Earlier in the year, Rudi Keller wrote in the Missouri Independent:

Missouri will enter the new fiscal year Saturday in its best financial shape ever. But there are unmistakable signs that the massive surplus, now approaching $8 billion, has likely peaked.

Really? Is Missouri actually running a huge surplus? Are we taking in more than we owe?

No, no we are not.

In Truth in Accounting’s  (TIA) “Financial State of the States 2023,” Missouri ranked 25th. TIA gave Missouri a “C” grade and concluded: “Missouri would need $700 from each of its taxpayers to pay all of its outstanding bills.” Of particular concern to TIA was Missouri’s highest-ever unfunded debt to the Missouri State Employees’ Plan.

The reason for the disparity is due to how states account for debt. In cash-basis accounting, states merely account for the money they have on hand without considering their debts. If you and I were to budget like this, we’d count loans as income, ignore debt, and put off expenses until next year in order to claim a huge surplus now.

If you think that sounds criminal, you’re not alone. The IRS does not permit businesses with gross receipts exceeding $29 million for three years to use cash-basis accounting—but city and state governments may do so. As a result, according to the International Monetary Fund, “Governments have been tempted to exploit this weakness by deferring cash disbursements or bringing forward cash receipts as a means of artificially inflating their financial balance.” This is exactly what is happening in Missouri.

Governor Parson isn’t alone, sadly. Mayors and governors of both parties and all ideological stripes do the same thing. And journalists on deadline often repeat the claim without checking it. If such claims seem too good to be true, they probably are.

The post No, Missouri Is Not Running a Budget Surplus appeared first on Show-Me Institute.

Good policies go beyond good intentions. They serve a public need with as few negative consequences as is possible. Our national experience with large-scale, fare-free transit has been a bumpy ride. Kansas City needs to consider all the options and trade-offs before adopting such a significant policy change.

Unfortunately, those concerns were not heeded. At the time, the Kansas City Area Transit Authority (KCATA) CEO Robbie Makinen argued weakly, “Just because nobody else is doing it, that’s not a reason for us not to do it. What’s wrong with trying it? What’s the worst thing that happens? It doesn’t work, and Robbie gets fired.”

Now in 2024, after years of offering free bus service, the KCATA is wrestling with a $10 million gap in its operating budget. The service used COVID relief money to cover its operating losses, but those funds will run out by 2025.

As a result of the budget shortfalls, the new CEO has asked the transit authority’s board for permission to study reinstating fares to cover the shortfall. (The previous CEO cited above did seemingly get fired in July 2022.) One of the current KCATA board members, Michael Shaw, is at least asking the right questions, according to the Star:

“Have we done the homework and figured out what we need to do, what other resources and strategies are in place, before we say this is the policy decision that needs to be made?” Shaw said. “I don’t think we should look at solutions in silos. They have to be looked at collectively and I don’t think we’ve done that homework at this juncture.”

The chairwoman of the board, Melissa Bynum, pointed out what we already know: “Zero fare is not free – period. Somebody pays for it.”

The CEO of the KCATA should be congratulated for seeking such a study. Board members Shaw and Bynum are right to urge diligence and to point out that the money must come from somewhere.

Had the previous KCATA leadership wrestled with these questions a few years ago, the organization may not be in this mess now.

The post Free Bus Fare, Still a Bad Idea appeared first on Show-Me Institute.

Watch the full discussion

Brian Riedl is a senior fellow at the Manhattan Institute, focusing on budget, tax, and economic policy. Previously, he worked for six years as chief economist to Senator Rob Portman (R-OH) and as staff director of the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth. He also served as a director of budget and spending policy for Marco Rubio’s presidential campaign and was the lead architect of the ten-year deficit-reduction plan for Mitt Romney’s presidential campaign.

