Susan Pendergrass speaks with Noah Devine, executive director of the Missouri Charter Public Schools Association, about how charter schools in St. Louis are responding after the recent tornado damaged multiple campuses. They discuss the need for flexibility for displaced families, how charter schools are working to reopen quickly, and the broader importance of school choice, especially in times of crisis. Noah also explains why Missouri’s lack of open enrollment makes recovery harder, and shares resources for families navigating this difficult time.

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Transcript: Schools After the Storm with Noah Devine

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Susan Pendergrass (00:00)
Today I’m going to be talking to Noah Devine of Missouri Charter Public School Association. You basically represent, to a certain extent, the charter schools across Kansas City and St. Louis. To a certain extent, your organization helps them navigate policy processes, funding processes, and things like that in Missouri. So thanks for joining us.

Noah Devine (00:19)
Thanks for having me on, and yeah, you’re exactly right. We are a membership-based, dues-based organization that supports, represents, and advocates for public charter schools here in the state of Missouri.

Susan Pendergrass (00:30)
Well, like the Show-Me Institute, a few weeks ago, many schools in the St. Louis area were affected by a tornado. We lost the top floor of our building when it came through. I know that I’ve been reading that St. Louis Public Schools have about six buildings that are affected by the tornado. How many charter schools were affected?

Noah Devine (00:50)
Yeah, it was obviously really terrible what happened in St. Louis with that tornado. In total, seven charter school buildings were directly impacted. None of them will be compromised from opening this fall, so that’s a very good thing. Two of them were not able to open the week that it happened or the week immediately after. One of them has an annex that was very badly damaged, and so they’re going to have to rework how they meet the needs of their students. The building impact is very significant. What worries me the most is that they’re doing everything they can to meet the needs of their families and students who were directly impacted. Over the summer and into the fall, I think we’re going to see how things ultimately shake out. I’m quite worried that we’re going to have a large increase in students and families experiencing homelessness, and meeting those families’ needs will be really important.

Susan Pendergrass (01:41)
Why do you imagine that St. Louis Public Schools say six of their buildings can’t be used, but charter schools are going to find a way to use theirs? Do you have any thoughts on that?

Noah Devine (01:53)
Yeah, I honestly don’t know. Some of it could always be just good old-fashioned dumb luck, the location of buildings. I think that’s probably most likely. I do think the buildings that were more directly impacted and were charter schools were in better condition. I don’t know the condition of some of the SLPS buildings, but I think charter schools were able to mitigate things a little more readily.

Susan Pendergrass (02:30)
This is what I was thinking, because we had to scramble to find a place to work. Some of us are in temporary office space. Some people are working from home, and it really does affect people. I assume there are many students whose own homes were affected. It’s summer now, but we’re trying to figure out what to do in the fall. St. Louis Public Schools has said that the kids in these six schools are all being reassigned to new schools.

Wouldn’t it make sense, given that this is an emergency—an act of God type of situation—that families could be given flexibility over where their kids go? If they’re displaced, they might want their kids to stay with the same teacher and group of friends, or they might want to go somewhere closer to where they are displaced or where their job is. It seems to me this is the time for flexibility. What do you think?

Noah Devine (03:27)
Could not agree more. Setting aside the natural disaster of a tornado, we fundamentally believe, as all of our schools do, that the decision of where to send your kid—whether it be homeschool, private school, charter public school, district school, magnet school, whatever—is the decision of a family. In a time like this, we need to enact provisions, not dissimilar from what we did during COVID, to make sure families have what they need.

If a family in North St. Louis lost everything, let’s not upset the apple cart. If they want to stay at that school, we have to make sure they can get there. McKinney-Vento is the federal classification for students who are homeless. If you lost your home and are temporarily living with someone else, you meet that designation and can stay at your school. We’re working with charter schools and DESE to ensure that’s clearly communicated. But that designation comes with a cost, usually transportation.

We need help to meet that need. Big picture, we should always be trying to meet the needs of families with choice in mind. During emergencies, it’s even more necessary to push through red tape and ensure we aren’t telling families that, on top of everything else, they now have to move schools.

Susan Pendergrass (05:36)
Do you know if the governor has indicated he’s open to an emergency executive order to ensure St. Louis families have maximum flexibility?

