His response to a laundry list of budget items that were earmarked for a particular school district was:

Given the State’s historic investments in education this year, it is incumbent upon local school districts to prioritize the use of their resources for this type of programming as they deem appropriate and necessary.

In other words, the Foundation Formula is intended to make sure that all districts have and are able to spend an amount that is “adequate” for the successful education of their students. The Foundation Formula funds should cover repairing an outdoor track in the Houston R-1 school district, not earmarks.

Some programs, such as the St. Louis reading literacy program or Kansas City for K-12 career literacy resources, were vetoed entirely because the budget contains “multiple other areas of funding for similar programs.”

Increases for programs such as the Teacher Recruitment and Retention Scholarships or the Workforce Diploma Program were removed. Perhaps the governor wants to see evaluations of the impact of these programs first.

All in all, the governor, along with his staff, appears to have finally taken a close look at the education items in the budget before signing it. Perhaps the next fiscal year, when the governor is involved from the beginning, will usher in a new era of responsibility and accountability for the spending of our hard-earned dollars.

The post Credit Where Credit Is Due appeared first on Show-Me Institute.

So here is my contribution to the effort. Just tell St. Louis’s Bi-State Development Agency (also known as Metro) “no” on its application for around $700 million in federal funds for the ludicrous Green Line (formerly known as the North-South Line) proposal. Like Nancy Reagan said to Arnold on Diff’rent Strokes, “Just say no.”

The new leadership in the federal Department of Transportation (DOT) has instituted major changes in how the DOT is going to make decisions. This doesn’t look good for the Green Line, as the St. Louis Business Journal wrote about this week. The new DOT guidelines state that, among many other things, the DOT isn’t funding projects for local political purposes or social justice reasons. The new DOT leadership is focused on moving people and goods, and actually moving people is one thing the Green Line isn’t going to do. Metro’s own estimates—which based on history are probably inflated—claim that the Green Line will have only 5,000 boardings (so, about 2,500 people) per day. That is for a billion-dollar project. That’s absurd.

Whether you call it the “Green Line” or the “North-South Route,” I call it an inevitable failure and a huge waste of tax dollars. Even if you support MetroLink, there is no reasonable argument for the Green Line project. The federal government ought to reject this plan and many other similar, though not quite as bad, applications from around the country.

You’re welcome, Elon.

The post Hey Elon, Here Are Some Cost Savings for You in St. Louis . . . appeared first on Show-Me Institute.

Over the past few months, I’ve talked a lot about Missouri resuming its Medicaid eligibility redetermination process. In short, during a three-year pause on eligibility checks, Missouri experienced enormous Medicaid enrollment and cost growth. Today, more than 20% of all enrollees are likely ineligible for the program, either because they make too much money, have coverage from their employer, or have moved out of state. This means that Missouri is wasting upwards of $120 million each month footing the bill for health coverage for people who aren’t qualified to receive it.

Missouri’s Medicaid agency is now two months into processing redeterminations and enrollment has finally started dropping, albeit slowly. Recent reports from both national and local news outlets are attributing the enrollment decline to “paperwork issues.” In my opinion, this characterization is incredibly misleading.

States classify anyone who fails to respond to a renewal application as being removed from the program for “procedure reasons.” This is being referred to as “paperwork issues” by some. This is in contrast to the other classification of individuals removed from the program—those who were “determined ineligible.” The problem is that if the state never hears back from an enrollee after repeated attempts to confirm their eligibility, they can only be removed from the program for “procedure reasons” because there wasn’t enough information to determine their eligibility one way or another. Calling all failures to respond to the state Medicaid eligibility checks “paperwork issues” misses a key point.

Someone who knows they no longer qualify for coverage is incredibly unlikely to go through the effort of filling out and returning the Medicaid renewal application. For years, individuals on essentially every welfare program (including Medicaid, Supplemental Nutrition Assistance Program [food stamps], and Temporary Assistance for Needy Families) have been required to inform the state when something changes that would make them ineligible for services, but they rarely do. Recently, the Congressional Budget Office estimated that more than 5 million Medicaid enrollees nationally are currently enrolled in private health coverage, meaning states are losing billions providing coverage to individuals for whom it’s completely unnecessary.

Most Medicaid rules are biased toward recipients maintaining continuous coverage, which may sometimes be a good thing, but for many people, Medicaid is a resource they only need temporarily. No one is saying that eligible Medicaid enrollees should be removed from the program, but even if that does happen, they’re still effectively covered because the federal government will cover up to three prior months of health costs once they’re determined to be eligible again.

Removing Medicaid recipients who don’t provide evidence of eligibility is a necessary act of fiscal prudence—an act of prudence that, prior to three years ago, was standard, federally mandated operating procedure.