During 2001–11, Riedl served as the Heritage Foundation’s lead research fellow on the federal budget and spending policy. In that position, he helped lay the groundwork for Congress to cap soaring federal spending, rein in farm subsidies, and ban pork-barrel earmarks. Riedl’s writing and research have been featured in, among others, the New York Times, Wall Street Journal, Washington Post, Los Angeles Times, and National Review; he is a frequent guest on NBC, CBS, PBS, CNN, FOX News, MSNBC, and C-SPAN.

The post Virtual Town Hall – The National Debt Crisis with Brian Riedl appeared first on Show-Me Institute.

Tax the rich, feed the poor
Till there are no rich no more?

More than 40 years after that song was released, the state of Connecticut is learning a lesson from  policies that heavily tax the rich. According to the Associated Press:

New figures released last week show tax revenue from the state’s top 100 highest-paying taxpayers declined 45 percent from 2015 to 2016. The drop adds up to a $200 million revenue loss for the state…

This latest drop in tax revenues paid by the wealthy, a problem for the past several years, has exacerbated Connecticut’s current budget woes. The projected deficit for the new fiscal year beginning July 1 has now jumped from about $1.7 billion to $2.3 billion, while the deficit predicted for the second year of the state’s two-year budget is now about $2.7 billion. The state’s main spending account, the general fund, is roughly about $18 billion annually.

As the headquarters of several hedge funds, Connecticut is especially sensitive to changes in that industry. Recent fund failures have meant that investors have sought to protect themselves from risk, meaning less profit and a double whammy for the Nutmeg State.

The commissioner for the state’s Department of Revenue Services conceded to the AP that “part of revenue decline can also be attributed to ‘a handful’ of wealthy individuals who moved to more tax-friendly states.” Imagine that. If your state levies higher taxes on the wealthy than other states do, the wealthy leave. The AP story also cites a similar example in New Jersey last year.

Soak-the-rich tax policies may seem great on bumper stickers and in song lyrics, but they are no way to run an economy. As we have written, in Missouri and elsewhere governments must compete against one another. Rather than penalize producers to cover for profligate spending, government should only tax what is needed to provide basic services effectively and efficiently.

To their credit, even Ten Years After wasn’t convinced of the merits of their proposal, ending with the refrain,

I’d love to change the world
But I don’t know what to do
So I’ll leave it up to you

The post What’s the Matter with Connecticut? appeared first on Show-Me Institute.

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Read the full essay: .

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It seems the governor wants as many people to know about, and feel, these cutbacks as possible. However, the budget facts paint a far less dire picture than the one the governor has sketched out, and to which he is presumably reacting. As the Associated Press‘s David Lieb noted:

. . . Nixon announced more than $400 million of spending restrictions for education, building projects and other government services, even though Missouri began its fiscal year July 1 with a cash balance of around $450 million.

The state apparently has more money in the bank than Nixon has set aside from the budget to supposedly avert a budget deficit. And that’s before we even start talking about the BBTRA, which the governor claims is the driving factor behind his cutbacks. Indeed, with all impacts on the budget included, the fiscal note on the cost of the BBTRA suggests the tax cut would decrease state revenue by about $200 million in 2014 — which is far short of the $400 million the governor withheld.

The state’s education system and other programs are the ones that get hit hard because of the withholding, for seemingly no good reason. The money in the bank doesn’t justify it, and the price tag of the tax cut doesn’t justify it. I’m not so sure Missouri’s schools appreciate their funding being held hostage in the governor’s fight with the legislature, especially when the facts don’t justify the cutbacks.

The post Budget Action In Search Of A Crisis appeared first on Show-Me Institute.

But now former Missouri Supreme Court Justice Mike Wolff is lending some credence to the idea, writing in the Post-Dispatch that not only would the move be legal, it would be preferable to cutting other state programs:

If the governor or the Legislature declared a holiday on accepting tax-credit coupons in payment of taxes, the state would not be reneging on its promise to accept tax credit coupons to pay taxes. The state simply would be saying, “wait until next year.”

