s unreliable, that’s a system that needs to be dramatically improved to ensure the buses at least arrive and depart on time.

That also means there remains an economic incentive for even low income Kansas Citians to buy a car of some kind, “green” or not. For good reason: the City of Fountains was and is built around the automobile. Only two other cities in the country have lower traffic volume per lane mile as Kansas City, meaning residents who choose public transit don’t do it to avoid gridlock on the roads that could be caused by private vehicle ownership. That fact also undermines any traffic-busting reasoning around fixed rail projects like the city’s streetcar, which continues to be more of a tourist attraction and an oddity than a practical means of transit for locals.

Whatever the reason one might choose to use KC’s public transit system—whether it’s to “go green,” to save money relative to car ownership, or because it’s one’s only viable transportation option—there remains the question of whether it’s a reasonable option for most people here. While public transit serves as a backstop for poorer residents, it isn’t necessarily a very good one, and its appeal to other potential riders is meager. Indeed, the car is still king in Kansas City, and will be for the foreseeable future.

Welfare Reform or Welfare Expansion?

Posted on by Maria Rivero

St. Louis City Mayor Tishaura O. Jones wants St. Louis to join a growing list of American cities that have started experimenting with “guaranteed basic income” programs. Her administration hopes to use $5 million from federal pandemic aid to establish this program and fulfill her promise to tackle poverty.

Welfare programs often create perverse incentives regarding work; recipients don’t look for jobs due to the risk of reaching a level of income that would cause them to lose access to the welfare program. Because of this problem, welfare programs can exacerbate the poverty problem they are intended to fix.

Politicians have floated the idea of a universal basic income (UBI) many times as an antidote to the incentive problems welfare programs tend to create. Andrew Yang made it a prominent plank in his 2020 presidential campaign, promising to give out $1,000 per month to every American adult if elected. Since UBI offers every single person (rich and poor alike) a certain amount of money per month, no strings attached, its proponents argue that it wouldn’t create an incentive against working.

Some free-market economists have argued that the replacement of welfare programs with UBI could reduce the bureaucratic power of government—the state would have less of a say over how people choose to live or spend their money. Charles Murray emphasized replacement as a key feature of UBI implementation:

The first rule is that the basic guaranteed income has to replace everything else — it’s not an add-on. So there’s no more food stamps; there’s no more Medicaid; you just go down the whole list. None of that’s left. The government gives money; other human needs are dealt with by other human beings in the neighborhood, in the community, in the organizations.

For UBI to serve as a tool that helps low-income individuals while increasing government transparency and decreasing state paternalism, it must be accompanied by a complete overhaul of how the welfare state currently functions.

The proposal put forward by the City of St. Louis disregards all of the wisdom stated above. First, the incentive problem that UBI tries to address is mostly ignored in the guaranteed basic income (GBI) program. Recipients of the “free” money must fall at or below a certain mark of the poverty level, which could create an incentive against working. Second, the proposed GBI program would not replace other social welfare programs. A spokesman for Mayor Jones expressed that one of the administration’s priorities is to ensure that the GBI program does not force its recipients off other government benefits, such as food stamps, for fear that it “might leave residents worse off.” In other words, Mayor Jones is not looking to reform the current welfare programs in St. Louis—she is hoping to establish another one.

Additionally, this proposal does not address concerns about the future sustainability of such a program. Mayor Jones proposes using money the city received from the federal government in pandemic aid to pay for the program. Once the $5 million is handed out, how does the city plan to keep funding this program?

If the mayor really wants to help low-income individuals, how about using the $5 million to improve the bus system that has seen massive service cuts in recent years? The reductions in bus lines have negatively affected many low-income individuals who rely on buses to get around St. Louis.

In any case, countless problems accompany the program Mayor Jones proposes. As tends to be the case in public policy, closer attention to incentives and to future financial viability could help the City of St. Louis craft proposals that would better serve the poor of St. Louis.

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