A push by the attorney general’s office for the emails of professors and staff at the University of Missouri has academic freedom advocates concerned the office is being weaponized to stifle free speech and deter researchers’ work.

In June, Missouri Attorney General Eric Schmitt’s office sent two records requests to the university….

“When I see these requests, it really makes me worried about how this kind of request for faculty information can be used to burden faculty or hassle them where they’re engaging in research or scholarship that state actors might disagree with,” said Anne Marie Tamburro, program officer for student press and campus rights advocacy at the Foundation for Individual Rights and Expression, known as FIRE.

Your mileage will vary on the utility of the Attorney General’s undertaking. Indeed, the vast majority of the public has little interest in the behind-the-scenes decision-making of Mizzou journalism professors. But that has zero bearing on the facts of this case, namely that (1) the people of Missouri fund their public universities through their tax dollars; (2) the people have the right to be informed about the activities of their public employees insofar as they relate to their public functions; and (3)  the Attorney General has the same right to use the Sunshine Law as anyone else, and a greater responsibility to do so where he deems the public interest requires it.

Academic freedom is an important principle, but all it means is that professors at public universities should have the discretion to research and discuss their ideas within the limits of the policies set by those constituted in authority over them. It doesn’t mean that they are exempt from the rules of transparency that apply to all those who work for the taxpayer. If their work would be “deterred” (to use FIRE’s word) unless they can conduct it in secret, maybe it’s work that shouldn’t be done, at least on the public’s dime.

FIRE should be considering the full public policy picture here rather than acting as an apologist for secrecy against the clear interests of transparency under an otherwise unambiguous law.

The post Sunshine Law Applies to Government Journalists, Too appeared first on Show-Me Institute.

The reason the state bureaucracy resists transparency is simple: the Sunshine Law in Missouri (and elsewhere) is pretty weak, local government officials know it, and many of our state and local officials are reluctant to share information about government operations if they can avoid it. Mandatory document reporting and spending transparency resolve this kind of problem, offering notice to bureaucrats and penalties for noncompliance. I’ve pushed for that reform for a few years now and will continue to do so until it’s passed.

Of course the ideas of “mandatory reporting” and “mandatory transparency” are predicated on active policing of those laws by public officials, like an attorney general or auditor. So I read with great interest an article announcing that the state attorney general’s office had launched a transparency portal of its own showcasing what the office had found in district curricula:

Missouri Attorney General Eric Schmitt subpoenaed seven school districts Wednesday for information on surveys given to students, and also launched a portal which gives the public access to “objectionable teacher trainings and assignments” uncovered through parent submissions and open records requests. . . .

As part of the Students First initiative introduced by Schmitt in March, the attorney general’s office also launched a transparency portal to compile parent’s submissions and open records requests sent to school districts.

The Students First initiative, launched by Schmitt in March, is designed to “increase transparency in Missouri’s schools” and “ensure a quality education for Missouri’s children by uncovering and eliminating curriculum and policies and practices that prioritize politics in the classroom instead of student education and success.”

You can find the attorney general’s transparency portal here.

It has been remarkable to see how resistant many school districts have been to transparency even when the inquiry has come from a state office, but I think that’s emblematic of a state governing culture that holds good governance and transparency in fairly low regard. That the attorney general’s office has had to sue districts to get documents is a testament to the need for transparency in all facets of government, and I’m glad the attorney general and his office have taken steps to increase transparency while a bumbling state legislature struggles to catch up.

The post Attorney General’s Office Starts a Curriculum Database of Its Own appeared first on Show-Me Institute.

• Barry Langford, Chair of the Columbia College Criminal Justice program. Langford has taught at the school since 1994.
• Aaron Hedlund,  economics professor at the University of Missouri and visiting scholar at the Federal Reserve Bank of Saint Louis.
• Nicole Volkert, former prosecutor and municipal judge. Volkert has served both Monroe and Montgomery Counties and a legal advisor to the Columbia Police Department
• Jennifer Bukowski, a criminal defense attorney with over ten years of experience. Nicole founded the Bukowsky Law Firm seven years ago after serving as a public defender for three years.
• Eric Schmitt, Treasurer of the State of Missouri, elected in 2016. Previously, Eric served in the Missouri State Senate

The 90-minute presentation was packed with information. Panelists discussed criminal justice theory, the process and players from arrest to parole, over-criminalization, and the deleterious role of fees and fines, along with possible reforms. Some of the latter the Show-Me Institute has discussed before, including the cost of incarceration overall and reforms such as Raise the Age and reducing mandatory minimums. Panelists even pointed out the positive effects that education choice can have on incarceration likelihood.

