This report is concerned with the ways in which Missouri counties spent the funds they received as a result of the CARES Act, as well as how each county reported its expenditures. The Institute used Sunshine Law inquiries to request CARES Act expense report sheets from every county in Missouri. Unfortunately, gaps in data created by non-responses from some counties and limited descriptions of spending from the counties that did respond illustrate yet again that state and local governments in Missouri have a long way to go to meet the transparency obligations they have when they spend taxpayer money.

Click here to read the full report.

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Missouri is in that majority.

Missouri’s debt burden was $8.2 billion in fiscal year 2020. That’s $4,400 per taxpayer needed to fully pay the state’s bills, up from $4,300 the year before. Much of this debt burden comes from unfunded retirement obligations, for which “the state had only set aside 60 cents for every dollar of promised pension benefits and 6 cents for every dollar of promised retiree health care benefits.” This debt burden earned Missouri a “C” grade and a ranking of 24 out of the 50 states for fiscal health.

This report provides further evidence that Missouri was not in a financial position to successfully weather the economic downturn that followed the COVID-19 pandemic, something my colleague Elias Tsapelas and I have written about. Re-evaluating our tax structure and tackling pension problems (by shifting employees to defined contribution accounts, for example) would likely improve Missouri’s grade and ranking in this report. Fixing the state’s fiscal health is a big task, but it’s something that lawmakers should start to prioritize.

The post Missouri Is in Poor Fiscal Health appeared first on Show-Me Institute.

As more than a year has passed since the first bill’s passage, and almost nine months have passed since the second, we can start to figure out how the money is being spent. A new report from the American Enterprise Institute crunches the numbers and tells us the answer: it isn’t.

The first relief bill—the CARES Act passed in March of 2020—allocated $13.2 billion for K-12 schools. The Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA), the second bill, was signed into law in December of 2020 and allocated another $54.3 billion. The third bill, the American Rescue Plan (ARP), was passed in March of 2021 and allocated $122 billion.

According to the AEI report, to date only 70 percent of CARES Act dollars have been spent, and a mere 7 percent of CRRSA dollars have been spent. (Not enough time has passed to know how the ARP dollars have been spent.)

Missouri has spent 84 percent of its CARES Act dollars but 0 percent of its CRRSAA dollars. If we combine the total dollars, it means that Missouri has only spent 16 percent of the money it received in the first two relief bills.

As it turns out, reopening schools was not nearly as expensive as some school advocates said it would be. State and local tax coffers were not hurt nearly as much as some had predicted. Some money was necessary, but it was a fraction of what Congress allocated.

And here comes the kicker: The real money is in the ARP, and it is just starting to show up. If schools haven’t spent down the funds from the first two bills, and schools start back up without the need for any additional pandemic-mitigation measures, the money from the ARP is just going to start piling up. Ultimately, the report estimates that between $78 and $123 billion of the coronavirus education funds will be spent on non-pandemic related expenses. And it isn’t just AEI making these predictions—the Congressional Budget Office (quoted in the report) predicted that only $6.4 billion of ARP dollars will be spent in 2021, and the rest will be spent over the next seven years.

The bottom line: If we hear from K-12 school leaders about underfunding at any time in the near future, we should know that they are misrepresenting reality.

The post So about that Coronavirus Money . . . appeared first on Show-Me Institute.

The CARES Act made several large changes to the unemployment insurance system. These changes were intended to be temporary and preserve family and small business finances during the period of greatest uncertainty. Specifically, the CARES Act extended the duration of unemployment benefits, added a $600 weekly supplement to the usual state benefit amount, expanded eligibility to gig workers and many others traditionally excluded from the unemployment insurance system, and introduced other modifications such as the waiving of job search requirements to account for the unique circumstances of the pandemic. At the end of 2020, the federal government extended into March the supplemental benefit amount at a lower level of $300, and President Biden’s American Rescue Plan extended these enhanced benefits further until September 2021.

