Susan Pendergrass speaks with Todd Davidson, Vice President of Programs at the State Policy Network, about how artificial intelligence is reshaping the think tank world. They explore what AI is good at and where it falls short, how organizations like the Show-Me Institute can use it to become more productive without losing their edge, why face-to-face relationships will only become more valuable as AI-generated content floods the internet, how a Hawaii think tank used an AI agent to help fire victims submit legislative testimony, what good policy looks like in an AI-driven energy landscape, and more.

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Episode Transcript

Susan Pendergrass (00:00) Great, well, thanks so much for joining us this morning. Todd Davidson of the State Policy Network, to talk about the topic du jour: artificial intelligence. Thanks so much for coming on to talk about it. I’m afraid to even say anything out loud about AI because by next week it’ll be…

Todd Davidson (00:11) Yeah, happy to be here. Thanks for having me.

Susan Pendergrass (00:18) Nothing really ages — it changes so fast. But I did just read that Mark Zuckerberg has an AI agent who is performing his CEO duties for him. Did you see that? Why not, right?

Todd Davidson (00:28) I saw that, yeah. And then he can just kick back, go down to his Hawaii bunker and just let Facebook run itself.

Susan Pendergrass (00:37) Yeah, I mean, I still haven’t really dabbled in agentic AI, but I know it’s right there and I’m going to want to do it soon. We’re going to talk about AI in the think tank world, but I have to check legislation and hearings and see how those things are going every day. I can well imagine an AI agent doing that for me.

Todd Davidson (01:01) Yeah, if it’s properly trained. So ShowMe Institute, to give the audience broader context, is a member of State Policy Network, and we have sister organizations like ShowMe in states across the country. The Libertas Institute, which is based out of Utah, did exactly what you’re talking about. Connor Boyack, the CEO, built a legislative tracking system that then feeds into their scorecard where they keep track of legislation. He said it took him about eight hours of work to code the agentic AI, but now it does the work automatically. Of course it needs fine-tuning and always has a final human observer that verifies everything, but it’s being used for those purposes right now across the country.

Susan Pendergrass (01:59) So we’re in the think tank world, and it’s probably more of an art than a science at the state level. Tracking the policies — first of all, thinking about the policies that we think would be best for Missouri, then doing a bunch of research on those policies, then creating content on those policies, then trying to talk to legislators and hope that they see our point of view, and that they enact actual laws that reflect those policies. That’s a really labor-intensive job. Which parts of that could you see being picked up by AI?

Todd Davidson (02:33) I’m by no means an expert on AI, but I work with someone who is. What has been explained to me is that AI is very good at synthesizing information. It’s very good at predicting — it essentially predicts the next word. It takes all these inputs and predicts the next set of words, which comes out to us as sentences. So if you are able to give it certain inputs — say, I want you to look at these bills, I want you to look at these things — and give it a sort of walled garden, it can then be prompted to produce any type of analysis that you want. The reason you want that walled garden is because AI can still hallucinate. It can make stuff up. Actually, this just went viral last week: a lawyer down in Georgia went before the Georgia Supreme Court and had AI produce her entire argument. It cited five fictitious cases, and the judges called that out. So you have to give it constraints and say, here are the data inputs, now summarize this for me. And it can get you a pretty solid first draft of that summary. Of course, you’re still going to need a human to go through and edit it and add voice and texture to it. But summarizing that data, saying tell me which of these align with our principles or does not align with our principles — it would be very good at that kind of thing. What it’s not going to be able to do is the creative part. When you think about what is the policy that we want to design for Missouri, what does Missouri need — it’s not at the stage where it could do that. That’s where you would still want Show-Me Institute experts to be crafting those kinds of things. But if something’s already out there and existing, you can summarize it and score it based on criteria pretty easily.

Susan Pendergrass (04:35) So given how quickly firms are moving towards AI — and in fact mandating AI because it’s such a time saver and productivity increase — how does a think tank position itself in that world? There’s so much talk about AI just replacing all of our jobs. Maybe it does replace my job — I don’t know. I’ve heard podcasts generated by AI in my voice, so it could be doing this job right now. I would like to think it wouldn’t be as great, but how does a think tank position itself? What’s our value add in that scenario?

Todd Davidson (05:12) Start by going back to what your mission and objective is. ShowMe Institute — and by the way, I am a resident of Missouri and a big fan of the Show-Me Institute, both from my SPN perspective and from my Missouri resident perspective — we have principles: free markets, a robust civil society, a thriving economy. We want the feds to get out of the way in a lot of cases. We want the government to get out of the way. And then how we execute that mission is through policy change, mostly at the state level, though I know you also work at the local level. So state and local policy change is the objective. How do we go about that? We produce research and then we advocate — in some cases talking directly to policymakers, communicating out to the public through op-eds and things so that the public then talks to lawmakers. And ultimately we get policies passed that lower the income tax, reduce barriers to work, and provide more options for kids in schools. So what AI is going to do is make research and content much easier to produce. By research, again, I mean that summarization kind of research — it’s going to make that kind of stuff extremely easy for folks to produce. Everybody’s going to have a research assistant. What AI cannot do is personal relationships. It will never be able to do that. What it also cannot do is tour the entire state of Missouri, know all of the history and relationships and connections of people throughout the state. So I believe Show-Me Institute and all of the affiliates across the country that are state and local based are going to have an advantage because you’re in your community. You know people, you know policymakers, you know community leaders, you know people that are affected by your policies. And that’s something AI is not going to be able to do. AI can look at the statistics and arguments and academic literature, and it could put together a brief, and that could be useful. It would make your job more efficient — you’d be able to produce those things in a fraction of the time you do right now. But then with that extra time, I would use it to go out and build stronger relationships in the communities, and then use those relationships towards policy change.

