Susan Pendergrass is joined by Elias Tsapelas, director of state budget and fiscal policy at the Show-Me Institute, to break down the sweeping new federal legislation known as the “One Big Beautiful Bill.” They discuss what it really means for Medicaid recipients, food stamp programs, state budgets, and Missouri taxpayers.

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Timestamps

00:00 Understanding the One Big Beautiful Bill Act
06:44 Medicaid: Changes and Implications
11:23 SNAP Benefits: New Regulations and Effects
14:18 Tax Implications for Missourians
19:09 Future of Medicaid and State Budgets

Episode Transcript: Understanding the One Big Beautiful Bill with Elias Tsapelas (Download Here) 

Susan Pendergrass (00:00)
Okay, here we go. You ready? Elias Tsapelas, we are going to talk about IT—the big IT—the One Big Beautiful Bill Act. I don’t feel like I understand it. I suspect there’s a lot of people reading the news that don’t understand it, but you seem to understand a lot of it. So thanks for coming to talk to us about it today.

Elias Tsapelas (00:19)
No problem. I think there’s a lot of misconceptions, especially about what’s happening with the welfare programs in the bill. So I’m happy to dive into those.

Susan Pendergrass (00:27)
Yes, yeah. I’ve definitely seen claims that this is going to basically strip health care from millions and millions of people and that kids will be hungry. And I don’t want to minimize that. But we had Brian Blase on the podcast, and I thought I had an understanding of it that didn’t exactly line up with that narrative. So let’s just start there. People are saying that tens of millions of people are going to lose health insurance under the One Big Beautiful Bill Act. Explain that to me.

Elias Tsapelas (01:01)
Well, the first thing people need to understand about Medicaid is that it’s gotten tremendously more expensive in recent years. The Biden administration made a lot of changes during COVID—changes to how the program works and its future trajectory. Even after the One Big Beautiful Bill goes into effect, we’re basically just putting the program’s costs back on the trajectory it was on in 2021. This isn’t going back to the Stone Age—it’s more like going back five years.

A lot of this stems from efforts to eliminate waste, fraud, and abuse. And while there’s certainly some of that, what many people don’t realize is that most states, including Missouri, now contract with private health plans to cover people on Medicaid—particularly the Medicaid expansion population, which consists of healthy adults.

Susan Pendergrass (02:11)
Okay, so let’s just pretend we know nothing. Medicaid is a program that covers health insurance costs for low-income and disabled individuals?

Elias Tsapelas (02:24)
Yes. About 50% of kids in Missouri are on Medicaid. The program covers around two-thirds of all nursing home costs and over a third of all births in the state.

Susan Pendergrass (02:34)
So low-income pregnant women can get Medicaid coverage, and their children can as well. Who exactly is in the “expansion population”?

Elias Tsapelas (02:47)
Good question. And just to clarify—yes, Medicaid also covers a lot of very disabled individuals who private health insurance wouldn’t. But the expansion population refers to healthy adults making up to 138% of the federal poverty limit. These are not permanently disabled people. They’re generally able to work.

Before 2021, someone like me—unmarried and childless—couldn’t qualify for Medicaid in Missouri, even if I lost my job. Medicaid expansion changed that, and with it came a lot of problematic incentives. One issue is that states are paying health plans monthly for enrollees, but there isn’t always a process to verify whether those people are still eligible.

Susan Pendergrass (04:53)
Let me just stop you there. So the state is paying monthly premiums for people who might not even know they’re on Medicaid? And they might have a job now and no longer qualify, but the state hasn’t gone back to check?

Elias Tsapelas (05:40)
Exactly. Ideally, people would notify the government when they get a job, but most don’t, and the IT systems don’t really catch that. Previously, states just paid the bills as they came in. If someone didn’t go to the doctor, there was no cost. Now we’re paying premiums whether they use care or not, which adds up quickly.

Susan Pendergrass (06:40)
So what’s in the One Big Beautiful Bill? Are states required to recertify people?

Elias Tsapelas (06:45)
Yes. One big provision is that states must check eligibility at least twice per year. The Congressional Budget Office projects significant enrollment losses just from checking more often. That’s raised concerns about red tape, but the goal is to ensure people who are no longer eligible aren’t still receiving coverage.

Susan Pendergrass (07:13)
Can Missouri do that? Do we have the systems in place?

Elias Tsapelas (07:20)
I’d like to think so, but I’m not sure. During COVID, states weren’t allowed to check eligibility at all for over three years. Missouri spent an entire year catching up when that ended. Right now, about 1.2 million people are on Medicaid in Missouri, including 350,000 in the expansion group. So yes, it would mean more IT strain.

Another major part of the bill is requiring “community engagement” or work requirements for the able-bodied expansion group.

Susan Pendergrass (08:24)
So that’s people under 65 who aren’t disabled? How do they know who’s supposed to work?