Noah Devine (05:47)
I don’t want to speak for the governor’s office or DESE. But I’ve been extremely impressed with how they’ve moved to get direct support to families in St. Louis. During special session a couple of weeks ago, a huge pot of money was allocated to meet those needs. I’m confident they’ll do everything they can within the law. That said, Missouri does not have open enrollment, which limits flexibility. It’s come close many times, but hasn’t passed.

Susan Pendergrass (06:56)
In times of crisis, like pandemics or tornadoes, the need for flexibility becomes very apparent. You and I followed legislation last year that would have allowed students from outside the city to enroll in a charter school. It made so much sense and still couldn’t get across the finish line.

Noah Devine (07:47)
Yeah.

Susan Pendergrass (07:48)
Families often face personal emergencies too. A child being bullied, a move to live with grandparents—these are real. Charter school leaders want to keep kids where they belong. We just haven’t found the right words to convince enough people.

Noah Devine (08:21)
I couldn’t agree more. First and foremost, our thoughts are with the families impacted. But this is when policy limitations become very real. Missouri is surrounded by states that allow more enrollment flexibility. We shouldn’t lock families into bad situations, whether the crisis is natural or personal. We need to continue pushing for change.

Susan Pendergrass (10:04)
In Kansas City, many top-notch charter schools have strong reputations. If families live on the Kansas side, they can cross the river and choose from any school. Kansas has one of the strongest open enrollment laws in the country. Missouri should follow that example. Not every school is right for every child. And families shouldn’t have to move to find a better fit.

Noah Devine (11:04)
Exactly. I read an article recently about this. People often assume open enrollment would destroy public education. It won’t. Families pick different colleges for their kids based on interests and needs. Why shouldn’t the same logic apply to K-12?

Susan Pendergrass (11:58)
Pell Grants follow students to the college of their choice. It works. But in K-12, it’s somehow controversial. I was asked yesterday on the radio about some charter schools closing in Kansas City and St. Louis.

Noah Devine (12:26)
Great question. First, we can’t underestimate the impact of school closures on families. It’s very real and unfortunate. But charter schools are designed to be more accountable. If families leave or the school isn’t performing, it should close. That’s how accountability works.

We are in a period of declining enrollment nationwide. All public schools will have to make tough choices. The charter system allows closures based on whether families want to go there and whether the school is serving them well. That’s how it should work.

Susan Pendergrass (14:30)
Mm-hmm.

Noah Devine (14:45)
When you lead a charter school, you have to earn it. Every student is there by choice. That makes charter schools unique. Missouri ranks among the top five states in charter school performance, according to CREDO at Stanford. We should take that seriously.

Susan Pendergrass (15:36)
This reminds me of the Unsafe School Choice Option under federal law. If a school is deemed persistently dangerous, students have the right to transfer. Missouri has never labeled a school that way, even though the data suggests otherwise. But charter schools already give families that power. If parents feel unsafe, they can simply pull their child out.

Noah Devine (16:37)
Exactly.

Susan Pendergrass (16:50)
That’s how it should be in all public schools. If parents in St. Louis want to know what resources are available for displaced children or schools, where should they go?

Noah Devine (17:26)
Start with our website, mocharterschools.org. We have a resource page for families affected by the tornado. Also, we work with Show Me Mo Schools, which runs a common application system. Their site is schoolappstl.org. And finally, DESE’s website has guidance and updates, though it could use improvement.

Susan Pendergrass (18:12)
Good luck with that. Thanks again, Noah.

Noah Devine (18:20)
Thanks, and take care.

Produced by Show-Me Opportunity

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I am confident that the media will get that information, and I am as interested as anyone to learn more. But let’s be honest here–what we already know about the program makes it clear that this “grant” program smells like a racket. Let’s look at what this program is giving away as part of this $32 million “grant” program.

A former state representative is getting $1.5 million to expand her consulting company to create more affordable housing and grow the economy by two—that’s right, two—new jobs.

A former mayor is getting two grants for a total of $125,000 to expand and improve the bar he owns in the city.

Sweetie Pie’s restaurant is getting $1.5 million to expand operations, despite some recent problems with management and operations at the restaurant.

Non-profits are included too, and perhaps that is more understandable, but one non-profit that was only created after the program was announced last year is in line for over $700,000. Surprisingly, the director of that non-profit is connected to a politically influential family. I know, you’re shocked . . .