The entire presentation is now available online (click above). The Show-Me Institute is grateful to everyone who participated.

The post Criminal Justice Reform Panel in Columbia appeared first on Show-Me Institute.

The St. Louis Post Dispatch reports “Missouri mulling pension payouts for some former state workers.” Meanwhile, the Springfield News-Leader writes “Troubled Missouri pension system offers buyouts to former state employees.” In the PD piece, State Treasurer Eric Schmitt, who is also on the MOSERS board of directors, is quoted as saying, “Now is the time to start taking our pension troubles seriously. If we don’t, it will mean less resources for our schools, roads, and health services down the line.”

The buyout for MOSERS employees would provide a lump sum payment, rather than collect pension benefits down the road. The buyout is worth less than the actuarially assumed pension benefits the workers would stand to receive; thus it would generate a savings for MOSERS and it could potentially help some workers.

The treasurer is right. We cannot keep kicking pension problems down the road and this buyout is a smart, common sense strategy for reducing pension obligations. Smart, that is, for the state. Whether it is smart for the workers to take it is another story. Andrew Biggs doesn’t think so. Check out this Twitter interaction between, Biggs, Mizzou economics professor Cory Koedel, and me. 

Biggs suggests MOSERS pensioners shouldn’t take the deal. Koedel and I offer responses in jest, as Missouri taxpayers we stand to benefit from MOSERS shoring up its bottom line. Then Biggs offers a startling calculation. He suggests the buyout is worth approximately 39% of the value of the worker’s benefits. I doubt that’s actually worse than the odds on a lottery ticket, but it is certainly not a good payout.

Does this mean no one should take the buyout? Not necessarily. There may be circumstances in which some workers might be interested in having a lump sum of money rather than a pension that pays out over a course of 30 plus years. For instance, if you don’t expect to live that long!

The most important thing here is for workers to be educated on this option. With that said, I commend the MOSERS board for exploring this option and encourage MOSERS workers to fully understand their options before making any decisions. 

The post MOSERS Pension Buyout Good for Taxpayers, Probably Not for All Workers appeared first on Show-Me Institute.

The post A Tax-Cut Change of Heart from the Post-Dispatch? appeared first on Show-Me Institute.

With that statement, Missouri State Treasurer Eric Schmitt described our state’s severe underfunding of public employee retirement plans. To put an issue that Show-Me Institute writers have been highlighting for years in simple terms, when initial contributions to a retirement plan are too low or don’t grow as fast as projected, spending promises can’t be kept. Either retirees are hung out to dry, or taxpayers must step up and pay what a plan cannot.

Addressing our current spending issues is essential to improving our state’s fiscal health, but if we fail to consider Missouri’s long-term pension obligations the results could be disastrous.

As any savvy investor knows, the power of compounding can make a huge difference when it comes to saving. If our investment assumptions today are even slightly different from what actually happens in the market, this difference can grow rapidly over time. A widening gap between assumed and actual returns is especially troubling, because most economists agree that estimates for pension investment returns are often too rosy.

In 2015, Andrew Biggs of the American Enterprise Institute estimated that Missouri’s public pension plans had a total of $57.3 billion in unfunded liabilities (which are calculated as current assets minus the net present value of what will need to be paid). If plan investments fail to grow enough to cover promised benefits, then a bill much larger than even $57.3 billion will hang over the budget discussions Missourians have years from now.

So how can we fix this problem? Reforms that help Missouri transition away from plans that promise payments for life and toward plans that incur their costs up front can protect our state from investment risks. Schmitt illustrates this perfectly when he says “Our goal as a state should be to fully fund our obligations as they are incurred instead of putting the burden on the backs of our children and grandchildren.” Policymakers should consider adopting this goal—the sooner, the better. 

The post Pension Reform in Missouri appeared first on Show-Me Institute.