Susan Pendergrass (07:51) What about grassroots? More grassroots-type stuff?

Todd Davidson (07:55) Grassroots very much. AI is going to have an interesting relationship with grassroots. In one way, it actually makes it easier for grassroots individuals to engage their legislature. On the other hand, it’s going to create a flood of grassroots engagement digitally. So face-to-face grassroots engagement is going to have more impact. I’ll tell you a story: Hawaii had the terrible fire that destroyed Lahaina a few years back. Hawaii has terrible building codes — it’s incredibly hard to build homes there. That town was completely destroyed, so the state needed to relax its building codes in order for homes to be rebuilt. Well, they weren’t making this change. Show-Me’s sister think tank, called the Grassroots Institute of Hawaii, built an AI platform that allowed individuals to submit testimony to the legislature. Testimony has a higher bar, right? You can email your lawmakers pretty easily, but testimony goes into the legislative record and has to follow a certain format and be structured in a certain way. That’s not something that grassroots individuals were very equipped to provide. So a think tank would typically provide the testimony and then get grassroots supporters to send emails to lawmakers. What Grassroots Institute of Hawaii did was build an AI agent so that an individual could say, “Hey, my house was burnt down, I need these things,” and the AI agent would turn that into testimony and submit it directly to the legislature. It resulted in a skyrocketing number of testimonies being filed. Because of that, the legislature said, “Wow, we’ve heard from 500 constituents — we’ve never heard from that many constituents before.” So they relaxed their regulatory regime, and now homes are being built in Lahaina much faster.

Susan Pendergrass (09:48) Did they know that AI was doing it? Were legislators thinking, okay, this is AI?

Todd Davidson (10:12) That is why they went through testimony. Legislators’ email inboxes — they’re not reading their emails anymore, right? They get thousands of them. But through testimony, the AI was not making up the stories. The people had to fill out the content and explain their story. The AI was just structuring it in a way to make sure that it got submitted as testimony. I do think that is a bit of an arms race. At some point the same thing that has happened with email will happen — there will just be thousands of pieces of testimony and you won’t be able to read all of them. So there was a bit of a first-mover advantage. And once that becomes ubiquitous, I do think what you predicted is going to happen, where legislators just say, well, this is AI-facilitated. And that’s where it’s going to have to go back to face-to-face, bringing those people in.

Susan Pendergrass (11:08) I think you’re absolutely right. As more video content comes out and we all realize it’s AI — I just don’t really believe that any videos are real anymore. I don’t really believe pictures are real. I don’t really believe music is real. And it doesn’t necessarily bother me that much, but I think because of that skepticism and unwillingness to believe in digital content, things happening in real life right in front of us are going to take on higher and higher value, so that we know for sure that if I’m speaking to a legislator, it is me saying it and what’s coming out of my head. That’s about the only way we’re going to know if something is real — or the default is just going to become AI-generated.

Todd Davidson (12:01) 100%, I absolutely agree. And that’s where I think organizations like ShowMe are well positioned. Because you’re in the state of Missouri, you can be in Jefferson City or you can be in St. Louis or Kansas City in those face-to-face relationships. It’s going to make your government affairs personnel far more valuable, your fundraisers who can be face-to-face with donors far more valuable, grassroots activists that are face-to-face. It’s going to put a premium on face-to-face interactions for sure. I agree — there’s going to be so much content out there. You’re still going to need content because that gives you credibility, it gives you what you’re going to talk about. But then you’ve got to pair that with the face-to-face interaction, otherwise it’ll just get ignored.

Susan Pendergrass (12:47) And you can definitely see the gap when people are generating stuff through AI and they don’t know the subject matter enough — like you said about the attorney. But there is definitely a role for humans to say, I mean, I do this all the time with AI: I’ll say give me five of these things, give me five infographics or something like that. But the human has to know which one is the best or which one makes the most compelling argument. AI simply really can’t do that. So while some people would love to believe that AI is going to run the world, I do believe there is an emerging role for human discernment to know which AI products are better than other AI products. Would you agree with that?

Todd Davidson (13:32) Yeah, 100%. I think the sweet spot is utilizing AI to make yourself more efficient or do things that you don’t like doing. But then that raises you up into that discernment phase where you’re the one making the call. I do this all the time — I’m having conversations with AI to increase the outputs. I should not spend any time making infographics. I’m not good at it. But I can have a conversation with AI where it produces that infographic much more effectively than I could. I’ve also found that, if you put the prompting on it, it can help you find those particular sources that you’re looking for. Say you want to write a survey on school choice research — it can help you gather all of those materials much faster. But then you have to make sure that it’s of high quality.