Should the state pay interest on tax credits that are on holiday for a year (or more, perhaps)? For example, when a taxpayer eventually is allowed to use its $10 million in tax-credit coupons, which the taxpayer bought for the discounted amount of about $9 million, perhaps the state should pay interest because the tax-credit owner has had to wait. Because these tax credit certificates are bought and sold through banks, perhaps the passbook savings account rate should apply. At the current generous rates, that might cost the state 1 percent or less per year.

But what if the taxpayer does not want to spend cash to pay its taxes because it needs the $10 million to rebuild its jet plane’s engines or to refurbish the yacht? Not a big problem, actually, because remember, the tax credits can be sold. But can these $10 million in tax credits be sold for the taxpayer’s original price of $9 million? Well, probably not, there could be a further discount; markets work, even markets for tax credits.

If Justice Wolff’s idea was implemented, it might help Missouri’s budget problem for a year, but it would not solve the underlying problem: tax credit issuances run amok. In fact, declining to redeem tax credits could actually compound budget problems in future years if other reforms are not implemented to reduce the state’s forthcoming and outstanding tax credit liabilities; tax credits that have been authorized or issued but not yet redeemed constitute a multi-billion dollar (that’s “billion” with a “b”) liability that the state will have to pay in coming years. Preventing budget cuts to favored programs — for Justice Wolff, education — does not seem to be a compelling reason to embark solely on his plan. It is almost like trying to get a hamburger today for $1 tomorrow . . . at some point, you have to pay for the hamburger. Tax credits are a recurring problem, the reduction of which could cure other recurring parts of the budget (for example, reducing taxes on all corporations with the savings, rather than picking and choosing winners and losers.)

Keeping all of that in mind, if done in concert with a moratorium on tax credit issuances (ideally including caps, sunsets, and other permanent changes), Justice Wolff’s idea might be workable as part of a larger reform program; over the long haul, such a multi-pronged approach may actually make a real dent in the state’s looming tax credit liabilities, and ultimately save the state money.

Missouri officials cannot just treat the symptoms of the state’s tax credit excesses and defer cuts for later; it must also treat the underlying disease. Trimming tax credits and reducing taxes is a better, forward-thinking solution, and would provide the foundation for a healthier economy and a more stable budget.

The post Retired Missouri Supreme Court Justice: Decline Tax Credit Redemptions for a Year (or More?) appeared first on Show-Me Institute.

I mention our neighbor’s misfortune because it serves as an example of different approaches to handling financial difficulties. Last year, Illinois raised taxes on personal income and the corporate income. Yet, despite these increases, its financial situation continues to deteriorate. In Missouri, the tax rates have remained the same. Missouri Gov. Jay Nixon brags about not raising taxes and personally cutting $1.6 billion in government spending. While both states have a budget shortfall to close, which budget situation would you prefer?

Illinois officials’ reaction to the state’s financial difficulties also presents an opportunity. As I mentioned before, Illinois responded to its dire fiscal situation by raising its corporate income tax. This has already put pressure on the state’s own businesses, and other states (Wisconsin and Indiana) are trying to entice those businesses to relocate into their states. Missouri has had its own methods of trying to encourage companies to relocate to the state, but they tend to be costly. When the Missouri Department of Economic Development (DED) used tax credits to get Applebee’s to relocate to Missouri, the cost was about $35,000 per job.

Instead of handing out millions of dollars in economic development tax credits, why doesn’t Missouri eliminate the corporate income tax? Considering that Illinois just raised its corporate income tax, wouldn’t a corporate income tax cut (if not outright elimination of the tax) serve as a powerful incentive for Illinois companies to move to Missouri?

Missouri officials estimate receiving $352 million in corporate income tax revenue for fiscal year 2013. Missouri officials also estimate that the state will issue more than $450 million ($463,409,492, to be exact) in economic development tax credits for the upcoming fiscal year. A reduction in tax credits would enable the state to make up for any revenue shortfall it would encounter via the forgone corporate tax revenue and provide a more permanent, and more fair, incentive for businesses to relocate here.