There’s no getting around the fact that more state tax dollars being spent on ineligible Medicaid enrollees means less money for other state spending priorities, such as education and infrastructure. If Missouri’s elected officials ever want a chance at reining in Medicaid’s runaway spending, scrutinizing the program’s rolls must remain part of the equation, and occasional drops in enrollment must be normalized as simply par for the course.

The post Problems with Paperwork appeared first on Show-Me Institute.

But boy, is there a lot of spending—some of which might be justified, such as expanding Interstate 70—but the emphasis on expanding government made the speech basically indistinguishable from a speech by a tax-and-spend liberal. The governor didn’t propose a single meaningful change to the state’s failing education system or suggest a single reduction in government. Nothing about further tax cuts. Nothing about anything truly aspirational, reform minded, or geared toward good governance at all.

It’s understandable that the governor would want to pursue some form of legacy initiative or project near the end of his final term. Frankly, redoing I-70 should be plenty. But programs that permanently expand the reach of Missouri’s welfare state—like a universal pre-K program that the Heritage Foundation has eviscerated time and again—run completely against the small government view that many politicians in Missouri had historically given lip service to.

Perhaps in future speeches and press availabilities, the governor will expand upon his State of the State remarks, adding back in some of the reform-minded small government conservatism.  The legislature has been advocating for a variety of these small government reforms, and I thought the governor’s office was in agreement. The governor can, and should, do better.

The post Missouri’s State of the Bloating State appeared first on Show-Me Institute.

Jefferson City is awash in taxpayer cash. Missouri’s state government is slated to receive $2.7 billion in federal stimulus funds from the American Rescue Plan Act along with $9 billion from the “bipartisan” infrastructure bill. In addition, the state expects to bring in nearly $2 billion more in net revenues compared to just before the pandemic. What is disconcerting is how quickly some lawmakers—including self-proclaimed fiscal conservatives—have shed sound economic principles in their rush to find ways to spend the money, forgetting the wise words of Nobel Prize winning economist Milton Friedman that “there is no such thing as a free lunch.”

The simple, alluring, and false logic is as follows: either Jefferson City spends the money or the funds get sent back to the federal government to misspend on other boondoggles. But Missouri does not have to choose whether Jefferson City or the federal government gets the privilege of misspending taxpayer money. There is another way—one in which state lawmakers apply a strict cost–benefit test to all proposed spending and in which Missouri taxpayers are the beneficiaries of direct fiscal relief from any unused funds that fail to pass such a test.

To begin, it is crucial that lawmakers be aware that misspent money today—even if it has the false appearance of being “free”—can saddle Missouri with fiscal obligations, a weaker economy, or both, in the future. Because the funds are a one-time injection rather than a reliable stream of future revenue, Jefferson City must avoid engaging in spending that creates long-term future commitments (for example, in the form of unfunded maintenance). Lawmakers should also be wary of any government investment that crowds out private-sector investment. Infrastructure spending ought to enhance the private sector, not compete with it.

The other obstacle to sound cost–benefit analysis is the mistaken belief that the cost of the stimulus and infrastructure funds is zero because Washington, D.C., will both supply the money and reclaim any unspent funds. After all, the message to lawmakers has been that states cannot use the money to offset tax cuts. But this is an oversimplification of the options available to state officials. For starters, as long as state revenues stay above their inflation-adjusted 2019 level, the American Rescue Plan Act provides a safe harbor that deems states to be in compliance with the restriction against using stimulus funds for state tax cuts. That inflation-adjusted revenue threshold is likely to be around $10.8 billion in 2023, which is $600 million less than the $11.4 billion in revenues the state is projected to take in. Thus, state lawmakers immediately start out with a cushion of $600 million that they can provide in tax relief without risking stimulus funds.

Second, the American Rescue Plan Act only prohibits state governments—not local governments—from using stimulus funds to offset tax cuts. Moreover, it explicitly allows the state to transfer some of its funds to localities. Nothing in principle stops Jefferson City from distributing money to localities on the condition that they use the money to enact temporary local sales or property tax cuts. When using such transferred funds, localities must abide by any restrictions that apply to the state, but the American Rescue Plan Act does not impose any restrictions on local tax cuts. To create an even more secure legal hedge, Jefferson City could come to an agreement with localities that they use much of their own $1.2 billion in earmarked local stimulus funds for tax cuts, and the state could transfer some of its funds to localities to put toward sound public investments. This way the funds allocated originally to Jefferson City would be used on public investments, while localities would focus on tax relief.

Lastly, the American Rescue Plan Act allows state and local governments to apply stimulus funds toward mitigating the negative economic consequences of the pandemic, chief among which is the decades-high inflation that Americans are suffering through. Seven percent inflation in 2021 caused real wages to drop 2.3 percent, which amounts to an almost $900 “inflation tax” on the average worker. Jefferson City could simply opt to send direct fiscal relief to Missouri workers to offset this tax.