Susan Pendergrass (14:35) What do you think about the current pushback on AI-generated pictures? Do you think that is just a learning phase we all need to get through? Some top artists on Spotify have been determined to be AI-generated.

Todd Davidson (14:57) Really?

Susan Pendergrass (14:59) Yeah. The number two Christian artist is just AI, and across all genres there are artists with millions of subscribers who are just AI-generated music based on what AI knows we all like. So we do like it. Does it matter that there’s no real person writing the music? I don’t know.

Todd Davidson (15:12) It’s kind of sad. Yeah.

Susan Pendergrass (15:21) I know the initial reaction is, that’s sad. But then after a while you’re like, I don’t know.

Todd Davidson (15:26) There is going to be intense pushback to all things AI. AI is very unpopular right now. I saw some polling just last week that showed it is the number one concern of voters. There will be a populist pushback against AI. We’re seeing this pushback against the data centers. There’s even polling that showed a plurality of the population believes it’s immoral to use AI. And I think it gets at the core of some of what you’re talking about here — yes, there’s this very popular, satisfying music, but it loses some human element because there’s not a human behind it. I do think we’re going to see a lot of pushback to AI on multiple dimensions. There’s that cultural dimension. There’s the economic anxiety dimension right now: a fear that AI is driving up energy costs, a fear that AI could take my job. There’s going to be pretty significant pushback. Right now we’re mostly seeing that in anti-data center efforts, trying to stop the building up of data centers across the country. I was looking at some Democratic pollsters today who were pitching that Democrats should advocate for a guaranteed job, guaranteed income, guaranteed healthcare, and a guaranteed home if you lose your job to AI. That kind of populist messaging is going to resonate with a lot of the public. What is the response going to be to that? What are the other solutions that we could advocate for that both allow the continued growth and opportunity and also allow continued innovation around AI, because we’re going to need AI to continue to develop?

Susan Pendergrass (17:30) It’s already here. I mean, we’re doing this in reverse order. And I think my opinion is that massive new technologies always get pushback — like the car. People were on their horses, and then we started designing roads for cars. Calculators got a lot of pushback, the internet got a lot of pushback. But ultimately people decided that they liked it better. I think AI is the same — we just have to figure out how to work with it. And I know that it is threatening to take a lot of jobs, but I see it more as a good thing. It gives us an opportunity to become the expert over AI. AI is not going to be the expert — we still need the human component. Like you said, face-to-face interactions. Legislators are still going to know what Missourians want and how to represent their constituents, and those are real-world issues. The data center pushback is because I don’t want to look out my window and hear a buzz and see a data center — I don’t want all that land going to data centers. That’s a real-world, in-person issue. But I just think we’re going to have to learn to work with it. I don’t think robots are going to — maybe this is where I don’t want to say things out loud — but maybe the robots will take over the world, I don’t know. But personally I feel like it is helpful to get a lot more content out, because you don’t know what’s going to resonate with stakeholders. Whether it’s a video or an infographic or a report or a different type of content, the fact that we can generate these things much more quickly I think is a benefit to us, and it makes the in-person time more meaningful to me.

Todd Davidson (19:11) You’re absolutely right. When a new technology comes out there’s going to be pushback, and organizations like ours have to figure out what’s the policy framework that allows that innovation to thrive without getting in the way. And fortunately we have a lot of those policies already. Like Avery, your colleague at Show-Me Institute, talks a lot about energy. One of the biggest pushbacks on AI is that it’s driving up energy costs. There’s some research that shows that’s not quite what’s happening. What’s happening is a lot of green policies that got passed in the 2010s are coming to roost — the renewable portfolio standards and those things are really what’s driving up energy costs. But even still, what can we do to make energy more affordable and reliable, even with a bunch of data centers added to the grid? And Avery’s got good policy on this: expanding nuclear power, expanding the use of reliable energy sources.

Susan Pendergrass (20:23) It’s separating out consumer electricity from data center electricity. You can carve these things differently.

Todd Davidson (20:29) Yeah, that’s another one — where the data center has its own power source. So there are policies out there that can mitigate it. And on the job question, unfortunately AI is happening at the same time that we’re having a continued cost of living and inflation issue. It’s one more thing that is driving anxiety. It’s not the root cause of what’s going on — we’ve got other factors that we need to address to get inflation under control, particularly on the energy side.

Susan Pendergrass (21:08) Yeah, but I do think it’s great that we have so many opportunities to expand or improve how we do things. In our little corner of the world, which is think tanks, we’ve been doing things kind of the same way for a long time. So I think a new approach to how we do business is a welcome change, and I think we could be a lot more effective.

Todd Davidson (21:38) Yeah, I think we’re going to see far more productive think tanks on the research side. On the litigation side, I was talking to Wisconsin Institute for Law and Liberty. They litigate a lot of cases. With the advent of AI, every lawyer essentially got a legal clerk right away. They went from nine lawyers and a handful of legal clerks to nine lawyers who each now have their own AI legal clerk. It’s dramatically expanded the number of cases they can take on. And the same thing on the research side. On the marketing side, production of content is going to be quite a bit easier and more cost effective as well.