Elias Tsapelas (08:32)
There are carve-outs—new moms, parents with kids under 14, people over 65, etc. The idea is to target people who could be in the workforce. There are also alternative ways to meet the requirements, like volunteering. And it’s worth noting: the SNAP program (food stamps) has had work requirements since the 1990s.

Susan Pendergrass (10:25)
Then why are people saying this will “kick people off”?

Elias Tsapelas (10:33)
Because people will have to meet work or volunteer requirements, and the state will recertify them more often. The question is: how many people will get caught in red tape? That depends on how well states implement the changes. Most of the bill’s provisions are phased in over time to allow states to adapt.

Susan Pendergrass (11:34)
Let’s talk about SNAP benefits. People are saying this will take food away from families. What’s actually changing?

Elias Tsapelas (11:46)
The federal government will now penalize states with high error rates in SNAP administration. Missouri’s overpayment error rate is about 10%, and some states are worse—Alaska’s is nearly 25%. Under the bill, if your error rate is over 6% for two years, the state will have to start covering some of the cost. So Missouri may have to pay a portion of benefits if it doesn’t improve.

Susan Pendergrass (14:06)
How does the bill impact taxes for Missourians?

Elias Tsapelas (14:14)
The standard deduction is going up—by $750 for single filers and up to $6,000 more for seniors. There’s also a new deduction for car loan interest and temporary exemptions for taxes on tips and overtime. Since Missouri’s tax code follows the federal code, that could mean less state revenue, too.

Susan Pendergrass (15:41)
So what will this cost Missouri?

Elias Tsapelas (15:46)
It depends. If we reduce our SNAP error rate, the cost isn’t too bad. But a bigger issue is the provider tax cap dropping from 6% to 3.5% over a few years. Missouri is at 4.2% now, so we’ll need to lower it. That tax generates about $1.5 billion per year for hospitals.

Susan Pendergrass (17:09)
How does the rural hospital fund come into play?

Elias Tsapelas (17:24)
The bill creates a $50 billion Rural Hospital Fund to be distributed over five years. States will get a portion based on how rural they are. The hope is this fund offsets the provider tax losses—at least through 2030. But after that, the fund ends. So there’s concern about what happens long-term.

Susan Pendergrass (19:18)
Senator Josh Hawley mentioned he supports the bill but hopes to fix the provider tax issue in five years.

Elias Tsapelas (19:29)
That seems to be the thinking—pass it now and revisit the unpopular parts later. A lot of the tax and spending changes are temporary, which is partly how they got the bill to comply with budget rules.

Susan Pendergrass (20:30)
This reflects what voters asked for—smaller government and more state responsibility. It reminds me of the Department of Education cuts. Missouri will have to decide which programs to keep and how to fund them. But I was surprised the expansion of the MOScholars tax credit program made it in.

Elias Tsapelas (22:35)
Yes, Medicaid will continue to dominate the state budget if we don’t address it. Every year it’s, “How much more is Medicaid going to cost?” Then we build the rest of the budget around that. This bill will force Missouri lawmakers to reevaluate some of those assumptions and perhaps reconsider whether managed care is working.

Susan Pendergrass (25:02)
That’s going to be interesting to watch. Thanks for breaking it down, Elias. This bill is being talked about a lot, but I think a lot of people are still unsure what it really does.

Elias Tsapelas (25:16)
No problem. I think we’re all looking forward to seeing what happens next.

Produced by Show-Me Opportunity

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There are many arguments for maintaining the current post office monopoly on mail, and economic efficiency isn’t one of them. Arguments include:

• The necessity of subsidizing rural life (especially really, really, rural life)
• General feelings about preserving “public goods,” as if getting a folder of advertisements delivered to your door each day is a “public good.”

And the one argument supporters of the post office usually don’t say out loud:

• Maintaining a small army of allied voters on the public payroll.

There are several ways the nation could go about privatizing the post office. The easiest would be to simply remove its monopoly protections against other companies delivering mail. That wouldn’t be privatization, but it would give people a choice to use other options for routine mail services.

Even with all the advantages the post office has over Fed Ex, UPS, etc., such as not paying taxes, exemption from parking regulations, and so on, it still manages to lose a lot of money each year.

Let’s face it. In the modern world, mail is no longer a necessary public service for the vast majority of people. For the people who still need it, there is no reason they should get subsidized service paid for (even if indirectly) by the rest of us. If you don’t want to adapt to technology or choose to live in outer Alaska, that’s fine, but you should pay more for your mail.

I write this at Christmas time, which is the only time that many people make use of the mail anymore. My family is sending out Christmas cards now, and we will pay the same price whether we mail a card to neighbors across the street or to friends and family in New York. Those price mandates and mail protections are absurd. I’d like us to sell the entire post office to the highest bidder, but short of that opening it up to competition is the next best thing.

The post Yes, We Should Privatize the Post Office appeared first on Show-Me Institute.

Throughout the United States, retail competition has helped to lower the electricity rates for residential, commercial, and industrial consumers.