Sen. Eric Schmitt, a St. Louis County Republican, is sponsoring the legislation capping municipal court fines.

“We’re trying to prevent cities from using this as a revenue-generating opportunity and we’re trying to protect individuals who are primarily poor,” Schmitt told The Star. “People ought to obey the law, but we shouldn’t treat our citizens like ATMs.”

In a more recent story, the Star features various Jackson County and Kansas City leaders bristling at the idea of having court fines and fees reduced. Specifically they point to the impact this might have on addressing blight:

Deb Hermann, chief executive officer of Northland Neighborhoods Inc., said Kansas City is already planning to spend $10 million to tear down 800 dangerous buildings over the next two years, illustrating the level of blight in the city.

She said that for too many irresponsible property owners, $450 is just the cost of doing business.

“The city does not need to lose any tools it has to encourage people to take care of their properties,” she said.

Here is the problem: the City of Kansas City is the largest owner of blighted properties in the city. About 200 of the 800 dangerous vacant buildings that Kansas City is finally tearing down are its own. As several residents pointed out in the KCPT documentary, “Our Divided City,” the City can be quick to levy fines on private owners while letting their own properties languish.

This all reminds me of my father’s favorite example of chutzpah: a defendant convicted of killing his parents asking the court for leniency because he is an orphan.

No one should be surprised that local governments do not want the legislature restricting their ability to levy fines and fees. Claiming that they are motivated by addressing blight is just not supported by the facts. 

The post Kansas City’s Crocodile Tears over Blight appeared first on Show-Me Institute.

However, last March a Cole County judge invalidated much of SB5, ruling that several of its most important provisions were unconstitutional. Although the decision will be appealed, it has jeopardized the protections that SB 5 had provided to Missourians.

Regardless of the fate of SB5, concern about court fines and fees should extend beyond traffic tickets and percentages of budgets. State Senator Eric Schmitt (the sponsor of SB5) sponsored legislation in the recently completed session to extend the protections against taxation by citation.

SB 572 (passed by the legislature this session) lowers and caps fines applicable to both municipal traffic and ordinance violations and adds municipal ordinance violations to the calculation of the 20% municipal revenue cap allowed to come from municipal fines and fees.

The use of taxation by citation in any form invites unpredictability and conflicts of interest among the courts and law enforcers. For the benefit of government and the people of Missouri, tax policies should be set so that revenue is reasonably stable and predictable.

The first step to solving any problem is admitting that one could exist. The legislature has recognized that funding municipalities using traffic fine collections, and now municipal ordinance violations, is bad policy—and that’s a great start. The next step is to fully address taxation by citation in all its forms.

The post Making Sure Municipal Courts Are Not Tax Collectors appeared first on Show-Me Institute.

Transcript

Audrey Spalding: [testimony]

John Lamping: The name of your organization again?

Audrey Spalding: The Show-Me Institute

Bob Dixon: I was just curious in listening to your testimony there about the cost … if you did any sort of analysis with respect to the opportunity cost of — let's say we don't do it, and it goes somewhere else.

Audrey Spalding: I have not done that study. We haven't had time to do that study given that the ”Aerotropolis” tax credits, the amounts in particular, were recently agree upon. I think, I would assume: 1) that the tax credits are necessary to the creation of an international hub; and, 2) that such an international hub would be successful. Regardless, I think anyone can agree upon the fact that there is at least a possibility that this is not successful.

Eric Schmitt: I have a follow-up. Mr. Dixon?

Bob Dixon: I would be interested to, if you're going to present a study like that, I'd be interested to see some sort of analysis on that. Because a lot of times we do things, recently we sent to the governor's desk a phase-out of the corporate franchise tax, but I don't think that your organization was here to testify against that because of the cost. I realize it's a different issue, but it seems to be an opportunity that, if it's lost, we could certainly lose out, and I'd like to see us calculate that cost. Thanks, Mr. Chairman.

Eric Schmitt: Thank you. And I want to, first of all I want to thank you for coming up here and testifying. I totally disagree with your analysis. You made reference to the $480 million. Are you aware of how long it would take for the $480 million, if everything hit, how long that would take?

Audrey Spalding: Yes, I realize that would not hit immediately.

Eric Schmitt: Do you know how long of a period of time it is?