These changes to the unemployment system have undoubtedly had major effects on individuals and the economy. The additional $600 was certainly beneficial for the financial situation of the unemployed; researchers have found that additional benefits from the CARES Act resulted in 76 percent of unemployed people earning more than their previous wages on unemployment between April and July. In Missouri, the median replacement rate of UI benefits (including the $600) to lost wage earnings was 154 percent, meaning those on unemployment made 54 percent more than their lost wages. Even with these extra earnings, research has found that unemployment benefits did not harm job growth in spring and summer 2020 when lockdown restrictions made job search very difficult.

However, conditions have changed. Most businesses are open, vaccines are available to those who want them, and the unemployment rate has fallen from 14.8 percent to 6.1 percent. Are these extra unemployment benefits still necessary? Job openings hit a preliminary record high in March and anecdotally, many businesses are struggling to find workers. It’s certainly possible that the additional $300 and the long extension to September are causing people to push back their job search and extend their time receiving UI. Jobs will likely be even more abundant by the time benefits expire, thereby reducing the risk of a delayed job search.

It seems that the job market (and therefore our economic recovery) is being helped by vaccine access and business re-openings and hurt by extended unemployment benefits. However, we may be able to see the light at the end of this UI tunnel. Governor Parson announced that Missouri would end participation in the federal pandemic unemployment programs on June 12th, saying that these benefits were always meant to be temporary and it’s time to get people back to work. The federal government is also taking steps to return to pre-pandemic UI rules. Lawmakers seem to recognize that getting people back to work is a priority and enhanced UI benefits may not have been moving us toward that goal. Hopefully, these changes will help us continue to recover quickly.

The post How Are We Recovering? (Part 3) appeared first on Show-Me Institute.

In the spring of 2020, the COVID-19 pandemic and associated shutdowns quickly sent our country into unimaginable economic lows. The national unemployment rate reached its peak of 14.8 percent in April 2020 while Missouri’s unemployment rate jumped to 12.5 percent the same month. However, the economy has bounced back faster than expected. Recent numbers show the national unemployment rate at 6.2 percent in February 2021, and Missouri’s preliminary unemployment rate for January 2021 was 4.2 percent.

Though still higher than the national unemployment rate of 3.5 percent from January 2020, we’ve recovered much more quickly than we did from the Great Recession.  It took nearly five years for the unemployment rate to fall from its peak of 10 percent in October 2009 to below 6 percent. As the image below shows, unemployment reached an even higher peak during the pandemic but has still managed to fall to 6 percent in less than a year’s time.

Source: https://www.bls.gov/opub/mlr/2020/article/employment-recovery.htm

Perhaps the historical fiscal relief packages passed in 2020 help explain the more robust recovery. The CARES Act was passed in March 2020 to support the economy in a variety of ways through a period of widespread lockdowns. Included in the CARES Act was enhanced unemployment insurance to help those who had lost their jobs at a time when it was difficult to find jobs.

However, with the economy re-opening, job postings on the rise, and accelerating vaccinations signaling a potential end to the pandemic, it is worth re-examining the evidence on the effects of unemployment benefits during downturns and recoveries. Are the benefit extensions helping the recovery by sustaining consumer spending, or are they slowing the recovery by discouraging people from searching for jobs by paying them generously not to work? This will be discussed in future blog posts.

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The Missouri state government has $1.5 billion leftover from CARES Act federal relief funds and must spend it by December 31 or lose the money, despite scores of individuals and business owners that still need help. The Governor plans to spend $1.3 billion on measures such as personal protection equipment, school lunch programs, and unemployment insurance, among others.

It’s important to note that these funds have several strings attached. The money must be spent on expenses incurred due to COVID-19—it can’t just be used to fill unrelated budget gaps.

According to a new report from the state auditor, the Missouri state government had received a cumulative total of a little over $3 billion in federal relief funds through the end of October. County governments also received relief funds. Jackson County and St. Louis County received $123 million and $173 million, respectively, directly from the federal government due to meeting population requirements. The Missouri Legislature also chose to send $521 million to the remaining counties and St. Louis City, based on population proportions.