Between 2008 and 2022, the 14 states with retail competition saw an inflation-adjusted 18.3 percent decrease in average price for all sectors—whereas the 35 monopoly states saw an average price increase of 3.6% in the same time period (these numbers include Washington, D.C., but not Alaska and Hawaii).

Let’s assume you have an electric bill of $200. In a state with retail competition, that bill would have dropped to $178. In a state with total monopoly, your bill on average would have risen to $211—a $33 difference.

Of the 23 states that saw the highest price increases in the 2008–2022 period, only one of them had retail competition (New Hampshire, which was 12th). The 14 retail competition states clustered near the bottom, with seven in the bottom ten.

Here’s an example of Texas’s retail competition website. When searching for a provider, consumers can use a number of different filters, including estimated electricity use, share of renewables, fixed rate versus variable rate (a fixed-rate provides a stable rate for the duration of one’s contract, while a variable rate fluctuates with market conditions), and company rating.

During the period from 2008 to 2022, Missouri saw the sixth-largest percentage increase in electric prices on average. While Missouri still has relatively low electricity prices, things are moving in the wrong direction. Shouldn’t the Show-Me State consider opening up the energy sector to market forces?

The post A Policy That Could Help Lower Missouri Electric Bills appeared first on Show-Me Institute.

Unfortunately, that leadership is conspicuously missing. The DESE website has a link to the Show Me Strong Recovery Plan that makes no mention of education. If you dig deeper, you’ll find that DESE and the Department of Health and Social Services hosted an hour-long webinar on reopening that you could watch. The companion pdf has one slide on reopening that mostly focuses on attendance and funding.

What should DESE be doing? Maybe follow the lead of Nebraska. The Launch Nebraska project, has very specific guidance on school governance, operations, and technology targeted to both district leaders or school leaders. Maybe pick up some pointers from the Alaska Smart Start 2020 restart and reentry guidance that has separate suggestions for low-risk, medium-risk, and high-risk districts. Maybe set up a website like Iowa’s Return-to-Learn Support page with deliverables and timelines. Maybe read through Florida’s 143-page pdf titled Reopening Florida’s Schools and the CARES Act regarding closing achievement gaps and creating safe spaces for learning.

Unprecedented challenges in education require more than a webinar video and a slide in a PowerPoint. Having looked at the websites of over 400 Missouri school districts, I can attest that, based on what they were able to do last spring, districts are going to need real guidance and leadership. What type of staffing guidance should they develop? How will they deal with parents who don’t like their plan? How should they deal with teachers who don’t like their plan? How, specifically, should they address the social and emotional needs of students? What should they implement immediately to address learning loss?

There is no reason to make 520 school districts create 520 reopening plans. If the state education agency in Missouri is little more than a clearinghouse of links and information from other sources, then it may be time to rethink its structure and its existence.

The post Missouri Needs Education Leadership Now More Than Ever appeared first on Show-Me Institute.

THE SOLUTION: Defined contribution plans.

Defined contribution (DC) plans consist of employer/employee contributions into individual accounts—think 401(k)—which employees can manage as they see fit. Upon retirement, the funds are available to employees. DC plans fundamentally differ from DB plans in that they cannot incur unfunded liability (so taxpayers are not on the hook), they put investment decisions into the employee’s hands, and they are transferable from one job to another.

WHO ELSE DOES IT? Public DC plans exist across the nation; states such as Michigan and Alaska offer DC plans for new state employees, while others such as Florida offer both DC and DB plans.

THE OPPORTUNITY: Pension reform offers a chance to stop the bleeding. DB plans cannot (by definition) incur unfunded liabilities. DC plans also offer employees a retirement account that they can manage themselves and take with them if they change jobs in the future.

KEY POINTS

• DC plans can protect Missouri from devastating budget shortfalls.
• When a DB plan’s investment returns are below (sometimes unrealistic) assumptions, taxpayers can be forced to pay the cost.
• DC plans put investment decisions in the employee’s hands and can be transferred from one job to another.
• Shifting to DC plans reduces the political incentive to overpromise when impacts won’t be felt for years.

SHOW-ME INSTITUTE RESOURCES

Policy Study: Public Employee Pensions in Missouri: A Looming Crisis

Policy Study: Missouri Transition Costs and Public Pension Reform

Essay: The Funding Status of State and Local Government Pensions in Missouri

For a printable version of this article, click on the link below. You can also view the entire 2018 Missouri Blueprint online.

The post 2018 Blueprint: Public Pension Reform appeared first on Show-Me Institute.

THE SOLUTION: Open collective bargaining.

Open collective bargaining would allow the public to attend meetings where government bodies are negotiating collective bargaining agreements with unions to ensure that tax dollars are being spent wisely. Openness in public affairs empowers citizens to hold their government representatives accountable. The public is directly affected by policies set during collective bargaining; citizens therefore have a right to be present during such meetings. An open collective bargaining rule would not prohibit the public agency from discussing and formulating its bargaining positions in executive session.