Audrey Spalding: I believe that it's more than a decade.

Eric Schmitt: Fifteen years. So, if everything hits, if we hit the freight-forward piece, if we're building facilities, if we have industry that we don't have in our state right now, and the only way that they get any of the credit is: they invest in a $20–25 million building, they're operating, they've created jobs, we have the kind of economic activity that we were seeking with the legislation that we don't have, I do not understand how an organization that seems to at least state that they're for economic growth cannot get behind an idea of incentivizing people to come and do things that we just don't have. So, my question is, if this is a real possibility, is it worth doing? If China, which is first-in, is gonna move, and wanna have the ground, which they don't have in Chicago, is that worth having in our state?

Audrey Spalding: Well, I think perhaps we approach this from a different, each from different standpoints, obviously. Now, we're talking here about this proposed international hub, and of course there have been talks of a China hub in other countries, so this would be a wonderful idea. Given that those talks are occurring, isn't it also at least possible that Saint Louis–area developers and other such entrepreneurs would be entrepreneurial enough to seize upon such an opportunity without state help?

Eric Schmitt: But if you don't have, my question to you is, if it doesn't happen, and I know you're seeking some sort of letter of, memorandum of understanding or something. If it doesn't happen, none of this revenue that we would be foregoing — because that's what it is, we're foregoing revenue — which I find it interesting, actually, as a Republican, I hear a lot … really, what we're doing here is we are reducing the tax liability to create and to have an industry in our state that we don't have. I don't find that offensive in any way. People campaign a lot about this, about job growth, about opportunities, about having and creating an economic environment in our state that's conducive to the creation of quality jobs — well, here it is. And being critical of a new idea that's bold isn't anything new or isn't anything unique. I'm sure the steamboat captains of the late 1800s thought that the railroads were something that threatened their interest, or that people would be inconvenienced as their homes or property might be bought out to make way for the new mode of transportation. But guess what? One city got it right. Chicago got it right and Saint Louis was standing on the sidelines. I don't want to be remembered … there's a mural in the Senate, I spoke of this last time, of the first senator, Sen. Benton, who was talking about having that westward expansion of the railroad from Saint Louis to the west coast, and we missed it, OK? What I'm saying this session is: This is important enough that I think we need to stand up for growing the pie. And I know there's going to be plenty of people that poke holes and have criticism, but that's what critics do, OK? It's our job, up here, to seize on an opportunity to grow our economy, and there couldn't be anything more real or more immediate than being in the center of an international trade hub. Any great civilization, any great city has been at the confluence of routes, of commerce, of industry. That's what we have an opportunity for, here. And just because we want to live in an ivory tower and we want to give great speeches about what things might look like if we lived in some utopian world — we don't live in that world. We don't live in that world. So we can choose to compete, or we can be economic isolationists and we can build a great wall around our state. I think it's our job in this committee and in this Senate in this session to break down those walls, to open up trade routes, to create opportunity for Missouri businesses, the ag community. We heard from the pork producers today. This is an opportunity that we haven't seen in this state. So I appreciate, I really do appreciate you coming up here. I appreciate your different point of view. I've seen some of your articles. I haven't had a chance to visit with you; we haven't had a chance to talk about the legislation. I'd be happy to do that with you more. I know that you were probably coming in to a room where there's a lot of support, so I do appreciate that, but I respectfully disagree. Thank you. Any other questions?

Victor Callahan: Railroads were federal stimulus.

Eric Schmitt: Any other witnesses in opposition?

Christine Harbin: [testimony]

Eric Schmitt: Before I go, I just want to make note that it sounds like you're advocating more money for social spending, and, if I recall correctly, the Show-Me Institute was against the autism bill last year.

Christine Harbin: I'm sorry?

Eric Schmitt: The autism bill. I believe the Show-Me Institute had an editorial piece against the autism legislation last year, so I'm glad to see that the Show-Me Institute is advocating more money being spent on social programs now.

Christine Harbin: That wasn't my implication and I didn't work on that particular thing.

Eric Schmitt: Any questions? Sen. Dixon.