Susan Pendergrass (22:26) Well, I appreciate having a chance to talk to somebody who has a positive perspective on it, because I do hear a lot of doom and gloom when it comes to AI. I was reminded by somebody that many of the scenarios in movies and books about AI are very dystopian, but perhaps it’ll be utopian. We don’t know. It’s all in how we approach it, right?

Todd Davidson (22:48) Yeah, it is. It’s going to be an exciting new world that we live in and we’re right on the frontier.

Susan Pendergrass (22:54) Anyone with little kids, like you — who knows what the world’s going to look like when they’re going to college. So you’ve got to stay flexible, right? Well, thanks so much, Todd. I appreciate you coming and talking to us about it. We’ll have to talk about it again sometime soon when the whole thing has changed.

Todd Davidson (23:02) Yep, stay flexible and always be learning. Yeah, sounds good. Thanks, Susan.

Produced by Show-Me Opportunity

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SB 68 was originally intended to prohibit students from using an “electronic personal communications device” during instructional time (the current version prohibits students from using these devices from the start of the school day to the end, barring emergencies and exceptions). It was a little over 3 pages long and received an endorsement from Governor Kehoe: “It’s simple—cell phones have no place in Missouri classrooms.”

Today, SB 68 is no longer simple, and it is not the same bill that the governor endorsed two months ago. After its trip through the House and subsequent conference committee, SB 68 has ballooned to 138 pages and now includes 30 policies.

SB 68 now includes sweeteners or concessions for certain members and interest groups.

Wasn’t the original SB 68, which focused solely on cell phones in schools, a good, straightforward bill with enough merit and momentum to pass on its own? I guess not, because as I will detail in the following post, it now includes several bad policies that taint the worthwhile cell ban.

Curious about what got added to SB 68? Click here to read Part 2.

The post Senate Bill 68: From Simple Cell Phone Ban to Education Omnibus, Part 1 appeared first on Show-Me Institute.

Produced by Show-Me Opportunity

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Welfare programs shouldn’t encourage dependency, but far too often they end up trapping recipients on government support. This year, two state lawmakers filed bills aimed at addressing the work disincentives that currently accompany welfare benefits. In theory, these bills sound like good ideas. Unfortunately, the approaches chosen by lawmakers for these bills have some glaring flaws.

Here are some examples:

Good Idea: Ensure welfare recipients aren’t discouraged from seeking work or career advancement.

Wrong Approach: The bills create new transitional benefits for the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) programs that stack on top of the program’s already existing transitional benefit programs. The result is a new layer of costly complexity on top of an already overly complex system.

Additionally, the new transitional benefit would scale benefits based on the recipient’s income. While this may sound like a good idea, the government does not collect real-time income earned by recipients, and checking income is not an easy administrative process. In reality, this change will mean more people are enrolled in state welfare programs longer.

Good Idea: Simplify income reporting to reduce burdensome bureaucracy.

Wrong Approach: The bills require applications for Missouri’s welfare programs to fit onto one page. The problem is, as the state’s department of social services reports, “a one-page form would not capture all of the information federally required to determine eligibility for these programs. FSD would need to follow up with each applicant to obtain the required information to determine eligibility.”

In other words, one page is not enough space to gather the information sufficient to comply with federal law. This increases the likelihood that more individuals will be enrolled in welfare programs than are eligible to receive benefits, only for state authorities to discover this problem after significant tax dollars are improperly spent.

Good Idea: Focus on federally funded programs that states have the flexibility to reform.

Wrong Approach: Since SNAP and TANF are federal programs, the federal government also gets a say in whether they will pay for whatever reforms Missouri enacts. But the reforms for TANF and SNAP outlined in the bill’s fiscal notes will very likely not be approved by the federal government. No other state has anything similar to what is being proposed here. So, if enacted, these reforms and new benefits would be paid for by state taxpayers. All told, the fiscal note estimates the bill would cost more than $200 million per year in new state tax dollars.

Given all of these concerns, it’s safe to say that without significant changes, I think these bills would move Missouri in the wrong direction. They would grow the welfare state, worsen program integrity, and significantly increase costs.

Since there are a number of welfare reforms that could have been proposed that encourage work, improve program accountability, and responsibly spend taxpayer dollars, it is mystifying why such reforms have not been pursued. With less than two weeks remaining in the legislative session, it’s unlikely we will see revisions to the current bills that truly reform the system. Improving Missouri’s welfare state is a difficult but worthy task. Instead of moving forward with bills that could do more harm than good, I hope lawmakers will choose to learn from this years’ experience and carry this important conversation into 2024 with reforms that actually accomplish what they say they want to accomplish.

The post Right Idea, Wrong Approach appeared first on Show-Me Institute.

The good news in Missouri is that we’ve seen legislative progress toward both goals this year, especially with the Parents’ Bill of Rights. On Wednesday, news came from the Missouri Legislature that Senate Bill (SB) 4 had passed out of committee. As our readers may know, SB 4 represents the most likely vehicle for a Parents’ Bill of Rights to pass into law, so its (relatively) expeditious approval in the Senate and in a House committee is heartening.