WHO ELSE DOES IT? Alaska, Colorado, Florida, Georgia, Idaho, Iowa, Kansas, Minnesota, Montana, Ohio, Oregon, Tennessee, and Texas all require contract negotiations to be open.

THE OPPORTUNITY: A transparent negotiating process will enable the public to hold government accountable in its dealings with public employee unions and help ensure that the agreements reached between the two parties are in the interest of everyone instead of just a select group of employees.

KEY POINTS

• Open collective bargaining gives citizens the opportunity to attend union negotiations with government bodies and help ensure that tax dollars are spent responsibly.
• Missouri’s Sunshine Law allows government bodies to close meetings to the public if they relate to a negotiated contract, even though there is no compelling reason why negotiations between a union and a public body should be held in secret.
• Government unions can make campaign contributions and support candidates that they will potentially bargain with after election. This advantage makes it especially important that the public be aware of how the government and public employee unions interact.

SHOW-ME INSTITUTE RESOURCES

Policy Study: A Primer on Government Labor Relations in Missouri

Video: Government Unions: Restoring Accountability

For a printable version of this article, click on the link below. You can also view the entire 2018 Missouri Blueprint online.

The post 2018 Blueprint: Open Collective Bargaining appeared first on Show-Me Institute.

THE SOLUTION: Reduction or elimination of the individual income tax.

Lowering or eliminating individual income taxes allows Missourians to increase their take- home pay, increase business investments, and encourage population growth through in-migration.

WHO ELSE DOES IT? Seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) currently have no income tax. Two other states (New Hampshire and Tennessee) levy income tax only on dividends and income from investments.

THE OPPORTUNITY: Income tax reductions could be achieved in several ways. Reductions in tax incentives and spending can, for instance, provide the budgetary space to cut taxes. Whatever the pathway, reducing an obstacle to state and personal income growth should be a high priority if we want to jumpstart Missouri’s economy.

KEY POINTS

• Missourians work hard for their money and deserve to keep what they earn.
• Income taxes penalize and discourage work.
• If you include the 1 percent earnings tax in our two biggest cities, Missouri has a top income tax rate of 7 percent, which is more than all but 17 states. Our top income tax rate equals or exceeds those of all but one of eight neighboring states.
• A real reduction in individual income taxes raises take-home pay and encourages more consumption of Missouri goods and services, making Missouri more competitive with other states in the nation.

SHOW-ME INSTITUTE RESOURCES

Essay: The 49th State: Revisiting Missouri’s GDP Sector by Sector

Essay: Taxes Matter and They’re Too High for Missouri

For a printable version of this article, click on the link below. You can also view the entire 2018 Missouri Blueprint online.

The post 2018 Blueprint: Income Tax Reform appeared first on Show-Me Institute.

Over the years, we have marked the progress (or lack thereof) that Missouri has made by reporting new data on gross domestic product (GDP) released by the Bureau of Economic Analysis (BEA). If you pick out a single year’s data, Missouri seems to do okay. From 2015 to 2016, for instance, real GDP in Missouri increased at a 1.15 percent rate, ranking 31st out of the 50 states and the District of Columbia. Washington recorded the fastest growth rate, at 3.7 percent. It was a bad year for states that rely on natural resources: Louisiana, West Virginia, Oklahoma, Wyoming, Alaska, and North Dakota all reported declines in real GDP from 2015 to 2016. So, it looks like the recent decline in oil and coal prices helped push Missouri up into the middle of the pack. For reference, in the United States as a whole, reported real GDP increased at a 1.54 percent rate in 2016—much faster than in Missouri.

But year-over-year data doesn’t reveal larger, more important economic trends; any given year can be dominated by business cycle fluctuations. Growth is focused on long-term trends. When you look at the entire 1997–2016 period, the picture is quite different from 2015. Little wiggles in the year-over-year data get smoothed out and show the economic fundamentals operating within a state. Over the full two-decade period, we see that Missouri’s growth has been paltry.

During this period, Missouri has grown at half the pace of the United States as a whole (1.024% compared to 2.05%). Out of all 50 states and the District of Columbia, Missouri ranks 48th in economic growth; we trailed Mississippi by 0.001%—we were almost 47th. For an idea of the impact of Missouri’s poor performance, imagine you and a friend had started at the same job in 1997, each making $50,000 a year. If your friend’s salary grew at the rate of the country as a whole, and yours grew at Missouri’s rate, the friend would have made about $72,800 in 2016 while you’d have made roughly $60,400!

In a recent essay, Joe Haslag and Michael Austin identified some policies that could help explain why Missouri took a nosedive after 1997. There was the corporate income tax rate hike in 1993. There was a shift of spending from education and infrastructure to social services. There was the sharp increase in the state’s tax credit programs. And, though more difficult to measure, there was the regulatory burden that seems only to have increased over time. (Do you remember a time when the state government eliminated a regulation?)

