Far from it. Of the 77 U.S. cities that KPMG ranked (which was not exhaustive of all major metros), Saint Louis ranked 45th and Kansas City ranked 46th. Among the cities cheaper than Saint Louis (and Kansas City) are regional competitors like Nashville, Omaha, Cincinnati, Memphis, Indianapolis, Cleveland, and Oklahoma City, to name a few. Worse yet, Saint Louis was more expensive than all 18 Southeastern cities KPMG looked at, from Atlanta to New Orleans.

So where did the Post-Dispatch get a top ten ranking for Saint Louis? If we only consider regions with populations greater than two million (of which KPMG ranked 31), Saint Louis is the 9th cheapest. I will leave it to the readers of this blog to decide if Saint Louis should pat itself on back for being cheaper than New York, Los Angeles, and Chicago, when it has higher costs for businesses than Nashville, Memphis, and just about every other regional competitor. But if we do decide to use population as criteria, it seems more justified to look at metros with populations similar to those of Saint Louis and Kansas City (between two and three million residents). When we do that, Saint Louis is 7th and Kansas City is 8th out of 14 such cities. That seems awfully middling.

That’s probably why, if one reads the study that the Post-Dispatch reports on, they’ll find that it does not claim that Saint Louis is among the most competitive cities in the country. KPMG didn’t even break down cities by population in the study, choosing instead to do so by region.  The Post-Dispatch story (while citing the study) is actually based on an ancillary KPMG press release, which lauds Cincinnati, and is careful to note context.

Titling an article “St. Louis among most cost-competitive cities for business, report says” when the report in question says no such thing is a questionable decision for a newspaper of record. But this is not just a problem with the headline. The article itself is equally misleading, and it was not a headline writer who placed this story front and center on the Post-Dispatch’s website less than a week before a vote on multiple tax issues (where the city’s business climate is an issue). 

The post Report: Saint Louis, Kansas City *Not* Among Most Cost-Friendly Cities for Business appeared first on Show-Me Institute.

WHEREAS, Wisconsinites generally have a love/hate relationship with all things from Illinois but the sold-out crowd at the Overture Center on February 20, 2010 had only love for this band from Chicago; […]

In an article in the Duluth News Tribune, Madison Mayor Dave Cieslewicz pokes fun at the situation. I realize that he’s joking, but there’s a sad element of truth in his statement.

“If it’s a typical resolution for the city of Madison, it will be referred to 20 different city committees, it’ll be amended and we’ll probably vote on it in August 2012,” the mayor said.

On the one hand, although the Common Council could spend its time more productively, at least it isn’t passing resolutions that limit personal liberties or promote fiscal irresponsibility.

However, as Sarah Brodsky has communicated on this blog, legislating state symbols encourages people to ask the government to affirm their preferences. I happen to enjoy listening to Wilco, but why should it matter to me that Ald. Rhodes-Conway and Mayor Dave do as well? In a recent blog post, Mayor Cieslewicz confesses that he doesn’t like John Mayer. Does this mean that I shouldn’t like him too? If John Mayer is barred from becoming an honorary citizen in Madison, does he face a barrier to performing concerts in Madison?

I hope that Mayor Cieslewicz is only joking about this, too:

There are also questions being raised about where honorary citizens would be allowed to live. Some have suggested a referral to the Zoning Code Revision Advisory Committee to mull that one over, though the City Attorney has hinted darkly that he won’t allow it.

I hope that these cities stop short of providing tax advantages to their honorary citizens. I wouldn’t be that surprised if they did, though; Midwestern states have already demonstrated a willingness to bend their tax codes in an effort to attract glitz and glamour.

The post She Fell In Love With The Drummer appeared first on Show-Me Institute.

The legislature has created a system that sets up very strong incentives for a school district to contract with some corporate on-line operation, open up a virtual charter school, and set about trying to poach other districts’ students.