What’s less heartening is that the House added a Committee Substitute to the bill, which changes its contents and, thus, would require another vote from the Senate if it passes on the House floor, which it seems likely to do. Why is the substitute a problem? Because if the bill survived unamended, the Senate would not have to see the bill again; given the dysfunction in the upper chamber this year, there’s no telling whether the Senate would take up SB 4 a second time with the House’s amended language. Factor in threats from the House that it may stop considering Senate bills altogether, and yeah, the circumstances here aren’t great.

Unless the House knows the Senate can and will pass its revised SB 4 late in the session, I hope the House will consider removing the Committee Substitute, as it did with its special session bill last year, and pass it as drafted by the Senate. I appreciate the inside-baseball reason for rejecting Senate bills in an environment when the Senate is an AWOL partner in policymaking, but that doesn’t change that SB 4 achieves one of the core objectives the House had set out at the beginning of the session: putting parents back in charge of their kids’ education. Four weeks remain between now and the end of this year’s legislative work; we’ll keep you posted if SB 4 makes it across the finish line.

The post Optimism and Concern on the Future of Parents’ Bill of Rights Legislation appeared first on Show-Me Institute.

But perhaps the most interesting recent development on this subject happened Tuesday night. As part of the House’s annual budget debate, amendments were repeatedly added to spending bills that would explicitly stop state funding from going to DEI programs—not only in higher education, but in other state departments as well.

Now that the budget bills go to the Senate, this language will likely change or even be removed by the upper chamber. We’ll keep you posted on the progress of the budget bills and on the other anti-loyalty oath initiatives. The legislation remains a long way from crossing the finish line.

The post DEI-blocking Bills and Amendments Rain Down in “Loyalty Oath” Aftermath appeared first on Show-Me Institute.

But December 1st is also an important day for the legislature. That’s because it’s the first day legislation can be submitted for consideration before the chambers reconvene in January. Known as “pre-filing,” the process generally signals what the top priorities are going to be for legislators in the next legislative cycle—with the fastest filers getting the lowest-numbered bills and the sometimes dubious bragging rights of being the first to bring policy ideas to the legislative table.

What will be in the queue? In no particular order, here are some of the ideas that have been getting a lot of talk this fall and will probably be hot topics when the legislature reopens in 2023:

• Open enrollment is the idea that students in the state should, in some form or fashion, be able to enroll in a public school outside their home district. It appears that this will be a major priority in the House. My colleague Susan Pendergrass has talked about the issue at length, and it seems like she will probably do so again in the upcoming session.
• The Missouri Parents’ Bill of Rights, or MPBR, looks likely to make a comeback. The bill would guarantee parents a stronger role in their kids’ education and require curricular transparency from schools and districts that currently doesn’t exist.
• School board reform has been a popular topic of legislative debate during the break, including potential changes to when elections are held and transparency around who board members are and how they can be contacted by the public.
• Lastly in education, there may be a push to clarify who can participate in girls’ sports.
• The corporate income tax made a cameo in this fall’s special session, with a cut to the tax being stripped at the last minute from the individual income tax legislation that eventually passed. With a regular legislative session afoot, a push to cut or even phase out the corporate income tax appears likely. As with the individual income tax, I am a strong supporter of the reduction and elimination of the corporate income tax and am looking forward to hearing that debate in 2023.
• Property tax reform and changes to the Hancock Amendment will likely receive an outsized amount of debate, especially in the House. Both deal with the size of government and the tax burden government can impose.
• There also appears to be interest in the Clean Slate Initiative both inside the legislature and outside it. National organizations appear primed to get involved with a push to expunge certain criminal records, with conditions, to better integrate former inmates back into society. The exact language of the proposal remains in flux, but when it’s finalized, I’ll definitely weigh in on it.

‘Tis the season for policy. Let’s hope it’s a good one.

The post Some Thoughts on “Pre-Filing Eve” appeared first on Show-Me Institute.

Because HB 1858 was not amended in committee, the bill could technically be sent to the governor if the Senate passed it as is, since the bill’s language is currently identical to what the House passed. Given comments made by some senators at the hearing, however, it sounds like a handful of changes will be forthcoming, and those changes will then need to be approved by or negotiated with the House. The hearing also reaffirmed that a final vote in the Senate could be close, with one of the six committee Republicans voting against the bill.

On the heels of the Missouri Senate purportedly voting through “one of the most progressive budgets” it’s ever passed, the prospect of the parents’ bill of rights being gutted on the Senate floor or even failing is a more real possibility to me than at any time this legislative session. To be clear, I’m still generally optimistic about the current text, or something close to it, becoming law this year, but I hope the Senate leadership is prepared to use its political capital to get this important legislation across the finish line. Stay tuned.

The post Parents’ Bill of Rights Heads to Senate Vote, But Obstacles Remain appeared first on Show-Me Institute.