Of this combined $817 million sent to counties, roughly $543 million remains unspent, not including planned purchases. This is in addition to the state government’s remaining $1.5 billion.

Why hasn’t the money been spent, and what should be done with it?

If it really is the case that the money isn’t needed, then the funds should be returned to the federal government, and our state and municipal leaders should be commended for declining to help themselves to taxpayer money.

However, if it is needed, it should be spent wisely. For example, some money could be used to support businesses that struggled or closed during state and county-mandated shutdowns. Jefferson City imposed a statewide lockdown from early April to early May, and many counties continued with further lockdowns. Unemployment benefits for affected workers may well be appropriate, but they should be accompanied by relief to the business owners who were deprived of the opportunity to operate (and to employ those workers) for significant parts of the year.

Parents of school-aged children also deserve consideration. The pandemic has led to school closures and a switch to distance learning that caught many if not most school districts unprepared. Statewide, public school enrollment is down by nearly 25,000 students this year as parents struggle to find alternatives to their assigned public schools for their children. These parents would be facing a daunting task under any circumstances, but consider the parents whose incomes have been reduced by pandemic-related closures and who are also trying desperately to keep their children from losing a year of education. Shouldn’t some of the federal relief money be used to help them pay for tutoring, private-school tuition, or other resources?

Finally, policymakers should keep in mind that the challenging and complicated process of the COVID-19 vaccine rollout is now ramping up. It’s not going to be easy, and without a solid plan for vaccine distribution, it’s unlikely to go well. Does Missouri have a plan? If so, what kinds of resources will be needed to carry it out?

It’s hard to say what would be the very best use of the still-unspent portion of the federal relief money because of the number of variables in play. But if we can’t spend it in a way that provides meaningful help to pandemic-affected businesses and workers—if we can’t use it to help educate children whose school districts have let them down—and if we can’t use it to make the vaccine rollout as fast and effective as possible—then we should give it back to the federal government. It would be both injurious and insulting to Missourians who have suffered through months of this pandemic if their elected officials leave nearly two billion dollars of money unspent until the final weeks of the year only to squander it out of fear of leaving it on the table.

The post New Report on Federal Relief Funds in Missouri appeared first on Show-Me Institute.

For those who aren’t aware, PPP was created by Congress to give forgivable loans to businesses and nonprofits affected by the coronavirus. As governments across the country shut down schools and businesses, Congress realized that it needed to provide support or businesses would go under, costing millions of jobs and carving deep scars into the American economy.

The first part of the story is important. Government shut these businesses and schools down. PPP was not a “bailout,” rewarding businesses that had acted poorly or were floundering. Businesses and schools had little say in whether or not they would be able to serve customers and did not deserve to be harmed as a result.

Lots of schools took PPP loans. This shouldn’t surprise us. As Dean Johnson, leader of the Crossroad Academies charter schools in Kansas City told The Kansas City Star, “I understand the economic realities, but one way or another we need to be able to meet our expenses, and if we’re trying to provide a more complex learning model what we certainly can’t be doing is laying off staff.”

But here is where the Star’s PPP story went off the rails. Rather than examining the effects of the coronavirus on local schools and their budgets, the author decided to pit charter and private schools against the Kansas City Public Schools (KCPS), making the case that it was unfair that charter and private schools could get PPP support while KCPS couldn’t. The article PPP-shamed them. It includes the predictable jabs at Rockhurst High School’s tuition ($15,000 for the upcoming year), and a quote from the local teachers union leader taking a dig at Betsy DeVos.

Like great Kansas City jazz, it’s the notes that it didn’t play that are the most revealing.

First, it left out the fact that KCPS receives more public funding than local charter schools, and even more per pupil than most private schools. According to the state of Missouri, KCPS spent $15,137 per student in 2019. Seems like an important detail to put in the story. KCPS is hardly in penury. It is certainly not “underfunded.”