The bottom line is that state government needs to take a thoughtful approach to policy if it is to boost economic growth. Lower tax rates, for example, result in higher returns on capital and labor. The state should look for high returns on its own investments as well, just like a private citizen or business would. Common-sense adjustments to emphasize education and infrastructure over policies that transfer wealth from one group of citizens or businesses to another are needed unless Missouri’s policymakers are satisfied with 47th place.

The post Almost 47th appeared first on Show-Me Institute.

The Show-Me Institute has weighed in on such public projects, from the Stan Span to trolley systems in University City and Kansas City. In each instance we asked, just as you would before taking out that home-improvement loan, whether the projected benefit of the project was greater than the projected costs borne by taxpayers. And even if we make the somewhat dangerous assumption that the costs won’t increase as the project goes on, the answer too often is “no.”

Our conclusions are shared by Harvard economics Professor Edward Glaeser. In a recent article that appeared in the City Journal, Glaeser exposes the fairy tale of infrastructure investment as an economic cure-all. It isn’t that he (or we) believes that well-thought-out investment in roads and bridges is unimportant. Quite the contrary. The problem is that the way in which policymakers decide which project goes forward often leads to costly miscalculations that in the end simply do not deliver the promised improvements.

A couple myths about infrastructure that Glaeser dispels are:

• Infrastructure spending stimulates economic growth. Japan, which spent over $6 trillion on “construction-related public investment” between 1991 and 2008, and has arguably one the world’s best train systems, has not experienced sustained economic growth in over two decades. Will building more highways in areas with little population improve economic conditions in U.S. States? It seems unlikely.
• The public benefits, so funding should be done with general tax revenues. It is a near fact of life that funding a project from afar reduces the discipline needed to make sure it is done in a cost-efficient manner, and—perhaps more importantly—makes it less likely that the project will actually benefit the public (and not just those proposing it). Ill-advised, federally funded projects such as Detroit’s People Mover Monorail and Alaska’s Gravina Bridge (a.k.a. “the bridge to nowhere”) serve as cautionary tales. Spending federal funds on local projects like Kansas City’s trolley system is similarly likely to yield little or no economic benefit.

There is much more to Glaeser’s article, and I cannot do it justice in this space. I think you will agree, after reading his article, that maybe that new road or light rail extension being peddled by the local mayor or city council isn’t as critical to the region’s economic vitality as some might have you think.

The post About That New Home Addition . . . appeared first on Show-Me Institute.

The chart below plots the average annual growth rate for each of the 50 states and for the United States as whole for the period 1997 through 2015. The good news is that Missouri’s average annual growth rate increased from 0.93 percent when computed over the 1997 through 2014 period to 1.02 percent when computed over the 1997 through 2015 period. Missouri reported a 1.29 percent growth rate in its real GDP between 2014 and 2015. No one really jumps for joy when growth rates are reported at 1.3 percent for a year; however, Missouri did manage to stagger its way one rung up the ladder, from 49th-fastest to 48th-fastest growing state economy over the period from 1997 through 2015.

Overall, the story for Missouri is little changed compared to a year ago. Since the late 1990s, Missouri’s economy has increased at half the rate of that of the United States as a whole. Eighteen years is not a terribly long time, and we all hope that Missouri’s future will be brighter. But the question remains: Why has the Missouri economy reported such slow growth over the past eighteen years?

The answer is not simple. Note that the ten fastest growing states are: North Dakota, Texas, South Dakota, Oregon, Utah, Colorado, California, Idaho, Arizona, and Oklahoma. There is no one clear feature shared by these ten states that can account for their economic success. Some of them do have natural resources and have benefitted from being able to dig a hole in the ground and extract things that are valuable to the rest of the world. But that is not the only explanation. For example, Arizona, Idaho, Oregon, and Utah (at least) do not fit the oil/natural gas story. Alternatively, the ten states with the lowest growth rates are Michigan, Louisiana, Missouri, Mississippi, West Virginia, Maine, Ohio, Kentucky, Illinois, and New Jersey. No single attribute these states might have in common would account for their struggles, either.

Income tax rates cannot, alone, explain the differences in growth rates. The nine states with no earned income taxes (followed by rankings) are: Alaska (40), Florida (20), Nevada (16), New Hampshire (25), South Dakota (3), Tennessee (30), Texas (2), Washington (13), and Wyoming (11). The nine states with the highest marginal income tax rates (followed by rankings) are: California (7), Hawaii (37), Oregon (4), Minnesota (17), Iowa (23), New Jersey (42), Vermont (26), New York (29), and Maine (46). The mean rank for the nine states with no income taxes is 17.8 while the mean rank for the nine states with the highest income tax rates is 25.7.

Overall, the evidence does not prove, but does suggest, that income tax rates do matter for economic growth. Of course, a host of other factors matter as well. In order to assess the role of income tax rates on growth, the ideal test would involve holding everything else constant. In other words, you would want to examine a parallel version of New Jersey, for example, but one with a lower income tax rate. Holding everything else constant, economic theory suggests that New Jersey would grow faster.