In a near-unanimous vote, the Missouri House of Representatives passed legislation that would establish the Missouri Local Government Expenditure Database. The move rebuffed attempts by local officials to halt the bill’s progress and sends the proposal to the Senate. As the St. Louis Post-Dispatch describes it:

The legislation sponsored by House Speaker Pro Tem John Wiemann, R-O’Fallon, is designed to boost transparency in local government. It would allow municipalities to post the information voluntarily, but also would give residents the ability to petition for the creation of a local database if local leaders are reluctant to participate.

The proposal advanced to the Senate on a 149-2 vote. The measure mirrors a similar bill that won House approval last year, but was not taken up in the Senate during the pandemic-shortened 2020 session.

The proposal would establish the Missouri Local Government Expenditure Database, to be maintained by the Missouri Office of Administration. It would go into effect in 2023 and would include information about a municipality’s or county’s expenditures and the vendors to whom payments were made.

As major proponents of transparency initiatives like this, I am obviously elated at the progress the bill has made relatively early in the session, and while I wish it went further by making reporting mandatory for all local governments, it’s a step in the right direction. I’ll be watching this bill closely and will keep you posted on its progress.

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Both bills would place the question of raising the gas tax before Missouri voters. One would require a statewide vote to change Missouri’s current law regarding fuel tax rates, and the other would require a statewide vote to enshrine the new fuel tax rates in Missouri’s constitution. Missouri’s fuel tax has remained at 17 cents per gallon since 1996, and a 10-cent increase today would roughly adjust it for inflation since then. However, the full 10-cent increase under these bills would not be in place until 2026, and we can expect further inflation during the extra five years. Still, if our gas tax is five years behind inflation in 2026, that would be an improvement over the current 25-year gap.

The extra funds would provide a boost for Missouri’s roads. The Missouri Department of Transportation estimates that roughly $745 million in high-priority road and bridge repair and maintenance go unfunded each year. The most recent proposal in 2018 to increase fuel taxes by 10 cents per gallon was estimated on the ballot to raise an additional $400 million each year for road and bridge maintenance. The current proposals would likely reach this mark after the full 10-cent per gallon increase is reached after five years.

While voters have rejected fuel tax and road-dedicated sales tax increases in the past decade, research suggests that voters may now be amenable to increasing fuel taxes. A recent report from the Missouri Chamber of Commerce found that 85 percent of Missourians believe more money should be directed to road maintenance.

Specifically, drivers were asked about their support for a 10-cent fuel tax increase to repair Missouri’s roads. The report found that 45 percent of drivers support such a fuel tax increase, but when respondents were informed that it would cost an average driver $5 extra per month, 51 percent supported raising the gas tax 10 cents and adjusting its 1996 levels to current costs.

Ultimately, both fuel tax bills would have to navigate the Missouri Legislature before reaching voters, but the recent support may be the extra boost they need.

The post New Gas Tax Bills Highlight Missouri’s Transportation Needs appeared first on Show-Me Institute.

For those unfamiliar with the company, Turo connects car owners to car renters. For example, if I own a car and want to make some extra money when I’m not using it, I could list my car on the Turo platform and get paid to let someone else drive it around.

If Turo’s model makes it sound like a rental car company, well, there’s an argument to be made for that. And if you think Turo’s model sounds a lot like the Uber or Lyft business model—where independent contractors essentially rent their services and vehicles like a taxi—then you wouldn’t be wrong there, either (minus the driver, of course.)

The problem is that under Missouri law, the taxes and regulations that cover “motor vehicle leasing companies” appear to exclude Turo from oversight. One of the touchstones of having a car leasing company in Missouri is the nature of the vehicle itself, and the state’s leasing law covers vehicles “which are to be used exclusively for rental or lease purposes.”

The cars rented through Turo typically are not used exclusively as rentals, and if it weren’t for a company like Turo, many of these vehicles would be exclusively personal vehicles. So the state’s rental car tax provisions do not neatly apply to Turo’s business model.

That isn’t to say that Turo is exempt from all fees dealing with rental cars in Missouri. For example, Kansas City’s rental car ordinance captures Turo’s business model in its definition of a “rental car agency”:

Rental car agency means an individual person or business entity as described in section 40-61 that provides the service of renting, leasing or letting passenger vehicles for compensation, whether the provision of such service is the primary, secondary, or incidental business of such person or entity.

Turo is a business entity that provides the service of renting passenger vehicles for compensation, and under Kansas City’s definition, the vehicle doesn’t have to be used exclusively or primarily as a rental vehicle; incidental rentals are enough to subject the business to the city’s  fee of $4 per day for rental cars.

There are important policy questions in play here. High among them is whether car rental (and hotel, and other tourism-type) taxes should exist in the first place. While politically attractive because visitors tend to pay such taxes rather than residents, I and other researchers at the Show-Me Institute have expressed policy reservations about such regimes many times before.

The most likely question to be debated in the legislature, however, isn’t whether such taxes should exist, but whether state rental car taxes and regulation should apply to these particular companies. Existing state law does not appear to contemplate these types of arrangements. The language of municipal statutes like Kansas City’s may offer legislators a blueprint for updating state laws that were drafted well before the advent of car share companies like Turo. Truthfully, if the state intends to impose taxes and regulations on rental car companies, it seems like Turo would fall under a common definition for such enterprises, even if it isn’t captured currently.