Second, as Mayor Quinton Lucas pointed out on Twitter, in Clay County, federal CARES Act dollars were allocated to support the North Kansas City and Liberty public school districts. Jackson county could do the same for KCPS but hasn’t. Maybe someone should ask them why not.

Third, the article fails to mention that if private and charter schools were to close due to the economic effects of the coronavirus (as more than 100 private schools already have), it would be terrible for KCPS. State and local governments are already reeling from decreased tax revenue due to depressed economic activity; flooding schools with hundreds or thousands of new students would put tremendous strain on KCPS or any other public school district. If public school advocates could see beyond their immediate, narrow interests they would understand that charter schools and private schools are doing them a favor.

The disappointing thing about the Star’s article is that if it were not framed as adversarial, but as a system of schools wrestling with a shared problem, we might be better able to find solutions. Judging from the social media reaction, most readers walked away from the story angry at private and charter schools, not interested in how to help all children in Kansas City get a good education in the time of the coronavirus. That’s a shame.

The post The Star PPP-Shames Kansas City Private and Charter Schools appeared first on Show-Me Institute.

The petition gets a few things wrong.

The first problem is the claim about the test using 20 percent of the funds. According to the fiscal guidance on DESE’s website, “90% of (CARES Act) funds must be distributed based on the Title I formula (FY19), with equitable services provided to non-public schools.” Title I funds go to items such as instructional supports or behavioral programs in schools. That leaves 10 percent for “administrative costs and the remainder for emergency needs as determined by the state educational agency to address issues responding to coronavirus, which may be addressed through the use of grants or contracts.” The diagnostic test for students would be constrained to this portion of the money. DESE’s current proposal for the test would use $10 million, less than 6 percent of the CARES Act budget.

Second, a DESE administered diagnosis test would not cost the state millions of dollars, as the petition goes on to suggest. While Missourians do pay federal taxes, CARES Act money has already been allocated to states for things like testing.

Third, despite what some may think, DESE has an obligation to find out how much learning loss has occurred throughout Missouri. We know COVID-19 has caused more learning loss than what would normally occur over the course of the summer due to additional missed class time in the spring. To start addressing the issues caused by COVID-19 learning loss, we first need to understand the extent of the problem. Rather than a “misuse” of emergency relief funds, this test could be a crucial first step in helping our students.

Fourth, if individual schools or teachers create their own tests, as is suggested in the petition, it would not help identify which schools need the most support. If you ask more than 500 districts to create their own diagnosis assessment, you may get 500 completely different assessments. Without a common assessment, there would be no accountability and no basis to develop plans to address shortfalls.

To my fellow teachers who signed the petition: Let’s do our homework on the facts and let’s instead support DESE in gathering the data it needs.

The post Teachers Should Do Their Homework on the CARES Act appeared first on Show-Me Institute.

St. Louis County councilmembers, in a contested 4-3 vote, forfeited their legislative oversight authority of the federal coronavirus relief funds the county received to the county executive. No spending plan has been released, leading some to question the executive’s spending priorities.

The lack of legislative oversight appears to have contributed to some questionable expenditures. A $1.7 million overflow morgue was constructed which is currently sitting empty and has never held more than 56 coronavirus victims out of a capacity of 1,300. Additionally, a $1 million no-bid contract for a hotel to shelter sick first responders is currently reserving empty rooms. Of the 120 rooms reserved since mid-March, only 52 have been used for an average of $23,000 per person for an eight-day stay. The ten rooms currently in use are housing homeless people rather than emergency responders. As only $9 million of the relief funds have been spent so far, these are not insignificant expenses.

Conversely, St. Charles County councilmembers retained legislative oversight and influence over how the funds will be spent and have released a plan to do so. All money is currently designated for coronavirus-related expenses or reimbursements, as it should be. No spending data has been published yet, so time will tell if additional oversight will aid in more prudent spending.