The broader message is that lots of factors that influence a state’s economic growth rate. Each state is an experiment in which tax rates, school quality, and various government services are provided endogenously by state policymakers. The bundle of policies and regulations is too large and complicated for us to identify how each one matters. And on top of the political attributes, there are the things that lie underground, or on the ground itself (or the ocean front—or lack thereof), that people living in each state can consume. All policymakers can do is to try and manage the factors they can influence in a way that will help their state grow faster.

In case you are wondering, Kansas ranked as the 29th-fastest-growing state over this period. So, why can’t Missouri grow at least as fast as its neighbor? It’s a frustrating question, because we have a Gordian knot of regulations, laws, and policies that make it difficult to determine specific causes of our stagnation. Not only have policymakers failed to move Missouri in the right direction in the 21st century, but the complexity of our state’s problems prevents us from understanding why various initiatives have failed to produce their intended results. In my view, it seems like a good time for Missouri to review its entire spectrum of policies. For instance, we have not had a constitutional convention in this state since 1947. Maybe it is time for an institutional overhaul.

The post It Could Be Worse. Not Much Worse, but It Could Be Worse. appeared first on Show-Me Institute.

Far from it. Of the 77 U.S. cities that KPMG ranked (which was not exhaustive of all major metros), Saint Louis ranked 45th and Kansas City ranked 46th. Among the cities cheaper than Saint Louis (and Kansas City) are regional competitors like Nashville, Omaha, Cincinnati, Memphis, Indianapolis, Cleveland, and Oklahoma City, to name a few. Worse yet, Saint Louis was more expensive than all 18 Southeastern cities KPMG looked at, from Atlanta to New Orleans.

So where did the Post-Dispatch get a top ten ranking for Saint Louis? If we only consider regions with populations greater than two million (of which KPMG ranked 31), Saint Louis is the 9th cheapest. I will leave it to the readers of this blog to decide if Saint Louis should pat itself on back for being cheaper than New York, Los Angeles, and Chicago, when it has higher costs for businesses than Nashville, Memphis, and just about every other regional competitor. But if we do decide to use population as criteria, it seems more justified to look at metros with populations similar to those of Saint Louis and Kansas City (between two and three million residents). When we do that, Saint Louis is 7th and Kansas City is 8th out of 14 such cities. That seems awfully middling.

That’s probably why, if one reads the study that the Post-Dispatch reports on, they’ll find that it does not claim that Saint Louis is among the most competitive cities in the country. KPMG didn’t even break down cities by population in the study, choosing instead to do so by region.  The Post-Dispatch story (while citing the study) is actually based on an ancillary KPMG press release, which lauds Cincinnati, and is careful to note context.

Titling an article “St. Louis among most cost-competitive cities for business, report says” when the report in question says no such thing is a questionable decision for a newspaper of record. But this is not just a problem with the headline. The article itself is equally misleading, and it was not a headline writer who placed this story front and center on the Post-Dispatch’s website less than a week before a vote on multiple tax issues (where the city’s business climate is an issue). 

The post Report: Saint Louis, Kansas City *Not* Among Most Cost-Friendly Cities for Business appeared first on Show-Me Institute.

The study highlights several recent cases where a union executive got caught using the union’s coffers as a personal slush fund. In one case, a Service Employees International Union executive used the local he ran to procure lucrative contracts for family businesses. He also spent hundreds of thousands of dollars of union dues each year to maintain a posh Los Angeles lifestyle: using union funds to attend a Four Seasons Resort golf tournament, spend big at a Beverly Hills cigar club, and have expensive meals at steakhouses. According to the article exposing this abuse, the average employee represented by this union earns about nine dollars per hour.

In another case, a reporter for the Kansas City Star uncovered a culture of excess at the top echelons of the International Brotherhood of Boilermakers. The executives at this union, often family members of one another, typically made six-figure salaries, enjoyed first-class travel on private jets, flew to destinations like Paris, Marco Island, and Alaska, and had an executive suite at the Kansas Speedway. All on the worker’s dime.

In the cases highlighted in the study, the abuse of union funds was discovered after journalists reviewed a union’s financial disclosures. Financial transparency allowed union members to find out something was wrong and make the appropriate changes to leadership.

Government workers deserve the same protections as members of private-sector unions. Right now state and federal law allows government union spending to remain hidden. If a union executive representing government employees—like firefighters, teachers, or state employees—is using union funds for personal gain, there is little we can do to uncover it.

The post New Study Shows Benefits of Union Transparency appeared first on Show-Me Institute.

Read the full testimony:

The post On The Enactment Of A “Living Wage” In Kansas City appeared first on Show-Me Institute.

Missouri is submitting a new teacher equity plan to the Department of Education. As the Associated Press reports, the plan touches on the unequal distribution of experienced teachers within urban and rural school districts. States must submit updated plans to continue receiving waivers from No Child Left Behind (NCLB).