But—If such a tax is applied to Turo vehicles, legislators should simultaneously commit to reducing the associated taxes on all rental car companies against any added revenue expected from Turo rentals—that is, as they broaden the base for the tax, they also should lower the rate of the tax imposed for all involved. (This is much like my position on internet sales taxes in the state.) To be clear, I question whether rental car taxes should exist, but if they are going to exist, they should be applied equally and in a revenue-neutral fashion.

The post Is Turo a “Motor Vehicle Leasing Company”? appeared first on Show-Me Institute.

Missouri’s Constitution requires the state’s legislature to pass a balanced budget—meaning the government cannot budget to expend more funds than there are revenues. This requirement leaves our elected officials with difficult decisions each year, because the proposed budget increases for current state programs continue to outpace revenue collections. As lawmakers express concern regarding the revenue estimates assumed in the Governor’s budget recommendations, it is more important than ever to ensure that all state dollars are spent on worthy projects.

My new essay, “Missouri’s Budget: A Primer,” provides a step-by-step explanation of the state’s budgeting process and describes the measures available to elected officials when revenue collections exceed or fall behind the estimates used in the creation of the budget. The essay also includes two graphics that should make navigating the state’s budget more manageable. The first is a timeline outlining the budgeting process, and the second offers a list of topics to follow as the budget makes its way through the legislature.

Click the link below to read the entire essay.

The post Missouri’s Budget: A Primer appeared first on Show-Me Institute.

The post Michigan Repeals Prevailing Wage, and Missouri Should, Too appeared first on Show-Me Institute.

That’s why it was so disappointing that just as the EITC was on the verge of passing the Senate as part of House Bill 2540, an amendment struck. The proposed amendment, offered by an EITC supporter, would have stripped out the provision that would have essentially funded the EITC and an additional 0.1% reduction to the individual income tax. In response, the bill sponsor proposed instead to omit those effectively co-dependent sections from the final legislation, and that’s what the Senate agreed to. The revenue source for the EITC was gone, and with it, the EITC as well.

That’s why the cookie-cutter characterizations of the EITC ordeal by some Missouri news outlets is so off-putting. First, to portray tax reform as an either-or proposition—that you’re either “for corporations” or “for working families“—is fundamentally wrong as a framework for understanding tax policy. But secondly, to offer that portrayal with respect to the tax reform push of 2018, which included an EITC up until the final hours of the session, is especially misleading. Had it not been for the curious legislative decision to play chicken with a revenue provision in the waning hours of the session, the EITC would be on its way to enactment today. Alas, it isn’t.

A non-refundable EITC remains good policy. While its prospects are good for future years, it is nonetheless unfortunate that it did not pass in 2018. But to suggest that its failure this year was a matter of some form of class warfare is simply wrong, and unhelpful to Missouri newsreaders.

The post Enough: Earned Income Tax Credit’s Failure Wasn’t Because “Corporate Interests” Were Prioritized appeared first on Show-Me Institute.

That doesn’t mean that nothing should be done on taxes this year. In fact, a bill that would reform the state’s corporate income tax, sponsored by Sen. Andrew Koenig, has emerged from the Senate and is now before the House for consideration. The bill, Senate Bill 674, represents good policy pursued on a revenue-neutral basis, and while the legislation could be imagined as a “side car” to comprehensive tax reform plans, the bill itself is a strong standalone measure that would drastically reduce the state’s corporate income tax rate.

Cutting the corporate income tax is a cause near and dear to my heart and, with my colleague Michael Rathbone, it was the subject of one of my first essays at the Institute in 2012. That essay dove deeply into the importance of corporate income tax reform and some ways to achieve it, drawing on the broad academic consensus about the economic destructiveness of income taxes. To quote researcher Jens Arnold of the Organisation for Economic Co-operation and Development,

[a] stronger reliance on income taxes seems to be associated with significantly lower levels of GDP per capita than the use of taxes on consumption and property. Within income taxes, those on corporate income seem to be associated with lower levels of GDP per capita than personal income taxes. In fact, corporate income taxes appear to be the least attractive choice from the perspective of raising GDP per capita. [emphasis mine]

That’s why SB 674, even on its own, is important. Thus, the concern here—and a concern shared by the Washington D.C.–based Tax Foundation—is not policy-specific, since the bill is a good one, but procedural. If SB 674 is amended in the House, chances are good that the bill would simply die as the legislative session comes to a close, since the Senate would have to reconsider it and time is obviously running out.

I think most reformers would want to see reform come all at once, and in truth, there is no reason why over the last two years that couldn’t have happened on tax reform. But there is something to be said for methodical incrementalism, and I hope that serious consideration will be given to the subject of corporate income tax reform on its own terms as a springboard to larger reforms, passed this year or in the near future.

After two years of missed opportunities, it would be excruciating to see another opportunity for reform vanish at the end of this legislative session. I hope the House doesn’t let this happen.

The post Incremental Tax Reform: Don’t Let the Perfect Be The Enemy of the Good appeared first on Show-Me Institute.