The list goes on. When the program was announced, officials claimed it was a way to invest in North St. Louis. But it isn’t investing in infrastructure or things that can benefit the public. The program simply seems to be a way to give away tax dollars to North Side businesses. That’s it. There is no way this should be legal.

You don’t have to take my word for it. Consider the comments of one business owner who, admittedly, did not receive funding:

“The whole process has just been problematic from day one,” said Tameka Stigers, who applied unsuccessfully for a grant to expand her hair salon, Locs of Glory, on Delmar Boulevard and has been rallying other disgruntled business owners to lobby SLDC for reconsideration. “It’s a genuine money grab from the city to give the money to their friends.” [emphasis added]

I couldn’t have said it better myself. We will have more to come on this issue, I assure you.

The post The North Side “Grant” Program is a Racket appeared first on Show-Me Institute.

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The post A New Way to Tax, Redevelopment Retry, and Close the Gap appeared first on Show-Me Institute.

A few months ago, the Archdiocese of St. Louis announced the closing of two high schools in the fall, citing a lack of funds to remain open. Being very fond of the education these schools provide, students, parents, and alumni rallied together to save their schools and were able to secure the funding needed to remain open, independent of the archdiocese.

The closing of a school is almost always heartbreaking news that nobody wants to hear. However, I do believe that school closures shed light on an important principle that is (in some cases) being enforced: students deserve to go to high-quality schools, and only those schools that offer the best value and fulfill their students’ needs will survive.

Through market forces, this happens organically at a private school—parents will not pay to send their kids to a school that isn’t meeting their academic or social needs. If enrollment declines sufficiently, the school will eventually see no other option but to close. Charter schools also face closures, as schools that aren’t performing well will likely experience declining enrollment and will not continue to receive funding from the state. Because of the possibility of closure, private and charter schools have an incentive to improve academically and fulfill the needs of students.

Traditional public schools, on the other hand, have very little incentive to improve academically. Unless the situation becomes truly dire, public schools continue to receive funding despite their failures, and many students are left behind in the process.

Show-Me Institute analysts recently developed a piece of model legislation that would help address the incentive problem for public schools by allowing parents to send their kids to any public school in the state. Creating a true marketplace in education is one of the best ways to ensure our schools improve and kids in Missouri get the best education possible.

The post School Closings Shed Light on an Important Principle appeared first on Show-Me Institute.

We’ve talked before about how Saint Louis City’s attitudes toward non-city alternatives for the NGA expose local leadership’s fair-weather regionalism. After all, no matter what happens, NGA jobs are staying in the region and the area’s economy should remain unaffected. But in a bid to “redevelop” a part of North Saint Louis and keep the earnings tax revenue the NGA currently generates, Saint Louis City is preparing to pull out all the stops.

Saint Clair County is offering a low-cost, green field option on the north end of Scott Air Force base to the NGA, with the state of Illinois preparing to throw in $116 million in infrastructure improvements for the site. Saint Louis City’s original offer was a North City site at a cost $14 million, with $120 million in assistance from the state of Missouri. Now, Saint Louis will waive the $14-million cost, which was supposed to recoup the city’s expenses for preparing the site. Such costs will have to be pushed onto Missouri residents. Additionally, not to be outdone by Illinois’s infrastructure improvements, Saint Louis is throwing a MetroLink expansion into the deal as well. Strangely, Saint Louis has not put forward a solid plan for how it would fund a new billion-dollar-plus light rail line.

While city hall’s financial/infrastructure incentives may seem a little half-baked, they’re nothing compared to its rhetoric. Apparently, according to Saint Louis’s leadership, the city should get the NGA because millennials like to live and work downtown, among other lazy generalizations about an entire generation of Americans. One official stated that, “The days when talented young people wanted to commute 25, 35, 45 miles are over.” An interesting statement, because, since millennials have entered the workforce, the percentage of workers commuting longer than 25 minutes has regularly increased while the share of workers commuting less than 15 minutes has decreased:

This is just another example of how the generation dubbed “millennials” is, largely, much like the generations that preceded them in terms of living, working, and commuting. And city hall’s statements appear to be typical of local government officials using generational stereotypes to justify the types of policies they (not millennials themselves) have pursued for decades.