Illinois is in an unenviable situation. Illinois officials’ handling of that situation serves as a reminder that tax increases are not a cure-all for a state’s budget woes. Missouri officials have an opportunity to head in the opposite direction from its neighbor; however, will Missouri legislators embrace a new direction (tax rate cuts), or continue with the status quo?

The post The Cautionary Tale Next Door appeared first on Show-Me Institute.

Tax credit reform is difficult. We saw that during the last legislative session, and during the Tax Credit Review Commission’s hearings (beneficiaries of state tax credits tend to fight hard to keep their credits). And those interested in benefiting from a new tax credit program seem to fight almost even harder to establish a new program.

Perhaps more difficult for politicians is the fact that tax credit reform does not cut cleanly along party lines. Some Republican legislators strongly support tax credit reform, while others oppose it — just as some Democrat legislators strongly support reform, while others oppose it (or even advocate for the creation of new programs).

I disagree with the Post‘s rosy optimism that Nixon will act responsibly. Our governor has a history of waffling on tax credit reform, something my colleagues at the Show-Me Institute have documented repeatedly. He also seemingly likes to travel to announce the “creation” of jobs under questionable state tax incentive programs. Personally, I would pin tax credit reform hopes on legislators.

Did you know a single committee might have the power to vote to halt some tax credit programs this year?

According to state law, “…no new tax credits, except the senior citizens property tax credit…shall be issued or certified…unless the estimate of such credits have been reviewed and approved by a majority of the senate appropriations committee and house budget committee.”

If a majority of either the Missouri House or Senate committees referenced vote to not approve one or more of the more egregious tax credit program estimates (and there are several), then perhaps no money would be issued for those programs this year.  Under this scenario, the daunting challenge of convincing many legislators who may have constituents and contributors who benefit greatly from tax credit programs seems to be reduced.

It is time for legislators to put the needs of Missouri taxpayers ahead of their own political concerns. Concerns about party politics should not dictate the budget solutions pursued in 2012.

The state is facing a budget shortfall of hundreds of millions — perhaps approximately $500 million. Defunding a few of the more wasteful tax credit programs could certainly help address that. And it may be easier to do than some may think.

The post Could Nine People Stop Tax Credit Nonsense In 2012 (And Maybe Help State Budget)? appeared first on Show-Me Institute.

However, the plan for obtaining a $107 million loan from state universities to help fund a department that gives a lot of money to . . . well, state universities, seems odd. If the state is facing a shortfall, it needs to make the tough decisions to balance the budget (i.e., cut spending and NOT raise taxes). What happens if the state faces a similar situation in fiscal year 2014? Will Nixon ask for ANOTHER loan?

There are other places in the budget that can be cut (granted, these cuts alone will not make up the amount of money needed, but they are a start) before even thinking about cutting money from the DHE, never mind resorting to this loan plan. However, that is not to say that cuts cannot be made in DHE. The DHE budget is not sacrosanct.

For example, in fiscal year 2012, the DHE gave more than $400 million ($366,765,401 from general revenue) to the University of Missouri system. If Gov. Nixon wants a $63 million loan from the University of Missouri-Columbia, why doesn’t he ask the legislature to cut $63 million from the University of Missouri system. Lawmakers can always appropriate more money in future fiscal years (not that they necessarily SHOULD). Why ask for a loan?
Prudence is a virtue for a reason. Before engaging in plans meant to avoid the task at hand, wouldn’t it be better if the state actually finds out what it is paying for and truly decide what it NEEDS to pay for, and what people can do without?

The post College Loans: It Seems We ALL Have Them Now appeared first on Show-Me Institute.

Nixon said that he had offered assistance to [Saint Louis County Executive Charlie] Dooley. In particular, the governor mentioned Lone Elk Park, which is adjacent to Castlewood State Park. Nixon said such a state-county operation there would save money.