With coffers flush with cash, it is true that state lawmakers have a rare opportunity to make pivotal public investments to improve private-sector productivity. However, they would be wrong to view the money as “free” or the cost of spending the funds as zero. Instead, they should apply the same cost–benefit test that they would use for spending financed from state tax dollars with the knowledge that any unspent money need not go back to Washington, DC—it can end up directly in the pockets of struggling Missouri families.

The post Flood of Federal Money Is Not a Free Pass for a Spending Binge appeared first on Show-Me Institute.

In all the areas of government overreach and wasteful spending, this doesn’t come close to taking the cake. Honestly, it’s an appealing prospect. I mean, look at the picture below. Who would be against this puppy getting adopted? It shouldn’t take a tax credit for someone to support adopting puppies.

But this proposed bill wants to do just that, subsidize pet adoption, and the subsidy is the bad idea.

I want dogs to be adopted. I have a soft spot for dogs, and whenever a dog dies in a movie, I turn into Niagara Falls (don’t judge me—a lot of guys cry at the movies). However, the government shouldn’t be in the business of helping people pay for pet adoption. It should be in the business of providing basic goods and services necessary for a functioning society (police, firefighters, and prisons jump immediately to mind). Pet adoption is the purview of individuals and private organizations. If the government kept its spending down to the bare essentials, taxes would be low enough so that taxpayers would have more money to spend on a variety of admirable things: adopting puppies, saving the spotted owl, and preserving the rain forest.

Missouri has issued tax credits to things that frankly don’t need them, like country clubs and movie stars. Adopting pets isn’t nearly an egregious waste of taxpayer dollars as the former two, but it still shouldn’t occur. I hope it will never get the chance.

The post A Bad Idea That Sounds So Good appeared first on Show-Me Institute.

For those of us who like a good old-fashioned scare, this time of year is a real (trick or) treat. Halloween stories of ghouls, goblins, and ghosts make for a fun annual tradition, safely delivering in fiction what would be truly frightening in fact.

Yet while it does not wear a hockey mask or carry a cleaver, Missouri state government is a scary story in its own right. Today, the state spends taxpayer money at a rate of almost $800 a second, and if the fate of last year’s tax cut is any indication, it’s more likely that this spending will rise than fall. In fact, if some legislators have their way, next year, the state will throw billions more into an already broken Medicaid program. The state seems to be just like the creature from the 1950s horror film “The Blob” — growing and covering Missourians in regulations and burdens as it goes along.

Instead of feeding The Blob, the legislature should take a different approach and return power to the People — through tax cuts and other free-market, people-powered reforms. The Blob was defeated when people united to turn back its growth; defeating big government will require a similar commitment from Missourians.

Patrick Ishmael
Policy Analyst
Show-Me Institute

The post Don’t Feed The Blob: An Open Letter To The Editor About Government’s Spooky Growth appeared first on Show-Me Institute.

It is in that spirit that lawmakers in Jefferson City are now looking at the proposed legislation calling for creation of a “Midwest China hub,” or “Aerotropolis,” at Lambert-St. Louis International Airport.

According to newspaper reports, the legislature is prepared to scale back or totally eliminate $300 million in tax credits intended for owners of warehouses and real estate in and around the airport, while retaining $60 million in subsidies to encourage freight forwarders to route international freight through Lambert.

If so, that represents real progress – and a greater responsibility on the part of our lawmakers, including some of the prodigals who call themselves fiscal conservatives. However, while the final numbers are uncertain, talk of finding other means to funnel tax credits to Aerotropolis demonstrates a continuing blind spot on the part of legislators.

The question is: Why should the state of Missouri put up any money for Aerotropolis unless it supports the public good in some clear and identifiable way? Where is the justification for taking $60 million out of the pockets of Missouri taxpayers and giving it to unseen and unknown freight forwarders located in other cities around the world?

No one has advanced the slightest evidence that Missouri farmers or businesses have suffered a loss of exports – to China or anywhere else – because of inadequacies in the current transportation system.

Whether it is in shipping tools, pharmaceuticals, or frozen meat, there are fast and efficient means for Missouri exporters to reach key destinations around the world.

Supporters of Aerotropolis confuse economic incentives and competitive advantage. Yes, we can give taxpayers’ money to freight forwarders – the socalled travel agents of cargo – to offset obvious disadvantages in routing cargo through Lambert, which has no regularly-scheduled passenger or cargo flights to destinations outside North America. But that’s just asking people to take your money for doing something that doesn’t make any sense.

The real irony in the Aerotropolis saga is that our politicians and lawmakers – joined by business lobbying groups in St. Louis and Jefferson City – want to use taxpayers’ money to help Chinese carriers compete against U.S. carriers. In its eight-page economic impact report, the St. Louis Regional Chamber and Growth Association noted that “China has determined to grow their market share in air freight from 15-20% to 50%” in the transport of Chinese-made goods. Do we really want to help the Chinese government reach one of its objectives at the expense of our own carriers?