Bob Dixon: Earlier in your testimony, you referenced my question of the previous witness, and then in your reference to the St. Louis Business Journal, I believe in their editorial, before I ask you a question I'll just mention: I probably take greater offense at being called "out-state." I'm from Springfield, and I don't have … you know, I'm not in the Saint Louis area, and I support this legislation wholeheartedly because I think it's good for the entire state. But that, I'm more concerned about that mentality that we're not in-state, we're out-state, than I am anything else, because we don't need those kind of divides in Missouri, and that's part of what has hampered progress in the past. But my question specifically is, going back to what I asked of the previous witness, if you would please clarify what you said pointed to that question, because I still don't see anything where we're talking about the lost opportunity, and where that cost has been calculated. And then, specifically what services — and you used the word "services" — would be. That also is a concern, but I won't go into a big statement about that, because I don't believe the state provides "services," or if that fits. But if you could enumerate on what services you think we need to be funding with those "opportunity dollars," if you will, and then, also, how that testimony would have addressed my previous concern.

Christine Harbin: Sure. When I say "services," I just mean other government programs. I'm speaking in very general terms. I'm talking about education …

Bob Dixon: Bureaucracy.

Christine Harbin: Yeah, building roads, fixing potholes, stuff like that.

Bob Dixon: Those basic things I can agree with are functions, but if we're talking about "services," there's a lot of people roaming these halls talking about benefits for this that and the other, which, in my opinion, are not a function of state government. To that point, that answers that question. Specifically to the lost opportunity cost, if you could address that.

Christine Harbin: Certainly. Well, I would say that it's impossible to calculate with certainty what could have been in the absence of this policy. However, what I described in my testimony is … When you have a large public works program like this, when you have a large tax credit program like this, people are forced to, taxpayers contribute more of their earnings, a greater percentage of their earnings towards the program. And so, as a result, it means that they have less money to spend in the private sector.

Bob Dixon: Potentially.

Christine Harbin: Potentially. Because otherwise, they could see a reduction in services, too. It's some combination.

Bob Dixon: Some of that, though, I would have to say, and I'll yield back to the chair, but some of that also comes from the concept that any money not collected by government is actually just tax money that we didn't collect, which I fundamentally disagree with that whole mindset. A tax credit is not, and the courts even have ruled on that in various cases, one in particular, but those are not state dollars.

Christine Harbin: Agreed. I agree that it's not state dollars. I'm just saying that, as a consequence of programs like this, Missourians, taxpayers, have less money to spend themselves.

Bob Dixon: Potentially.

Christine Harbin: Potentially. It's difficult to calculate with certainty how much is taken out, but they're going to eat at fewer restaurants, they're going to spend fewer nights in hotels …

Bob Dixon: The very strong likelihood also exists that, in the long term, because of the economic growth, we could see substantially — and perhaps exponentially — more.

Christine Harbin: Agreed.

Bob Dixon: OK. I just wanted to make sure that, and again, I would like to emphasize that I would love to see some sort of a more exhaustive study on that end. Thank you. Thank you, Mr. Chairman.

Eric Schmitt: Sen. Richard.

Ron Richard: Mr. Chairman, just briefly, as someone who's done in Joplin, the lady mentioned my city, who's done most of the economic development for the Saint Louis region, us poor people that are barefoot and corncob pipes have done more to back up Saint Louis and the community in Kansas City than frankly some of the Saint Louis–elected people. And the reason we have is because we understand what's at the other end of the highway, which is Saint Louis. And as they progress and do well, the rest of us will, too. Everything that the Show-Me Institute is for, I'm against, and everything they're against, I'm for — and we're both conservatives, I don't understand that. I mean, we fought for organization on the Bombardier in Kansas City, and it was a stretch, didn't work. This may be a stretch, but I've been to Saint Louis somewhere almost twice a month, as in Kansas City, and I've got business people and friends of mine that live in Saint Louis that are begging for something new and creative. So we take a chance. And I think the chairman has a great opportunity here to take a chance on something. If it doesn't happen, nothing is given away — no tax credit. Granted, the lady's right, tax credits may be a little overwrought, and I think there's a mechanism to address that, and the chairman has a plan for that. But I will say that, until Missouri is ready to take a chance on something new, we'll just be a lackluster state. We will have all our kids move away, our universities will disintegrate, our highways will disintegrate, our schools don't have to worry about opening ‘cause there'll be no one going to school, ‘cause there won't be tax money one of these days. So, I respect the lady's opinion, again I think we take a chance, I think we move forward, and I support the chairman and I will support Saint Louis every time I get a chance.