Lone Elk Park is adjacent to Castlewood State Park and a previous article states that the county was considering transferring Lone Elk Park to the Missouri Department of Conservation. The governor claims that a shared management operation would save money. I haven’t seen any data to support this claim, but IF it is true, then the idea can be viewed as having some merit.

However, it seems odd that in this article, the topic of privatization was barely mentioned, except in this brief statement:

[Saint Louis County Chief Operating Officer Garry] Earls initially said that some of the parks, including Lone Elk, could be sold. However, Dooley dismissed that possibility at a special budget meeting Tuesday night.

Prudence would suggest that the county not dismiss privatization (or ANY potential solution) out of hand. Shouldn’t the county consider privatization as a possible course of action before sharing park management with the state? If there ARE obstacles to privatization, what are they? The only obstacle I could find is in this piece of information from the Southeast Missourian:

Officials said deed restrictions and covenants would prohibit the sale of most of the parks to private individuals.

However, Lone Elk Park does NOT have a deed restriction on its sale so the above restriction would not be applicable. Are there any other reasons the county would not consider privatization of Lone Elk Park?

As David mentioned in his post, the Reason Foundation has done a good analysis of park privatization, and the conservancy model of non-profit, public-private partnerships operating a park has been tried successfully in Tower Grove Park. County officials have not given a reason why following the Tower Grove example would be a bad idea, and unless there is a deterioration of Tower Grove’s situation, shouldn’t Saint Louis County investigate privatization of Lone Elk Park if a private operator can be found to manage it?

The post Public Parks Problem, Part 2 appeared first on Show-Me Institute.

“I don’t think it’s up to those guys to make that decision,” said Walter Crawford, executive director of the World Bird Sanctuary, which borders Lone Elk Park. “That park belongs to you and me.”

If it is not up to county officials to determine how to raise and spend tax dollars, whose job is it? Not surprisingly, the hipster urbanists are all a-twitter:

Parks represent a community’s shared aspirations and values. Our St. Louis County Park system is a national treasure.

No, it isn’t. It is a wonderful local park system, but “national treasure” is a fair bit of hyperbole.

I think the real opportunity is for cities to take over some of the parks that are within their borders. Many of the parks in question were county parks before these cities, such as Wildwood, incorporated. County government officials are correct to propose changing that model now. Residents in the newly-formed cities gain the benefits of the local park without the marginal tax burden. The St. Louis Post-Dispatch explains further:

The possible transfers: Lone Elk Park to the Missouri Department of Conservation; Greensfelder to the city of Wildwood; George Winter to Fenton; and Bon Oak to Dellwood.

Officials said that they had not yet contacted the state or municipalities to discuss that prospect.

However, Wildwood Mayor Tim Woerther said on Tuesday that he would be open to the idea of taking over the 1,734-acre Greensfelder.

“We would certainly be receptive,” he said. “But obviously, the devil is in the details.”

I commend Mayor Woerther for his openness to the idea. I would add Tilles Park in Ladue to the list; perhaps the cities of Ladue, Brentwood, and Rock Hill could take over the park in a cost-sharing arrangement. (Tilles is in Ladue, but on the border of Brentwood and Rock Hill, and residents of all three cities use the park extensively.)

Another possibility for some of these parks is to deed them to neighboring subdivisions as common ground. This is an option for the smaller, neighborhood parks on the list, such as Mathilda-Welmering. Maybe they would be well-maintained in that situation and maybe they wouldn’t, but the choice, and cost, would be up to the local residents who use the park. 

And, not surprisingly to regular readers, I think privatization should be considered for some of these parks. The Reason Foundation has covered the issue of park privatization at length. The conservancy model of non-profit public-private partnerships operating a park has been used successfully in some Saint Louis city parks, such as Tower Grove Park. Private supporters also have played a role in the success of some destination parks in the area, including Forest Park and Faust Park. (Nextstl.com has good detail on this in its story.)