Our lawmakers may think that they should leave something on the table for the special interests that have lobbied long and hard for the Aerotropolis legislation.

But $60 million is not some trinket that a spendthrift might pick up upon leaving a store. It is taxpayers’ money and it is equal to the median household income in Missouri multiplied 1,300 times. Here’s a novel idea: Why not return the $60 million to Missouri taxpayers?

Andrew B. Wilson is a fellow at the Show-Me Institute, which promotes market solutions for Missouri Public Policy.

The post The End of Aerotropolis Subsidies? appeared first on Show-Me Institute.

“You should do everything, including underwriting flights, to get as many highways in the sky as you can,” said John D. Kasarda, director of the University of North Carolina’s Kenan Institute of Private Enterprise and author of “Aerotropolis: The Way We’ll Live Next.”

Sounds a lot like Saint Louis so far. But (emphasis added):

There doesn’t appear to be support for the idea if it involves public money.

“I don’t agree with subsidizing flights or subsidizing certain airlines. We should work to lower the costs of all of the airlines at the airport,” said Allegheny County Executive Dan Onorato. He said the county doesn’t have money to provide such backing.

Pennsylvania and the Allegheny Conference on Community Development agreed to provide up to $9 million if Delta Air Lines’ flight between Pittsburgh and Paris missed revenue targets. They paid the maximum $5 million after the first year of service, but it’s unknown whether they will owe money for the second, which ended June 1.

Onorato appears to be taking the principled stance of not letting the government pick winners and losers at the airport. As to the airport, at least, Allegheny County taxpayers can be proud of its executive’s fiscal prudence.

The post Kudos, Allegheny County Executive Dan Onorato appeared first on Show-Me Institute.

Missouri public policy has its problems. Lawmakers have a terrible habit of trying to pick winners and losers in the market, even though they have such a bad track record of doing so. We’re relying on government to make the choices that individuals should be making for themselves in the private sector. Lawmakers are addicted to targeted tax credits and tax-increment financing (TIF) — even though these programs repeatedly fail to deliver on their promises.

Despite this state’s problems, Missourians have a lot to celebrate in public policy. Many great things are going on here. Missouri has fewer occupational license requirements than other states, which means that Missourians are more free to earn a living. Plus, Missouri has low state taxes on booze, cigarettes, and gasoline. It also has the Hancock Amendment, which limits state spending and requires that voters have the final say on tax hikes. (Wouldn’t it be great if the Hancock Amendment existed at the federal level?)

We’re taking many steps in the right direction toward limiting government and protecting individual liberty. For example, Missourians were among the first to oppose the federal takeover of their health care, and we haven’t given up. As another thing I find promising, the Saint Louis Land Reutilization Authority (LRA) is accepting more offers to buy vacant property (thanks largely to the efforts of my colleague Audrey Spalding).

I’m confident that Missouri, and other midwestern states, will be leaders in limiting government and getting the economy back on track. This change will be driven by individuals acting entrepreneurially in the private sector, however — not by the hand of government.

See you later, Show-Me State.

The post Ms. Harbin Goes to Washington appeared first on Show-Me Institute.

The post As Government Expands, Liberty Contracts appeared first on Show-Me Institute.

Hotels in Jefferson City already experience a high tax burden. They pay commercial property tax rates and the Cole County property tax surcharge. The hotels must obtain business licenses, liquor licenses, restaurant health inspections, etc., just to open and operate. Guests at the hotels pay the standard state and city sales tax of 7.725 percent for the rooms, as well as Jefferson City’s current 3-percent charge on top of that.

The question is not whether the current taxes are reasonable. In comparison with most other cities, they are. But the voters of Jefferson City should consider whether this is the time to tell their elected officials “enough.” Voters in three suburbs of Saint Louis did exactly that in response to hotel tax proposals in November. Voters in Clayton, Richmond Heights (both within Saint Louis County), and Saint Peters (in Saint Charles County) overwhelmingly rejected hotel tax proposals at the polls. The voters sent a message to local elected officials that they wanted difficult budget issues to be dealt with through greater fiscal discipline, not higher taxes. The voters of Jefferson City should give strong consideration to saying the same thing.

The private sector is capable of providing a conference center if there is a genuine market for one in Jefferson City. The taxpayers do not need to build one, even if the “taxpayers” in this case are mostly visitors from other areas. The city of Saint Louis used tax dollars to build a convention center hotel a decade ago, an investment that has worked out poorly. The hotel was unable to make its bond payments and was literally sold on the courthouse steps in 2009.