Within a draft of Missouri’s Educator Equity Plan, DESE writes, “According to federal guidance, less effective teachers are those who are inexperienced, unqualified, or out of field.” Later in the plan, the department presents dozens of ideas about how to recruit effective teachers to rural, poor communities.

Though DESE highlights a few academic studies, it neglects research with alternate findings especially in relation to experience and education versus student achievement. This—combined with the listed stakeholders (National Education Association, American Federation of Teachers, Missouri State Teachers Association, etc.) who played a role in giving the department recommendations—produced several unsurprising potential strategies.

• Increased salary
• Smaller class size
• Entry-level screening tools
• Content knowledge and pedagogical skills assessment

None of the listed strategies are “proven” to increase academic achievement. Still, the state continues to draw away from local policies in favor of controversial state and federal mandates.

This is not to say that recruiting teachers to rural communities isn’t a problem; one study found that 75 percent of teachers in urban areas stay in their hometown, while only 43 percent of rural teachers remain. There are, however, more creative solutions to ensure students in rural communities receive a quality education. Here are a few:

• Expand educational opportunity through virtual learning (DESE lists this one, Bravo!).
• Eliminate state mandates that encourage the use of salary schedules, which judge teachers based on experience and education. A competitive salary early on for science and math teachers may drive more qualified teachers to the profession.
• Eliminate arduous certification requirements. The Bering Strait School District in Alaska has 15 schools covering more than 80,000 square miles, many of which must be reached by airplane. The Alaska State Department of Education has recently given waivers to school districts, allowing them to recruit teachers from out of field. “It’s really been handy. Just recently, we hired a language arts teacher with no background, but he’s a good teacher, he’s what we look for,” a Bering Strait personnel staff member told me.
• Allow school districts to operate like businesses—let administrators make personnel decisions that make the most sense to the students within the school district.

The post Missouri’s Teacher Equity Plan Draft Misses the Mark appeared first on Show-Me Institute.

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If “stealing jobs” were as bad as — and essentially no different than — stealing cars or stealing horses, Texas Gov. Rick Perry might expect to wind up at the end of a rope — the traditional fate in cowboy movies for horse thieves and cattle rustlers in the Lone Star State.

While that is not about to happen, the Texas governor has clearly been having a fun time infuriating some of his fellow governors in going to their states to pitch CEOs on the idea of relocating their businesses to Texas — one of only nine states (the others being Alaska, Florida, New Hampshire, South Dakota, Tennessee, Washington and Wyoming) with no state income tax on personal income. In venturing into California, Illinois, New York and several other high-spending, high-tax blue states, Perry has made a lot of speeches and spent some $2 million in TV ads singing the virtues of “limited government, low taxes and a fair legal system.”

Perry also made two visits to Missouri — in August and again in late September. In the earlier trip, he took Missouri Gov. Jay Nixon, a Democrat, to task for promising to veto the first tax cut in Missouri’s income tax in many years. As it turned out, even with heavy majorities in both houses of the Missouri legislature, Republicans were unable to override Nixon’s veto.

“Vetoing a tax cut is the same thing as raising your taxes,” Perry said in the commercials aired in several Missouri cities. “But there is a state where businesses flourish and jobs are created — Texas.”

That brought out the usual charges of “stealing jobs” in the two big-city, liberal dailies — the St. Louis Post-Dispatch and the Kansas City Star.

But if someone is guilty of “stealing” a job, someone else must own the job. But who?

How about no one? As Harry Stonecipher, the outspoken former CEO of Boeing, liked to say, “Only the customer can guarantee your job.”

In a competitive marketplace, no one really owns a job — not the jobholder, not the company providing the job and certainly not the governor of any state. Companies naturally gravitate to — and create employment within — the jurisdictions that provide the lowest costs of production, and taxes are an important part of the cost of production.

At the end of the day, there is no such thing as “stealing” a job. Like it or not, the states are in competition with one another in trying to attract and retain businesses focused on creating the greatest value for their customers, shareholders and employees. One of the keys to doing that is keeping the “tax price” in your location below that of competing jurisdictions.

Missouri should be focused on lowering the tax burden for all businesses. The best way to promote growth (and compete for jobs) is to get rid of all income taxes on business. Let the people who have earned the money put it back to work in their own businesses.

Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Is Texas Gov. Rick Perry Guilty of “Stealing” Missouri Jobs? appeared first on Show-Me Institute.

In New York, the city’s chief actuary, Robert North, has proposed lowering the assumed rate of return for the city’s five pension funds to 7 percent from 8 percent, which would be one of the sharpest reductions by a public pension fund in the United States. But that change would mean finding an additional $1.9 billion for the pension system every year, a huge amount for a city already depositing more than a tenth of its budget — $7.3 billion a year — into the funds.

And:

Ailing pension systems have been among the factors that have recently driven struggling cities into Chapter 9 bankruptcy. Such bankruptcies are rare, but economists warn that more are likely in the coming years.