Having legislative oversight is no guarantee that questionable decisions will not be made, but it can reduce the risk. St. Louis County councilmembers who voted against forfeiting oversight lamented the council’s lack of involvement in the executive’s decisions, noting that other ideas could have resulted in better use of taxpayer money. St. Charles County councilmembers made a point not to take the same route as their neighbors, with the goal of establishing broad transparency over expenditures.

Ultimately, transparency in government spending is for more than just transparency’s sake. Accountability and oversight hold out the promise of more prudent use of taxpayer money, especially as taxpayer dollars will be at a premium for the foreseeable future.

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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.

Both chambers of Congress had previously proposed infrastructure bills with roughly $300 billion dedicated to highways and bridges. Despite funding mechanisms not being finalized, the president has expressed support for an infrastructure bill, indicating similar bills may come up again in the near future. On a smaller scale, the Missouri Department of Transportation (MoDOT) received $61.7 million from the CARES Act.

Considering that MoDOT is routinely short on funding for road and bridge maintenance, more money is welcome. However, it won’t solve the long-term problem.

MoDOT faces a $745 million shortfall annually in “high-priority unfunded [road and bridge] transportation needs,” and roads and bridges are vital to Missouri’s economic and physical security.

Overreliance on federal money helped create MoDOT’s budget shortfall. Large federal stimulus packages are infrequent. The last stimulus money from the 2009 stimulus package came and went in a mere two years.

Depending on once-a-decade disaster dollars to adequately fund road and bridge maintenance is a poor strategy.

While additional infrastructure money will likely help, Missouri can help itself more by funding transportation through a self-sustaining method. Show-Me Institute analysts have long advocated for the expansion of user fees—like gas taxes or tolling—as a way to fund road and bridge maintenance. By tying the costs of driving to the costs of upkeep, MoDOT would have a more consistent revenue stream to perform necessary duties, as well as ensuring enough state funds are raised to receive matching federal funds.

Missouri can make itself less dependent on federal funds and provide MoDOT the funds it needs to keep our roads and bridges properly maintained. Potential federal infrastructure spending should not distract us from this goal.  

The post Federal Money for Roads and Bridges Won’t Fix Missouri’s Real Problem appeared first on Show-Me Institute.

Ignoring the debatable merits of the bill, the 2009 American Recovery and Reinvestment Act (President Obama’s stimulus package), required reporting on every project down to the subcontractor level and taxpayers were supposed to have near-real-time ability to see how funds were being spent. This act spurred many states to enact increased transparency measures. It is disappointing to learn that Missouri took a step backward at a time when much of the country was moving forward. The auditor noted, “When there’s inadequate documentation, you don’t know if there’s waste, fraud or abuse.”

Has Missouri learned from its mistakes? Some governmental bodies appear to be transparent, if not exercising fiscal restraint, with their emergency spending. The State Treasurer’s Office is publishing CARES Act state government relief fund spending down to the vendor and item purchased. St. Louis County and City both have websites publishing their emergency spending, showing when, where, and on what the money was spent. The county also publishes future committed spending. Close-fisted spending habits have led some to question their emergency priorities, but it’s the transparency portals that inform such questioning. Franklin and Jackson Counties plan to release spending details in the future. However, no other major county or city has yet published such coronavirus-specific spending.

Some state agencies have published the amount of federal money they received but did not specify how they spent or will spend it. A few identified potential categories of expenses—such as the Department of Higher Education, Department of Elementary and Secondary Education, and the Department of Transportation—but did not provide details.

Why aren’t all state agencies and political subdivisions willing to show how they are spending taxpayer funds? Shouldn’t agencies receiving relief funds, i.e., taxpayer money, want to demonstrate that the money is being put to good use? With today’s technology, they can make such data easily accessible, complete, and accurate. If a county or agency is unable to publish this information on its own, it can send the data to the state for publication.

Show-Me Institute analysts have called for government transparency since the first relief funds rolled in. While some appear to be acting transparently, not all are. Isn’t it time for the rest to catch up and show us the money?