He then compares the ACT scores of his district’s students with the scores of an online school’s students. Fewer of the online school’s students took the ACT, and the average score of those who did was about one point lower than the district’s average.

The board member’s use of the word “poach” brings to mind hunters entering a forest illegally and shooting deer. That can’t be what he means, so lets look at the second definition. According to Dictionary.com, “poaching” can also mean “any encroachment on another’s property, rights, ideas, or the like.” Unless the board member has his own definition of the word, it seems that he views students as his district’s property and thinks other schools need permission to educate them anywhere else.

I’m sure the students who attend online schools don’t see themselves as being poached. They know they don’t belong to any school district. Taking online courses is their decision. And while the board member won’t acknowledge that online schools give students a choice, if it weren’t true, there would be no point in comparing test scores as he does in his essay. Telling people that your district has better scores than a competitor makes sense only if students can act on that knowledge and choose for themselves.

The complaints about poaching make the district look defensive and vulnerable. Districts that are doing well don’t panic when someone else offers online education. St. Louis County districts aren’t accusing SLPS of foul play because it enrolls a few of their students in its Virtual School. It would be silly for the districts to get upset when the vast majority of families prefer their brick-and-mortar schools to the SLPS Virtual School.

The board member’s emotional response may indicate that his district is threatened by the online option. Instead of pointing fingers, the Madison Metropolitan School District should consider opening an online school of its own.

The post One District’s Competition Is Another District’s Poaching appeared first on Show-Me Institute.

The new Jason Reitman film, Up in the Air, premiered at the Tivoli Theatre in University City last month. Many are using the event as an opportunity to promote film tax credits, to be used as a means of bringing more film productions to Missouri. Currently, the state offers a film production tax credit for up to 35 percent of the amount spent in Missouri for activities related to film production, up to $4.5 million. Although reducing tax burdens is generally a good idea, there are several reasons to oppose tax credits targeted to filmmakers.

States tend to spend more revenue by attracting filmmakers with tax credits than the filmmakers generate while working in the state. For an example of what not to do, Missouri should look to Wisconsin, which offers a refundable tax credit of 25 percent for all production-related activities, as well as the use of state-owned buildings and locations free of charge. When Johnny Depp and Christian Bale filmed Public Enemies in the state capitol building in Madison, the state lost money. According to the Wisconsin State Journal, the state paid $4.6 million to the filmmakers in credits, even though the film generated an estimated $270,000 in state taxes. Furthermore, filmmakers can frequently claim more than they paid in taxes, because refundable tax credits function like grants.

Additionally, this economic activity is short-lived. As soon as the filmmakers complete their shoot, they pack up their sets and leave the state. Certainly, many area residents are cast as extras in these films, but these jobs are both low-wage and temporary. According to the casting call for Up in the Air, extras were compensated only $7.05 per hour (before taxes), and they were asked to work for just one day. If the state were truly focused on creating productive, long-term jobs, it would target activities that are more permanent than film shoots. Rather than offering these film tax credit programs, Missouri should encourage employers to create jobs that are better compensated and longer lasting.

There are also fundamental downsides to targeted tax credits in general, not only those that target filmmakers. These programs reinforce the idea that government should be able to pick and choose which economic activities may occur within its borders. Government officials should not have the role of deciding who wins and who loses in the marketplace; they should allow businesses to succeed or to fail as a result of their own efforts, and the preferences of consumers.

Furthermore, targeted tax credits establish a system in which government favors certain businesses over others. These programs force every non-favored business to compete at a comparative disadvantage, creating inequality. Government policy should not prefer filmmaking over hog farming, for example, simply because one is considered to be more glamorous. This sort of favoritism breeds corruption, because it encourages all businesses within a state to seek the favor of their elected officials and solicit the government for special treatment.

There are ways to structure tax policy that would encourage job creation and also maintain a level playing field. If the government reduced or eliminated the commercial property tax surcharge or the earnings tax in Saint Louis, for example, it would decrease the overall cost of labor and employers could hire more people.