These problems are not confined to New York City. As the New York Times article says, this is a near-term problem for “public retirement systems from Alaska to Maine.” This expensive problem is manifesting in Missouri, and in particular in Saint Louis with the recent discussion of firefighter pensions.

Public employee pensions tend to use an outdated benefits structure that relies on growth assumptions that are unrealistic in the current climate. Public employee retirees are receiving pension benefits that assume growth rates that just do not match reality. This means that current employees are paying into a system that, in its current state, cannot afford to pay them when they retire. Something has to give. Either their benefits will be reduced, the current employees will be asked (or required) to contribute more — taking a salary cut to support their retired peers — or the taxpayers will be tapped year after year to plug the holes in the broken pension system.

Lowering the forecasted growth rate from 8 percent to 7 percent per year is not enough to improve this serious problem. And the longer Missouri policymakers wait to make politically unpopular decisions that will improve the long-term picture, the worse the finances become. Let’s not be like Greece and curry favor with unrealistic future promises to pay. Instead, let’s lead the way on substantial public pension reform at the state and local level by switching all public employees to defined contribution 401(k) retirement plans.

The post Will Missouri Taxpayers Have To Bail Out Public Pensions? appeared first on Show-Me Institute.

Among the elements of the new health care reform law that was passed by Congress is a requirement that almost every adult would either have to purchase a health insurance policy or face punitive fines to be collected by the Internal Revenue Service. There has been widespread debate in legal circles about whether the courts would uphold such a requirement, but lawmakers in at least 40 states are trying to do what they can to insulate their citizens from such a requirement. In Alaska, members of this legislature are considering HJR 35, which very closely resembles the legislation known in other states as Health Care Freedom amendments.

Related Links

The post Health Care Policy and Constitutional Rights: The Health Care Freedom Amendment appeared first on Show-Me Institute.

Currently, a bipartisan group of more than 20 state attorneys general and elected officials are asking a judge in Florida to invalidate the federal health care reform law. Missourians should encourage their attorney general, Chris Koster, to join this multistate lawsuit, which resumes on Jan. 10. In my view, the precedent that Missourians set by approving Proposition C could be continued if Attorney General Chris Koster joined the lawsuit.

The following are some facts related to the lawsuit:

• Twenty attorneys general are challenging the Affordable Care Act (ACA), the health care reform law that Congress passed earlier this year, in a courtroom in Pensacola, Fla. They are arguing that the law is unconstitutional and would set a dangerous precedent.
• The case involves two arguments. The first is that the requirement for all Americans to purchase insurance is unconstitutional. The second is that expanding the eligibility requirements for Medicaid, the joint federal-state health insurance program for the poor, threatens state sovereignty and will burden state budgets.
• The states party to the suit are Florida, South Carolina, Nebraska, Texas, Utah, Louisiana, Alabama, Michigan, Colorado, Pennsylvania, Washington, Idaho, South Dakota, Indiana, North Dakota, Mississippi, Arizona, Nevada, Georgia, and Alaska. Additional states, such as Wisconsin, are considering joining.
• Americans are divided in their support for the health care legislation. Only 42 percent of Americans say they have a generally favorable view of the law, while 41 percent say the opposite, according to a poll by the Kaiser Family Foundation in December 2010.

Missouri voters were the first to oppose this attempt by the federal government to take control over health care. As Missourians, we live in a democracy. We should have a government that represents the demonstrated wishes of Missourians in this matter, thereby advancing liberty with responsibility by promoting market solutions for health care policy.

I will discuss the effort to encourage Attorney General Koster to join the Florida lawsuit on the Mike Ferguson show on the Eagle 93.9 FM tomorrow, Jan. 6 at 5:00 p.m in Columbia. I encourage our readers to tune in or listen online.

The post Attorney General Chris Koster Should Join the Multistate Health Care Lawsuit in Florida appeared first on Show-Me Institute.

The W.K. Kellogg Institute released a study yesterday evaluating the success of the Alaskan dental therapist program over the past two years. The results reflected both high patient satisfaction and quality of care. Dental therapists — a topic we’ve discussed on Show-Me Daily before — are mid-level dental professionals that can provide basic and preventive oral health care at a lower cost than traditional dentists. Alaska’s recent results add to a growing body of research showing that deregulation in dental care can improve health by bringing quality care to underserved areas.

For Missouri, this is just further proof that loosening the restrictions on dental practitioners could be beneficial. Of Missouri’s 114 counties, 50 have a shortage of dental professionals, a problem that is most profound in rural areas. This has led to fewer Missourians receiving dental care: Missouri was ranked 47th in the nation for the percentage of its adult population who visited the dentist during the past year.

While rural Alaska reaps the benefits of this dental deregulation, Missouri still only allows dentists certified by the American Dental Association to perform even basic dental care. With the benefits of mid-level practitioners becoming increasingly apparent, Missourians stand to gain from a reconsideration of state dental regulations.

The post Healthier Smiles, One Dental Therapist at a Time appeared first on Show-Me Institute.