In the process of the bill working its way through the Senate, several additional provisions were added to it.  If passed, the bill would also authorize the Department of Elementary and Secondary Education to accredit individual school buildings in Jackson and Saint Louis Counties. If those schools did not pass muster, students would have similar transfer rights as currently exist in districts that lose accreditation. The bill also takes steps to rectify some of the problems that have developed with the school transfer program and specifies several interventions to be taken in schools in Saint Louis and Kansas City around literacy instruction in early grades.

Generally, I favor “clean” bills that tackle one topic at a time. I also realize that policymaking requires compromise, and that some of the additions to this bill deal with issues that people in the state have been trying to address for years. While I immediately recoil at the legislature trying to dictate pedagogical decisions for individual school districts, I recognize that making sure a wider set of views are represented during its enactment can make the ESA program more durable and ensure more buy-in at the state and local level.  That seems like a compromise worth making. 

The main obstacle ESAs now face is Missouri is the calendar. With only two weeks left in session and budget that still must be agreed upon, time will be short. We will be following this closely and will report back with news.

The post Session Notes: ESAs Clear the Senate! appeared first on Show-Me Institute.

1.       Expand charter schools beyond the boundaries of Saint Louis and Kansas City

2.       Create a course access program to allow more students (particularly in rural areas) to access high-quality coursework

3.       Create an education savings account (ESA) program to allow families to customize the education that best fits the needs of their child.

As the legislature takes its annual spring break, we can take a step back and ask: How close are we to seeing these ideas become reality?

In a highly dramatic scene, charter school expansion (as codified in HB 634) passed the house and is now under discussion in the Senate. The margin of victory was razor-thin, and the Speaker of the House himself came down from the dais to personally address the body on the bill’s importance. Several important compromises were made in the bill, including giving school districts the right of first refusal when it came to authorizing a new charter school and shortening the duration of a school’s charter if the school is struggling academically. We will see if those concessions are enough to get it over the bar in the Senate.

With much less controversy, course access passed the house (HB 138) and has a companion bill in the Senate (SB 327) that has passed out of committee. I was at both House and Senate hearings, and both bills garnered wide, bipartisan support. In fact, in neither hearing did anyone get up to speak against them. In education policy, that is a rarity. Both await consideration by the Senate as whole.

Two ESA bills have passed out of committee in the Senate (SB 32 and SB 313) and both await consideration by the Senate as a whole. SB 32 is a smaller bill, with $25 million in tax credits, but it has broader student eligibility. SB 313 is a larger bill, with $50 million in tax credits, but is restricted to students with special needs, students in foster care, and the children of military families.

If you are sensing a pattern here, you’re right. The Senate has a large number of bills under consideration. It is a deliberative body that tends to take its time dissecting and discussing legislation. Therefore, the primary concern of folks looking to advance education reform is the calendar.

The Senate has a lot to get done before May. Here’s hoping that education remains a priority.

The post School Choice: Legislative Halftime Report appeared first on Show-Me Institute.

 “The leases, agreements, contracts, or subleases and any amendments for space, usage, or services in any convention center or related facilities owned or operated by a regional convention and visitors commission… must not be considered public records under the Open Meetings and Record law, commonly known as the Sunshine Law…”

It goes on to say that this is only the case if transparency would put the commission at a competitive disadvantage; however it never defines such a situation and seems to leave it to the commission’s discretion.

Upon reading this, I immediately found myself wondering a few things. How is it ever a bad thing for the public to know how a public entity is spending public dollars? What is the possible competitive disadvantage regarding documents to which the parties have already agreed? If there really are legitimate situations in which the Convention and Visitors Commission would be hurt by transparency, why did nobody take the opportunity to tell us what these situations look like? At least the law states that this exemption does not apply if a sports franchise is involved, but I doubt it should apply under any circumstances.

I understand that secondary provisions get tacked on to bills fairly frequently, and perhaps legislators felt very strongly about getting the rest of this bill passed. However, questionable policy is questionable policy. Even if the legislature felt strongly that the main of the bill needed to pass, why did it not take the time to clean up this unrelated, troubling provision?

The post The Commission’s Omissions? appeared first on Show-Me Institute.

Read the full essay: .

The post Taxes Matter and They’re Too High for Missouri appeared first on Show-Me Institute.

Just one problem with that claim: it’s not true. Don’t believe this lawyer? How about . . . the Missouri Association of Trial Attorneys?

Sharon Jones, deputy director of the Missouri Association of Trial Attorneys, which initially opposed the bill, said “even in times of emergency people need to be careful and they need to be responsible. If you harm someone, you should still be held responsible for the harm that you’ve caused.”

But the bill doesn’t actually grant blanket immunity. Trial lawyers stopped actively working against the legislation after language was added providing for civil penalties if health workers engage in “willful misconduct” or a “gross deviation from the ordinary standard of care,” Jones said. [Emphasis mine.]

What a disaster. Assuming the governor wrote his veto message, there is now a serious question about whether he read the bill before he killed it. Does he stand by his veto message? And the big question now with the upcoming veto session is, will the bill stay dead, or will the veto be overridden?

The post No, The Volunteer Health Services Act Didn’t Offer ‘Blanket Immunity’ To Out-of-State Doctors appeared first on Show-Me Institute.