The post Don’t Repeat Mistakes from the 2009 Stimulus appeared first on Show-Me Institute.

The COVID-19 crisis is putting tremendous strain on Missouri’s budget. Beyond the health care costs of treating those infected with the virus, the resulting economic fallout has led to more people being eligible for Medicaid. And with businesses closing their doors and fewer people working, Missouri is collecting less in sales and income taxes, which are relied upon to cover Medicaid’s costs.

Growing Medicaid is not a new problem for Missouri, but for years elected officials have found ways of balancing the budget that don’t require major changes to the program. What we don’t know yet is whether Missouri’s experience with COVID-19 will make this time any different.

The federal government has suggested it will offer some additional support to help with state budget woes, supplementing the funding already sent to states through the CARES Act. But those funds are coming with strings attached and there is no guarantee that they will be enough to plug Missouri’s budgetary hole. In fact, the “strings” attached to the CARES Act funding included a prohibition on state Medicaid agencies checking whether people enrolled in the program are even eligible to receive benefits, which could lead to higher future spending. Are policymakers comfortable sitting idly by and hoping the federal aid will be sufficient?

My colleagues and I have written extensively (here, here, and here) about the many ways to improve Medicaid through programmatic reform. And just over a year ago, the state commissioned its own audit that included a list of suggestions that would help control spending. Policymakers have all the resources they need, and reforming Medicaid has never been more urgent. All that is left to do is to act.

The post What to Do About Medicaid? appeared first on Show-Me Institute.

State and local government

Missouri has received roughly $2.096 billion for state and local government relief. $521 million of that must be distributed to counties and cities with populations under 500,000 within ten days of Jefferson City receiving the funds. St. Louis County has also received roughly $173.5 million and Jackson County $122 million. The money is to be used for non-budgeted coronavirus-related expenses.

Community health centers

Twenty-nine community health centers have received a total of $29.8 million for testing, treatment, and continuing primary care.

Education

Missouri’s Department of Elementary and Secondary Education has filed the appropriate paperwork to receive $208.4 million from the Elementary and Secondary School Emergency Relief Fund. Further, the governor has announced that $54.6 million from the Governor’s Emergency Education Relief Fund will also arrive to assist with K-12 and higher education, as well as $117 million from the U.S. Department of Agriculture to help provide school lunches. Senator Roy Blunt has announced that Missouri will receive $206 million for colleges and universities, half of which will be immediately available for institutional and student use, as well as $66.5 million through the Child Care and Development Block Grant for early childhood education needs.

Transportation

The Missouri Department of Transportation has received $61.7 million from the CARES Act to be used for operating expenses and capital assistance for 30 rural agencies. Additionally, Missouri has received $152.4 million to be used for revenue assistance at 75 airports across the state.

Housing

$57.7 million in Community Development Block Grants are reported as being available to a combination of 16 Missouri cities, counties, and state government by the federal Department of Housing and Urban Development. This money is supposed to be used as block grants, emergency solution grants, and housing opportunities for persons with AIDS. The Missouri Department of Economic Development has announced that it will receive $13.6 million of that total.

Unemployment

The Missouri Division of Employment Security has used more than $66 million in federal funds to provide additional unemployment compensation, although more compensation will be distributed once the state determines how to process workers in the “gig” economy.

Emergency management

Missouri can apply for roughly $1.86 million to assist with emergency management procedures ranging from data collection and sharing to response plan development. A 50 percent match in state funding for the program is needed to receive funding.

Public safety

The cities of Joplin and St. Joseph have received funds to assist with public safety expenses for a combined total of $170,000. Overall, $5.5 million is available for 28 Missouri county and city agencies and $11.6 million for state agencies, should they choose to apply for these funds.

Small business loans

Over 46,000 Missouri businesses have received loans from the Paycheck Protection Program, totaling slightly more than $7.5 billion.