Nobody knows whether Jefferson City’s proposed conference center would also fail. It is reasonable to suspect that demand for hotels in Jefferson City is more inelastic than in many other Missouri locations, because many of those who travel to Jefferson City do so because they have matters that require the visit, regardless of the cost. However, although Jefferson City may face a lower risk than many other cities of losing business after a hotel tax increase, it does not follow that the tax should be increased.

Conference centers are not a core responsibility of local governments. There is almost nothing about a conference center that fits the economic definition of a public good. The hotel that developers plan to build next to the conference center is privately funded, and the backers of that project will undoubtedly direct their investment more efficiently than the promoters of a publicly funded conference center. Private investment in the conference center would have greater positive consequences than public subsidy, and taxpayers would not be on the hook if the hotel fails.

The voters and taxpayers of Jefferson City should think twice about assigning the role of developer to city government. Although hotel guests may be an easy mark for higher taxes, this does not mean that voters should use them to enlarge the portfolio of city hall. Rejecting this tax proposal would tell Jefferson City’s leaders that the residents want responsible, limited government, not government expansion and higher taxes.

David Stokes is a policy analyst for the Show-Me Institute, an independent think tank promoting free-market solutions for Missouri public policy.

The post New Hotel Tax a Bad Idea for Jefferson City appeared first on Show-Me Institute.

The following are additional resolutions that didn’t make the final list. I tried to model these after resolutions that individuals commonly make for themselves. I thank my colleagues for their collaboration, and I encourage our Show-Me Daily readers to leave additional resolutions in the comments section.

1. Get Out of Debt:
    
   This year, state and local governments in Missouri should resolve to get a handle on their finances. Policymakers can accomplish this by holding off on the pork barrel spending projects and fitting in time for fiscal fitness. Eliminating and reducing debt will have positive fiscal consequences in the future, because the state will not be spending tax monies on interest on debt. Government should resolve to live within its means, as an individual does. There are many policy areas that could save money. For example, school districts could elect against giving superintendents health care for life.
2. Eliminate Clutter:
    
   The state government should conduct a top-down, bottom-up review of all state agencies and regulations to eliminate waste, inefficiency, and government intrusion unrelated to public health and safety. To accomplish this, policymakers may pursue public-private partnerships, privatize services, eliminate underperforming programs, etc.
3. Get Organized:
    
   The state can take measures to reduce bureaucracy and red tape, especially huge mistakes and oversights in its expenditures. For example, the state government is issuing targeted tax credits too quickly to keep track of them. According to an article from the Associated Press, 56 businesses, nonprofit groups, and individuals in Missouri have failed to meet the mandates of a 2004 state law that requires annual progress reports after receiving tax credits. The state government awarded $2 million in tax credits to a convicted embezzler for a development project in Cape Girardeau. With better organization, scandals like this would be much less likely.
4. Find a Job:
    
   The state unemployment rate continues to exceed 9 percent. Missouri would attract a greater number of businesses to the region if it implemented strategies that reduce the cost of doing business in the state. Specific strategies that policymakers can implement are: eliminating personal and corporate income taxes, reducing occupational licensing requirements, and eliminating property tax surcharges.
5. Lose Weight:
    
   Just as individuals need to lose weight to remain fit and healthy, cities and other taxing districts need to save money by cutting out the fat whenever possible in order to remain fiscally sound. Policymakers in Missouri should take steps to limit this growth. Individual governments in Missouri can share resources, consider consolidation or disincorporation when appropriate, and contract with private service providers as much as possible. Individuals make the tough choices to eat less for better health. Taxing districts can make those same hard decisions to outsource, privatize, consolidate, or share services in order to perform key public services at as low a cost as possible. (Hat tip: David Stokes!)
6. Spend More Time With the Kids:
    
   Missouri can take measures to improve educational outcomes, such as increasing school choice. A specific strategy that policymakers can implement would be to expand access to charter schools and virtual schools, the latter of which can provide 24-hour education services to meet flexible schedules. It’s important to note that the most successful charter schools lengthen both school hours and the school year in order to help students catch up with their peers in other schools. (Hat tip: John Payne!)
7. Quit Smoking:
    
   Even staunch environmentalists now understand that the total carbon emissions from the use of ethanol are worse than the emissions from the fuel that ethanol replaces. Energy specialists recognize that it takes more energy to produce a unit of ethanol than the energy that unit returns. It’s bad for your health, your wallet, and the environment. It’s time for the state of Missouri to quit subsidizing, mandating, and abusing this substance.
8. Travel Less:
    
   Gov. Jay Nixon has the habit of holding ribbon-cutting ceremonies for subsidized projects around the state, and then billing the expenses to other agencies. These travel expenditures come at the expense of other programs because they compete for the agencies’ services. Taxpayers in Missouri would be better off if they weren’t footing the bill for these trips, because they could keep a greater proportion of their earnings. (Hat tip: Audrey Spalding!)
9. Spend More Time With Family and Friends:
    
   Just as an individual resolves to “Spend more time with family and friends,” a state government can resolve to increase the level of civil society interaction in Missouri through privatization. Instead of seeing government employees take care of your water utility, or going to a government-sponsored health clinic, we can interact with members of our community that we choose to do business with privately. This resolution could also describe hanging out with a family member or friend while they African-braid your hair or examine your horse’s teeth, even though they do not have a license.