The privatization model will, in my opinion, work better for destination parks. But, I think Lone Elk is such a destination park, and because it is one of the parks without a deed restriction on its sale, I hope the county gives that option strong consideration if a private operator can be found to manage it.

I don’t agree with every idea that the county executive proposes here, but I don’t think he deserves the criticism from all sides that he is receiving. Some of these cuts are tough choices that have to be made. I believe that the government is too large and too costly at every level. So, my axiom to that rule is that I don’t criticize elected officials — of either party — when they propose budget cuts, especially in tough economic times. (I think the closest I came to breaking that principle was in defense of Parents As Teachers. But, I only argued against its elimination; I supported cutting its budget.)  

If cities can take control of some of these parks, if privatization (including non-profit control) can be applied to the facilities where it may be best suited, if the more obvious cuts and changes can be applied (like closing minimally-used pools and expensive community centers), then I believe these changes can be implemented and, in the end, most St. Louisans would barely notice.

The post Where Will Nannies And Chimney Sweeps Sing Songs And Fly Kites If St. Louis County Closes Parks? appeared first on Show-Me Institute.

In other news, due to stimulus money running out (slide 15 in Budget Stabilization row), there will be at least a $64 million shortfall in the Missouri Department of Elementary and Secondary Education (DESE) budget that needs to be made up from somewhere else. That is, of course, unless the state government is fine with cutting the full $64 million out of the DESE budget.

Now, canceling the presidential primary won’t automatically fix this shortfall, but it would be a significant first step.

The post The $64 Million Question appeared first on Show-Me Institute.

Click below for live video of the Show-Me Institute’s Speaker Series on Economic Policy, which will begin at about 7:00 p.m. CDT. Tonight’s speaker at this Saint Louis University event is Brian Riedl, the lead budget analyst for the Heritage Foundation. Riedl’s speech, “What Washington Won’t Tell You About the Next Economic Crisis,” focuses on the looming budget and deficit crisis in America.

The post Watch Live Tonight: What Washington Won’t Tell You About the Next Economic Crisis appeared first on Show-Me Institute.

Watch the entire speech, including Roper’s warnings about government spending and the federal deficit.

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I credit lawmakers in Missouri for being forthcoming about the fact that the purpose of this tax hike is to generate tax revenue, not to discourage bad behavior. Lawmakers often attempt to discourage smoking on moral, ethical, or public health grounds with higher taxes, but that’s not the issue here — money is. No matter the reason for higher cigarette taxes, though, this policy won’t solve the state’s money problems. The tax hike will cause smokers to buy fewer cigarettes. Some will smoke less as a result, and others will quit entirely. Their personal health may benefit, but they won’t contribute any cigarette tax revenue.

Those who do continue to smoke will buy fewer cigarettes in Missouri because they will no longer be getting a comparative price break. By keeping its tax rate low relative to other states, Missouri encourages those who do smoke to buy their cigarettes within the state, and it motivates non-residents living close to the border to shop here, as well. After a rate increase, smokers living near the border would be much less likely to buy their cigarettes in Missouri when they come here to work and to attend sporting events downtown, instead buying their cigarettes in their home states and generating tax revenue there.

The eight states that border Missouri have an average tax rate of $0.90. If lawmakers hike the tax rate by $1, which is what they propose, the tax rate in Missouri will exceed the tax rate in all but one of its border states. Individuals will tend to vote with their feet and buy cigarettes elsewhere, and the state will see less tax revenue as a result.

Missouri residents and businesses would be better off if the state government tried other strategies to close the budget deficit instead. State officials should reform spending and operate within their means, looking for ways to lower tax rates across the board rather than raise them. Missouri would attract more business activity and, consequently, more tax revenue if policymakers fostered a low-tax environment.

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

The post ‘Sinful’ Tax Collections Won’t Fix Budget Woes in Missouri appeared first on Show-Me Institute.