Summary

Received: $10.201 billion

Expected: $710.2 million

Available through application: $18.79 million

If you add these sums together you get $10.918 billion. This is what we know so far. More dollars may arrive in the future, boosting the totals for many—if not all—categories.

The post Federal Stimulus Money in Missouri: What We Know So Far appeared first on Show-Me Institute.

Nearly 9 in 10 cities surveyed — from smaller hubs with populations of fewer than 50,000 to the largest metropolitan areas in the country — signaled they expect a revenue shortfall. Among them, more than 1,100 cities are preparing to scale back their public services, the survey found. Almost 600 cities predicted they may have to lay off some government workers amid the crunch. And local leaders in 1,000 cities said the reductions probably would affect their local police departments and other public safety agencies.

Amid this crisis, cities such as Kansas City and St. Louis need to start picking and choosing their priorities. In the face of revenue shortfalls, are convention and visitors’ bureaus really as important as police departments? Are we really going to continue diverting funds away from schools and libraries in order to fund stadiums, entertainment districts, and luxury accommodations? Do existing municipal contracts include force majeure clauses to help cities reorient priorities in a time of unprecedented crisis?

The sponsors of the survey have called for generous federal support for cities, and the Inquirer story goes on to state:

Lawmakers authorized $150 billion in coronavirus aid for states and large cities as part of the broader $2 trillion package that Trump signed into law in March. But that assistance — half of which, Treasury Secretary Steven Mnuchin announced Monday, is now available — comes with restrictions. Even when combined with additional help offered by the U.S. government, many leaders outside the nation’s capital also see it as insufficient to keep their cities afloat financially.

While such support may be necessary, it should not allow cities to escape the consequences of their own bad behavior. Kansas City and St. Louis are high tax cities that also have high per capita public debt. They divert an ever-growing amount of money to private developers to build things that in some cases are clearly not needed.

If cities are to receive federal aid, one hopes that cities with good financial track records are prioritized. Perhaps aid should be tied to ratings of fiscal responsibility before the pandemic such as debt and deferred maintenance. Public funds should not be used to hide, or even reward, previous bad behavior.

The post Should All Cities Automatically Get Federal Help? appeared first on Show-Me Institute.

Liquor taxes are a kind of so-called “sin tax,” a topic that that contributors to Show-Me Daily have discussed before. The primary purpose of such taxes is to discourage behaviors that may be considered socially undesirable, and the secondary purpose is to generate revenue for the government.

Sin taxes have a marginal nature, which is illustrated in this example from Massachusetts. Liquor stores that are located close to the Massachusetts border will particularly benefit as a direct consequence of the repeal — they will experience increased sales from nonresidents. Similarly, stores that are located on the other side of the border will likely experience fewer sales. This illustrates how rational individuals tend to think on the margin, another topic that we have blogged about previously. From an interview of a liquor store owner published in the Tauton Daily Gazette:

“It wasn’t a mass exodus [when Massachusetts instituted a liquor tax]” Matias said. “You would still see Rhode Island plates in the parking lot. They just wouldn’t come as often. If you saw a guy every two weeks, now he might come once a month.” The repeal is expected to be a boost for the South End stores. An Ocean State resident is more likely to make the trek to Massachusetts now that the savings is significant.

Compared to other states, Missouri assesses some of the lowest tax rates on alcoholic beverages (and on cigarettes, too). Similar to the illustration provided by the aforementioned article, a marginally higher number of individuals purchase these products in Missouri instead of in their home states because of the difference in tax rates.

Should Missouri eliminate its tax on alcoholic beverages, too? A disadvantage of that policy change would be that state government would miss out on revenue. Massachusetts, for instance will miss out on $100 million as a consequence of eliminating its tax. However, as an advantage, stores in Missouri would experience a higher volume of sales. Policymakers are always looking for ways to encourage economic activity and job creation. Perhaps repealing the liquor tax could be a means to achieve these goals, in part.

The post Massachusetts Repeals Liquor Taxes; Should Missouri, Too? appeared first on Show-Me Institute.