The post New Year’s Resolutions for Missouri Public Policy: From the Cutting Room Floor appeared first on Show-Me Institute.

This initially sounds great (I am definitely in favor of a better-looking city), but after factoring in the cost of $89 million from Missouri taxpayers, the plan begins to lose its luster.

Private developers are footing the majority of the bill, but the remaining government intervention into this real estate market seems ill-advised. When an investment becomes economically viable, a private entrepreneur will usually dive in with no cost to the state. Whenever the government involves itself in a market, on the other hand, either through subsidies or special taxes, it entails some amount of dead-weight loss, but by placing some trust in reducing burdensome regulation and allowing the market to work, we can eliminate some of this wasted productivity.

If politicians had a demonstrated track record of choosing investments that paid off, there could be an argument for such targeted tax credits — but no such track record exists. If no private developer finds it worthwhile to redevelop a set of properties without receiving massive tax credits, the project is probably not an efficient way to invest our tax dollars, especially at this time when fiscal discipline is so important. The government would better serve the people of Missouri by trusting the market to do its job.

The post Faith in the Free Market appeared first on Show-Me Institute.

But let’s move on. We are talking a lot around here about ways to cut the state’s budget. Although this idea is more closely related to Missouri’s county governments, personal property tax declarations could very easily be done online. As far as I can tell, only Jackson County allows you to do the entire process online. That saves every taxpayer the postage cost of two letters, and it should be emulated by every other county. St. Louis County offers some helpful things online, but I think they should go the full mile here and try to phase out the requirement for physical mailings of property tax declarations for as many people as possible. Cutting costs here might also save the state at least a little money, given that the state reimburses counties for portions of their assessment expenses.

Please let me know if you are aware of other counties that have gone completely online with this process.

The post Governmental Things One Should Be Able to Do Online appeared first on Show-Me Institute.

I strongly recommend everyone watch the video. Speaking as someone who would normally rather take a dart to my eardrum than watch an online video of a political speech, you can trust me that this one is worth it. After you watch it, read the Post-Dispatch’s take on it and try and decide where you stand. Needless to say, I support the governor here. I think that cuts to the size and scope of government in our state, along with consolidations for greater efficiency, are long overdue, and I give great credit to any elected official of either party who is willing to make the tough choices and hard decisions, as the governor is doing here.

I have not fisked a Post editorial or column in a while — probably not since Eric Mink left. But I think that both this topic and article deserve a point-by-point analysis:

Missouri Gov. Jay Nixon, in an address to a group of business leaders in Springfield last week, called for plugging the $500 million gap in the state budget with a program to “right-size state government by cutting programs, trimming the workforce and consolidating departments while maintaining excellence in our services.”

Some of his ideas: Whacking 1,000 more employees from a state payroll that already has been trimmed by 1,800 workers; closing some county offices of the Family Support Division, making it harder for people to get to one; selling 2,000 state vehicles; outsourcing child support collection to private firms; combining the Highway Patrol and the Water Patrol; eliminating the May 8 Truman’s Birthday state holiday; streamlining the environmental permit process and “modernizing” (i.e., reducing) pension and health care insurance for state employees.

So far, all of this sounds perfectly reasonable and positive to me.

“My blueprint for change will recalibrate the size and scope of state government, giving us a government that is leaner, nimbler and less costly,” Mr. Nixon said.

Also, he said this: “One thing is off the table here in the Show-Me State. We will hold the line on taxes.”

Excellent.

In all, this is the kind of plan you’d expect from a Republican governor.

But Mr. Nixon is not a Republican. He calls himself a “fiscally conservative Democrat.” This is nothing if not politically expedient, a quality that has marked Mr. Nixon’s entire career.

I will avoid the political aspects of the article, because commenting on that is not part of my role here at the Show-Me Institute.

Given the Republican majorities in the Legislature and the reflexive anti-tax sentiment in Missouri’s suburbs and rural areas, and given where most campaign cash comes from, it would take a far bolder leader than Jeremiah W. Nixon to tell Missourians the reality.

Although I’m avoiding the politics, I should point out that some of the personal attacks detract from the seriousness of this article.

The simple truth is you can’t cut $1.2 billion from the state budget in two years, as Mr. Nixon has had to do during the economic downturn, and still emerge with a budget that meets the state’s crushing needs.

Whose “Truth”? Who defines “crushing?”