Eric Schmitt: Thank you. Any other questions? Sen. Lamping.

John Lamping: I'm curious about a couple things, actually. First of all, you were kind enough to quote the St. Louis Business Journal, and I'm curious to know what the Show-Me Institute's opinion would be on their proposed outcome, which is, we simply offer $60 million tax credit to freight forwarders. So what's your opinion of that idea?

Christine Harbin: I didn't study that particular proposal.

John Lamping: Well, that was the second half of the editorial you just quoted.

Christine Harbin: Yeah, sorry. Similar to how you said earlier in response to the question and answer session with Audrey: You're either for it or you're against it. I testified in front of the Tax Credit Review Commission last September. And I have been a very vocal supporter of the total elimination of targeted tax credits in Missouri. And that holds true here, too. I think that Missourians would be better off if they were able to keep their earnings and spend it themselves in the private sector. So, I do not support kind of a halfway …

John Lamping: So you like the idea of suggesting that some of the Business Journal editorial is correct in pointing out the fact, in your opinion, that the rest of the state subsidizes it, but you disagree with the conclusion they come to — you don't support.

Christine Harbin: I agree with their criticisms of the project. I don't fully support their policy recommendation.

John Lamping: Second thing, probably unlike most of the members of this board, I appreciate you coming forward today. As someone for who economics is kind of a hobby, I study … I'm a member of the Show-Me Institute, as well as many other think tanks, as I like to stay abreast and current of different thoughts and ideas. But one of my favorite economic terms that all my teachers used over and over again, and us in business and finance always laughed when we think about this, is this concept of all things being equal. And that's something that, your study of economics sounds like from school. And that's where the theoretical world comes in and they say, "Well, all things being equal, then, well, here's our supply line, here's our demand line, we're going to now go forward with our great discourse and our great study, assuming all things are equal." I think what the chairman spoke to today is the reality that the world, all things are not equal. There's the theoretical and there's the reality. And as much as I enjoy sitting down and going through the theoretical. I think that it helps for, and again, maybe that's your role. Maybe that's your role in the discourse: It's to be the theoretical go-to. Unfortunately, in this capitol building, it's all about the reality and the real, and all things are not equal. And when it comes to economic development in and around this region, clearly all things are not theoretically perfect. So, I appreciate you coming forward, it's a really interesting part of the testimony, and I look forward to your next publications.

Christine Harbin: Can I respond to that?

Eric Schmitt: Sure.

Christine Harbin: To that last point, I agree that economics is separate from natural sciences because it can't really be studied in a laboratory, we're kinda going through it, you know, as we are. However, I think that my focus here is very reality-based. I think that the idea of this particular policy awarding close to half a billion dollars in tax incentives to a small group that is … The hope is that it will encourage trade, but I think the reality is that it won't.

Eric Schmitt: OK, let me follow up on that. If it doesn't, do we expend any tax credits?

Christine Harbin: If it doesn't encourage trade?

Eric Schmitt: Correct.

Christine Harbin: You mean after we go through the policy? After we enact it?

Eric Schmitt: Look, I do want to — and I do appreciate you coming out — I just want to make, I want to understand, know that you understand the bill …

Christine Harbin: Oh, I read it.

Eric Schmitt: So what is your understanding of how the tax credits are awarded for facilities?

Christine Harbin: It was what Audrey outlined. We offer tax credits to support the subsidization of these warehouses.

Eric Schmitt: But how does that work? How does that work?

Christine Harbin: I don't have the text of the legislation in front of me.

Eric Schmitt: Well, you're testifying against the bill. OK? And I'll just explain how it works, which is, you build a building. It's a $25 million building, you operate it, you get a portion, it's screened over five years, each year you have to prove that you're getting the economic activity and the jobs. So, if those buildings never get built, my point is, if the buildings never get built, and we don't have the trade, there's never any tax credit. So, it's a very different reality from what you're explaining, which is, we're spending 500 million and hoping that people come. The reality is, if they come, at that point we have the infrastructure because of the trade. So it's just a, it's different, it's a different sequence of logic here.