The new policy would increase transparency in the state budget, which is clearly lacking. Taxpayers are picking up the cost of this travel, so the sheer amount of this line item should not be hidden from them. If the costs of these trips are diffused across the budgets of multiple government agencies, taxpayers will not have a clear picture of the real costs of Gov. Nixon’s travel. What good does the Missouri Accountability Portal provide if it is so disorganized?

According to Lieb’s article:

Nixon often bills a specific agency for his flights. But he sometimes splits his travel cost among about a dozen state offices when the trips have no direct connection to specific agencies, such as his attendance at sporting events.

Does anybody seriously believe that Gov. Nixon’s attendance at a sporting event generates an increase in economic output for the state economy? Additionally, when the governor travels around the state to announce a handful of jobs here and there, doesn’t that travel expenditure partly negate the ostensible benefit of the jobs?

Even though the state government faces a budget shortfall, and even though Nixon has made cuts in other agencies, he increases his own travel budget. If the governor were serious about promoting fiscal responsibility, he would take measures to reduce these expenditures, but he doesn’t. The fiscally responsible thing to do would be to seek out cheaper substitutes, such as videoconferencing, or to cease holding multiple ceremonies throughout the state for a single project.

Missourians would be better off if they weren’t picking up the cost of Nixon’s trips. These expenditures decrease the funds available in agency budgets by unexpected amounts, which means that the governor’s travel comes at the expense of other programs. If the travel expenditures were reduced, Missourians could keep a greater proportion of their earnings.

The post Gov. Nixon’s Sky-High Travel Expenditures appeared first on Show-Me Institute.

The New York Times has an interactive web tool in which end users can employ different strategies (i.e., raise taxes, cut expenditures) to solve the federal deficit. Although this particular experiment focuses on the federal level (e.g., military spending, Social Security), it highlights some deficit-reducing strategies that policymakers in Missouri could use.

For example, the state government can eliminate loopholes and special exemptions, which are pervasive in Missouri’s status quo. Loopholes concentrate benefits on a select few, and they disperse the costs on those who remain in the tax base. Although this would increase taxes on the groups that currently enjoy an exemption, it will reduce the rate that the rest of the tax base experiences. Furthermore, the policy would result in increased revenue. According to the web tool, the federal corporate tax rate would fall from 35 percent to 28 percent. Individual federal tax rates would fall within all brackets.

Of additional note, it is possible to close the federal budget gap by cutting expenditures and without raising tax rates at all using the web tool.

Although I am confident that the reforms I selected would be good for the economy, they would be difficult to put into practice. It’s a consequence of public choice theory. Special interest groups have a significant incentive to petition the government to enact policies that favor them. Additionally, elected officials want to remain in office, so they have an incentive to focus on short-sighted pet projects that benefit a select number of their constituents rather than the general welfare.

The post Good News: I Solved the Federal Budget Deficit! appeared first on Show-Me Institute.

According to a recent article in Governing, Minnesota and Wisconsin, my two home states, are choosing the second strategy. Their state governments are starting to share services as a means to cut expenditures. From the article (link via the Wall Street Journal‘s Real Time Economics blog):

The Gopher and Badger states are looking to find efficiencies and save money on everything from sharing amusement ride inspectors to buying ammunition and tires. The task has not been easy, but in the year and a half since the report’s release, Minnesota and Wisconsin have shared resources, consolidated services, bartered and even joined forces on contracts for package delivery, software and institutional food.

The Show-Me State would be wise to follow the example of the Badger and Gopher states. Missouri borders eight states, so certainly there exist many opportunities to consolidate services in the style of Minnesota and Wisconsin. Raising additional tax revenue may be a simpler strategy to implement, but it doesn’t result in the same long-term savings and efficiency gains as sharing programs across state borders.

The post A Lesson From the Land of 10,000 Lakes and Cheeseheads appeared first on Show-Me Institute.