Here’s another truth: Those “excellent services” that Mr. Nixon talks about don’t exist. In rankings among the 50 states for various state services, Missouri generally ranks in the mid-30s to the mid-40s. In public health spending, Missouri is 50th. In Education Week’s recent survey of overall performance on school achievement, the state ranked 40th.

Unbelievable. The Post claims that services are of a low quality, and uses public health spending levels as evidence. It is possible, however, to have low spending levels and still have quality services. At least the other examples cited performance measures (biased as they may be), rather than spending levels.

In his speech, Mr. Nixon touted a report by Moody’s Investment Services that ranked Missouri, largely because of its Triple A bond rating, as one of the states poised to lead the nation in economic recovery. But Mr. Nixon won’t take the lead on a proposed capital bond program that would put Missourians to work.

I am not adamantly opposed to the bond program proposal, but the Post blindly assumes that the short-term economic benefits will outweigh the added debt payoff in Missouri’s long run. It may, but the governor hardly deserves criticism here.

A similar survey done by online newspaper The Daily Beast — and not in thrall to bond ratings — showed Missouri ahead of only Michigan in its economic prospects in the next eight years.

“Take him to Detroit!”

Missouri is a low-tax, low-service state, ranked 16th among the 50 states in The Tax Foundation’s business climate index. Yet that hasn’t brought businesses and jobs knocking on the door. Even before the recession, the state’s growth was flat.

Perhaps this is because all taxes are not equally distortionary, and businesses are more concerned with high state income and earnings taxes than our comparatively low property and sales taxes. We’ve released several studies dealing with these points.

Perhaps its low investment in public health and education quality has something to do with it. Perhaps its low investment in highway, bridge and other infrastructure has something do with it. Perhaps its penuriousness on safety-net services for its people has something to do with it.

I dispute the term “low.” The amount of this type of investment in Missouri may be lower than in some other states, perhaps, for some of the above examples. However, I outright dispute the infrastructure factoid above. Reason ranks Missouri 23rd in its highway system quality. And I want to live somewhere with a lower-level safety net. Expanding the welfare state is not the way to grow the economy. Does the Post really think that economic growth is aided by the expansiveness of a state’s welfare system? That is just ludicrous.

Now comes Mr. Nixon with a bugle sounding retreat.

And then there’s the so-called “Fair Tax” proposal. It was pushed in the Legislature earlier this session and now is being pushed in a petition drive. The man behind both is retired investment executive Rex Sinquefield. The “Fair Tax” would eliminate the state income tax and replace it with a “consumption tax” — a sales tax on nearly everything.

We have written about this issue enough around here.

The state sales tax, now 4.225 cents on the dollar, easily could climb to 7 or 8 percent. Depending on how successful lobbyists are at carving out exemptions, it could go as high as 12.9 percent, according to an analysis done for the Missouri Budget Project, a liberal-leaning think tank.

The Post is correct here. The latest plan has a rate of 7 percent, because a few major exemptions have been added, and that rate would indeed suffer more if lobbyists are successful in getting still more exemptions approved.

When you add local sales taxes (anything from 2.1 cents in parts of St. Louis County to almost a nickel in parts of the city of St. Louis) that would mean you’d be paying an additional 15 to 19 cents on everything you buy.

This is factually wrong. The plan includes decreasing local sales tax rates if the “Fair Tax” were adopted, in order to prevent a windfall for local governments.

Yes, that would attract jobs and businesses — to Illinois and Kansas.

It might encourage some retail businesses to move, particularly those near the Kansas border, but the exact same set of incentives would encourage other types of businesses — like, oh, say, corporate offices — to move into Missouri.

Missouri must live within its means. But the means don’t have to be quite so mean. The Missouri Budget Project suggests three simple, fair steps that Mr. Nixon and the Legislature could take to offset the need for many of the new cuts.

These ought to be good.

• Collect sales taxes from all online vendors, not just those with employees in the state. This could return $180 million a year to state and local governments.

On top of just being wrong, this would be extremely difficult to enforce, and probably impossible at this time. Please tell me: What services does an online vendor in California receive from Missouri that would justify forcing it to collect a sales tax?

• Eliminate the so-called “Geoffrey Loophole” — named after Geoffrey the Giraffe, the mascot of Toys“R”Us, one firm that exploits the loophole. It allows companies to reduce the profits shown on Missouri tax returns by transferring income from subidiaries to out-of-state corporate umbrella companies. Taxing all the profits they earn in Missouri could return $90 million a year.

Taxing all the profits might also encourage some businesses to leave Missouri entirely. Then where would we be? However, this point is not entirely off-base. Eliminating loopholes can be great, but only if the overall rates are correspondingly lowered.

• Eliminate the “Timely Finally” discount given to corporations that pay their taxes on time. Individuals who pay on time don’t get a discount. Why should corporations? Estimated new income: $39 million a year.