John Lamping: Mr. Chairman, my guess is, what she really means to say is that she's against the Business Journal's recommendation to just do the freight-forward piece. ‘Cause that would then show no evidence of successful …

Ron Richard: [Sen. Richard's microphone was turned off, so this portion is inaudible]

John Lamping: Maybe we'll find out in Friday's edition.

Christine Harbin: Well, my response is: If it's such a great idea, then there's a lot of entrepreneurs in Saint Louis with great ideas, with multiple skills — let them take risks and bear the burden.

Eric Schmitt: So, it'll just happen?

Christine Harbin: Yeah, incremental change.

Eric Schmitt: Sen. Dixon.

Bob Dixon: Yeah, I just want to follow up on the comments from earlier, I wanna make it very clear. I failed to thank you for coming. I want to make it very clear that I really do appreciate you coming, as several others have said, and I appreciate the Show-Me Institute for the stands they've taken on several things, principled stands. We'll just have to agree to disagree on this one, but it takes a lot of courage to come and testify in a room full of people that are in favor of something, testify against it. And I do appreciate it.

Christine Harbin: Thank you.

Eric Schmitt: Any other questions? Thank you again. And I really, I do appreciate it. Obviously I have … I believe in it. You're passionate; I'm passionate; that's what this process is all about. So, I do appreciate you taking the time to come up to Jeff City; it's not easy to come in and express at one of these.

Christine Harbin: Thank you.

The post Testimony on the ‘Aerotropolis’ Bill appeared first on Show-Me Institute.

I spent some time looking for that study, or any discussion of its results. Finally, about to give up, I emailed the Midwest China Hub Commission to ask whether the study Jones had promised was available.

Here is the response I received:

The study you refer to is still underway but very close to completion. The St. Louis RCGA is spearheading the impact analysis with possible completion and release of findings to come at the end of next month or June. The findings of the analysis will be made public at that time.

So, despite statements from legislators and special interests that subsidizing freight traffic is a good idea for Missouri, no study has been published that backs up those statements.

Right now, state legislators, local politicians, and special interest groups are in a rush to award $480 million in state subsidies that they say would further the China Hub dream. But the legislative session ends in mid-May, so the promised study won’t be done in time for legislators to consider the results before awarding almost half a billion dollars in subsidies.

There’s a lot that I don’t understand about this tangle of subsidies, but this is perhaps the most mystifying. Legislators who say that they want to keep Missouri fiscally responsible are now pushing to award almost half a billion dollars without any formal attempt to weigh the costs and benefits of the proposal.

From Sen. Eric Schmitt:

This is new. This is new investment. This is new economic activity that we just don’t have. When you have zero flights a week and we want to move forward and actually create this kind of international trade hub, which is what it is, that’s activity that we don’t have now.

What evidence is there to substantiate Schmitt’s statements? Has any analysis been done demonstrating that the award of tax credits would result in increased freight traffic to Saint Louis?

From Rhonda Hamm-Niebruegge, director of airports at Lambert-Saint Louis International Airport and Ed Monser, president of Emerson:

[The Aertropolis subsidy bill] has the support of organized labor because of the job impact it would bring to Missouri and support from rural legislators because of the opportunity to export Missouri beef and pork, as well as other agriculture products, to countries not currently buying these commodities.

But what evidence is there to prove that this project and related incentives would result in new jobs? What study has been done that demonstrates that China would import Missouri agricultural products if the state spent $420 million to subsidize the construction and operation of cargo warehouses?

If there were an award for unsubstantiated, overblown commentary, it would go to Rep. Caleb Jones, who told CBS:

It’s going to create demand for all of Missouri and our products and goods. Folks from my district are going to be able to load up cattle and drive it to St. louis and have it in China the next day.

What evidence is there showing that this project and package of incentives will “create demand for all of Missouri”? How do Jones’ constituents know that there’s a market for their cattle in China? Instead, isn’t there a chance the constituents of the 117th district will have to pay roughly $80 each, which is what this bill will cost every Missourian — and then receive no benefit?

The aerotropolis tax credit bill does not have to be passed this year. After all, there’s no firm commitment from China, the legislation contains hidden costs, and no study has been produced demonstrating that this proposal makes financial sense.

What’s the rush?