I understand why Midwestern states offer tax credits to filmmakers: They want to attract celebrities. Certainly, it’s exciting for the hoi polloi to recognize their local haunts on the big screen and to spot celebrities like George Clooney and Johnny Depp. Rather than competing with other star-struck states, however, Missouri should leave filmmaking to states that specialize in it, like California, and then realize gains from interstate trade. If Missouri wanted to take part in a red-carpet film premiere, it would make much more economic sense to provide the Michelob than to give away tax money in exchange for the “privilege” of hosting the event.

Christine Harbin is a research analyst with the Show-Me Institute, a Missouri-based think tank.

The post Film Tax Credits Don’t Bring Lasting Jobs or Significant Revenue Gains appeared first on Show-Me Institute.

Instead of leaving filmmaking to states that specialize in it, like California, and then realizing gains from interstate trade, star-stuck states are competing with each other (and with other countries) to attract cash-strapped filmmakers. And, just like any other business would, filmmakers move to the state that offers the most tax incentives and subsidies. They even rewrite their scripts to accommodate the setting changes. According to the WSJ article:

Michigan offers credits for as much as 42% of a film’s in-state budget, and Utah and North Carolina have both recently increased their incentives to stay competitive. France recently enacted a new law that creates a 20% rebate for foreign productions shot in the country that have ties with French culture.

Missouri offers a film production tax credit for up to 35 percent of the amount spent in Missouri for activities related to film production.

As a fiscal conservative, I am in favor of reducing tax burdens in general. However, I believe that filmmaker tax credits are bad policy for several reasons.

First, states lose money on them. Filmmakers can frequently claim more than they paid in taxes because refundable tax credits function like grants. My home state, Wisconsin, offers a refundable tax credit of 25 percent for all production-related activities, as well as the use of state-owned buildings and locations free of charge. When Johnny Depp and Christian Bale filmed Public Enemies in the state capitol building in Madison, the state lost money. According to an article in the Wisconsin State Journal:

The state paid $4.6 million to the makers of Public Enemies through the credits, even though the film generated an estimated $270,000 in state taxes.

Second, there are more cost-effective ways to create jobs. In March, the Wisconsin Department of Commerce published a cost-benefit analysis of the state’s film tax credit program, which reported that it costs 20 times more to create a job using the state’s movie tax incentive program than it does using other state job creation programs.

The state subsidy going to films such as “Public Enemies,” starring Johnny Depp, cost $128,000 per each year-long job created, the Department of Commerce study found. In contrast, the agency’s other programs cost about $6,200 for creating a job for the first year and that position might, unlike some film jobs, last much longer than that, the study found.

This quotation introduces a third important point: This economic activity is short-lived. As soon as they complete shooting, the filmmakers pack up their sets and leave the state. Under other job-creation programs, the jobs are more permanent.

Commerce officials said that since taxpayer money for creating jobs is limited, it makes sense to compare how much it costs to create a job with the film program compared to others targeting manufacturers and high-tech businesses.

If the pukka focus of these subsidies were job creation, then they could be directed better elsewhere. I think that the real focus of film tax credits, however, is attracting celebrities to Midwest states. If it weren’t for the subsidies, why would Johnny Depp ever set foot in Wisconsin?

The post Filmmakers Vote With Their Feet appeared first on Show-Me Institute.

The Department of Energy announced Tuesday it will fund three biofuels research centers in Oak Ridge, Tenn., Madison, Wis., and near Berkeley, Calif.

I, for one, am not sorry. Economic growth happens when entrepreneurs work to satisfy consumers’ needs, not when established organizations vie for federal dollars. If biofuel is really a good idea, it’ll be profitable to invest in it even without government funds.

The post Biofuel Funding Goes Elsewhere appeared first on Show-Me Institute.