This refers to the credits businesses get when they submit employee income tax withholdings and sales taxes on time. If the state forces private businesses to serve as its tax collectors, it should compensate them in some manner. This is no different from paying jurors a small salary.

Long term, real leaders will have to lead a discussion about the true relationship among taxes, services, growth and prosperity. Missouri taxes individual incomes over $9,000 at the same 6 percent rate. If you make $9,000 you pay the same 6 percent as the guy who makes $9 million. Or $99 million.

Finally, something on which we can all agree. If the “Fair Tax” does not receive the support of a majority of Missourians, than we should increase the threshold at which you’re required to pay the highest tax rate of 6 percent. That would entail a tax cut for almost every Missourian, but would really benefit people with lower incomes.

In 2007, each Missourian enjoyed the benefits of $66 paid by corporations in income tax. Per-capita corporate income taxes were higher in all eight bordering states, ranging from $233 in Kentucky to $109 in Iowa. Rich people and corporations are getting a deeply discounted ride on the backs of the poor and working class.

This is absurd class warfare rhetoric. By this logic, states should all be in a race to levy the highest amount of taxes possible.

If this had yielded jobs and prosperity, that would be one thing. But it hasn’t. And it won’t. And eliminating the income tax entirely would make a bad situation catastrophic.

Missouri is doing better than most other states in this recession, not worse. The state’s relatively low tax rates help that. And, as a point of fact, none of the suggestions in Gov. Nixon’s speech involve getting rid of the state income tax.

Mr. Nixon’s solution: Cut more services for the poor and middle class. Lay off more state workers. Wrap it all up in clichés and euphemisms and call it “right-sizing.”

There is perhaps nothing more important, cruel as it may sound, than keeping a lid on the overall number of state workers. Almost every government employee (and I used to be one), becomes an enthusiastic advocate for higher taxes and more spending, in part as a direct result of the perverse incentive that it would directly benefit them and their families.

Blight-sizing is more like it.

And the win goes to the governor.

The post “Rightsizing State Government” appeared first on Show-Me Institute.

California and Florida will receive $2.3 billion and $1.25 billion, respectively, which are the largest single awards. Obama’s home state of Illinois will receive $1.1 billion of this money, which is the third-highest amount. Missouri will receive much less money under this program: “only” $31 million, which equals 0.39% of the allocated funds.

In a recent study for the Show-Me Institute, “Why Missouri Taxpayers Should Not Build High-Speed Rail,” Randal O’Toole demonstrated that the president’s high-speed rail plan would result in high costs and few benefits:

If Missouri decides to build moderate- or high-speed rail, it may be responsible for cost overruns, operating losses, and the costs of replacing and rehabilitating equipment about every 30 years.

O’Toole has written several pieces for the Show-Me Institute about high-speed rail. He has a vision for transportation in Missouri that is more fiscally responsible than President Obama’s:

A better plan would be to use the state’s share of the $8 billion stimulus funds solely for incremental upgrades, such as safer grade crossings, longer track sidings, and signaling systems, that do not obligate state taxpayers to pay future operations and maintenance costs.

Alarmingly, the Obama administration emphasizes that this money is merely a down payment. This means that states, which are already cash-strapped, are left to pick up the rest of cost of these high-speed rail projects. For example, although the the Amtrak route from Chicago to St. Louis stretches 284 miles, the federal grant will cover only the 182-mile segment between Alton and Dwight, which constitutes only 64 percent. Illinois will have to find a way to pay for the rest of the project.

Although I understand that this money will pay for improvements to the existing rail in Missouri, I am concerned that this project will costly and will have low marginal benefits. Taxpayers are paying $31 million to increase the speed of the train that runs between Kansas City and Saint Louis by a mere five miles per hour. However, I will defer the analysis of the Missouri project and how it relates to O’Toole’s study to David Stokes, because he knows much, much more about transportation policy than I do. I look forward to reading his thoughts on this subject.

The post Feds Allocate $8 Million to High-Speed Rail; Missouri Gets a 0.39% Cut appeared first on Show-Me Institute.

The revolving loan fund of the St. Louis Local Development Corporation serves no need that the private sector cannot meet. It serves no legitimate public purpose, and should be abolished. It should be a market decision whether two restaurateurs can get backing to open more restaurants in St. Louis. Tax dollars have no business being involved in these projects. I am fully aware that this is a loan program, not a gift program, but I don’t care. Even if they get every penny back with interest, the loans serve no legitimate public purpose, the government has no business being involved in things like this, and it still takes tax dollars above and beyond the loan amounts themselves to employ the people who work for the STLDC. The program deserves to be abolished.

The post Here Is a Government Program That Absolutely Should Not Exist appeared first on Show-Me Institute.