The post Where’s the Evidence That the China Hub Makes Financial Sense? appeared first on Show-Me Institute.

State lawmakers want to turn Saint Louis into an international cargo hub. Sounds great, right? Who wouldn’t want that?

Unsurprisingly, state lawmakers decided to do this by providing millions in tax incentives to private companies. They want to give up to $60 million in tax credits to companies that export by air from Missouri, and $420 million in incentives toward the construction of storage facilities. My colleague Audrey Spalding already argued that this policy would subsidize the construction of warehouses abroad, and that trade will occur independent of government intervention. Essentially, we’re paying our trading partners to buy our products.

In this post, I will introduce some additional arguments against using taxpayer monies to boost foreign exports. Don’t get me wrong; I am an enthusiastic supporter of foreign trade. (And, as it turns out, 90.1 percent of economists agree with me on this.) I just disagree that taxpayers should be forced to pay for it.

The air hub would benefit some groups in the Saint Louis area, but taxpayers throughout Missouri have to pay for it.

People living in Saint Louis will receive more of the benefits, but the other taxpayers in Missouri will have to help shoulder the cost. A taxpayer in Joplin or Sedalia will pay proportionately the same as a taxpayer in Saint Louis, despite the fact that he doesn’t directly benefit from the policy. This is an unfortunate case of concentrated benefits and diffused costs, a phenomenon I have described before on the blog.

Tax Credits in Missouri are already out of control.

From 1998 to 2010, tax credit redemptions have grown from $102.7 million to $521.5 million, and they’re continuing to grow. At the same time, state revenues are falling. This is not sustainable in the long-term. Both the Tax Credit Review Commission and the state auditor’s office have recommended changes that would limit tax credits, but so far lawmakers have adopted none. I wish that lawmakers in Missouri would implement measures that limit — not expand — tax credits in Missouri.

Other government services compete for these funds.

Because Missouri is strapped for funds, lawmakers have made cuts to education and public safety in the state budget. Does this indicate that they believe being an export hub is a higher priority than education or public safety?

The subsidy steals activity from one location in order to give it to another, and will lead to an interstate bidding war.

The purpose of this bill is to steer cargo away from other cities, particularly Chicago. The bill’s sponsor, Sen. Eric Schmitt, recently said this in an article in the Saint Louis Beacon. From the perspective of a state legislator, this make sense. They want to get reelected, so they will focus on projects that are large and very visible to voters. However, the policy makes Illinois worse off because it causes businesses to leave the area.

Once enough companies leave Illinois to come to Missouri, it’s only a matter of time before Illinois retaliates by providing its own set of incentives to lure them back. We see this in the auto industry, in particular. As a result, targeted tax credit programs encourage states to engage in a bidding war. This is a problem because taxpayers are left to pick up the tab. Even though subsidies don’t create new economic activity (they merely shift it from one location to another), taxpayers are forced to devote increasing amounts of their tax monies toward attracting businesses and industries. They’re paying more, but they’re not getting more.

Local economies would be wise to stop viewing each other with antagonism. Saint Louis would be better off if it focused on its comparative advantage and let exporting activity stay in Chicago.

The post Subsidizing Exports Will Do More Harm Than Good for Missouri appeared first on Show-Me Institute.

There has been a lot of charged rhetoric on the topic of autism mandates, and I’m positive that its proponents have had the best of intentions. (In fact, I played softball last weekend with one of the sponsors of the bill, Sen. Eric Schmitt, and he seemed like a great guy.)

It’s important, though, to understand the economic mechanisms behind mandates. Insurance becomes prohibitively expensive if the government attempts to mandate coverage of everything that could happen to anyone. As I’ve mentioned before, high-deductible health savings accounts are one of the best ways to handle these sorts of issues; once the policy owner exceeds a certain deductible, their insurance can cover the cost of treatment. The high deductible helps to minimize costs by reducing the health care wedge between patient and doctor, as well as reserving insurance for its intended purpose: large, catastrophic costs. Market competition is a more effective way to bring health coverage to all children with autism and other conditions, and not just a select few.

(Also, a quick thanks to John Combest for linking to my op-ed in the Springfield News-Leader! My op-ed will also be available in the Sunday edition of the Joplin Globe.)

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