What’s more, even if millennials are everything that Saint Louis City leaders hope they are (and want to live downtown and take public transportation to work), the existing MetroLink already goes to Scott Airforce Base, where the NGA could be. Millennials could, if the Illinois site were chosen, live on Washington Avenue and ride the train to work. That certainly sounds easier than flattening a large section of North Saint Louis and spending billions to expand the MetroLink. Given the fact the city’s plan would turn dozens of families out of their homes, wouldn’t that be a fairer solution as well?

The post City’s “NGA for Millennials” Pitch Rings Hollow appeared first on Show-Me Institute.

The NGA is vital to our City’s economic health, and its relocation to North St. Louis will reinvigorate a significant urban area of our community. Conversely, losing the NGA would be a devastating blow to our City’s economy. The many benefits to the future of both St. Louis and NGA are immeasurable, promising and exciting.

With the NGA as the new centerpiece of the Northside Redevelopment Project (which has failed to achieve anything thus far), the city hopes to turn around a significant section of North Saint Louis City. The loss of the facility would, supposedly, be devastating.

You might be forgiven for thinking that the NGA is choosing between sites in Saint Louis and far away cities in Texas or Maryland. But that’s not the case. The NGA is choosing between sites inside the Saint Louis region, including sites in Saint Louis County and near Scott Air Force Base. If the NGA moves from its current location in South City to either location outside the city, it will change commuting patterns for current employees. However, the effects on the regional economy and regional jobs should be nil. The NGA’s move out of the city will not be a devastating blow to the city’s economy (which is ensconced in a larger region), but rather a blow to the city’s tax rolls, which depend on earnings taxes (more than $2 million a year) that the facility provides.

The city’s apocalyptic attitude towards losing tax revenue underscores Saint Louis City’s love-hate relationship with regionalism. When it comes to funding improvements in—and for the benefit of—Saint Louis City (and usually downtown), city leaders call for everyone to chip in for the Arch grounds and convention centers and stadiums and the light rail. Any refusal by outlying areas to throw in their money is treated as myopic, and a deep regional problem. But now that an important source of revenue might move out of the confines of the city, leadership is treating other parts of the region like they’re the surface of the moon.

The message city leadership sends when they speak this way is that regionalism means coming together to build up the city, not the outlying communities. That is hardly going to inspire residents who do not live or work in Saint Louis City (read: most metro residents).

Finally, just as an aside, would anyone have approved the massive tax subsidies to Paul McKee’s Northside Redevelopment project if they had known its success hinged on relocating a large Department of Defense instillation to the Northside? Wasn’t that project supposed to draw new jobs and residents to the city?

The post Regionalism for Thee, But Not for Me appeared first on Show-Me Institute.

If you are in Kansas City, probably not. According to the city’s for-hire vehicle code, jitneys (fixed-route buses not otherwise regulated by the government) are illegal. City ordinances do not describe a method for getting the government to approve a private bus route.

In Saint Louis, the Metropolitan Taxicab Commission’s (MTC) For-Hire Vehicle Code expressly allows for private shuttles, which can travel from one fixed point to another (although likely not more complex routes). Unfortunately, the regulatory hurdles toward getting a commercial service shuttle are formidable. It requires applying for certificate of need and necessity (which the MTC can refuse to grant at will), along with a plethora of other regulatory requirements. Getting permits to operate just one shuttle will cost you more than $3,000.

These regulatory roadblocks, along with competition from the heavily subsidized bus services (subsidies pay for more than 80 percent of costs in Saint Louis and Kansas City), likely have much to do with the absence of private bus routes in Missouri’s cities. But it was not always this way. In the early 20th century, jitneys took most American cities, including Kansas City and Saint Louis, by storm. They were faster, cheaper, and more flexible than incumbent streetcar competition. Hostility from streetcar owners and the nascent taxi industry pushed most cities to make jitneys illegal; but in Saint Louis they morphed into “Service Cars,” which served parts of North Saint Louis until the 1960s. At that time, Bi-State (Metro) moved to buy out the existing competition that was “skimming the cream” off its customer base.

Today, transit in Missouri’s cities is the exclusive domain of public monopolies, with limited competition from heavily regulated taxi markets. The resulting waste, inefficiency, and poor service are the predictable result. However, there is opportunity for improvement. In the United States, and especially internationally, private bus routes still exist. Reducing government control to only essential transit services, and allowing the private sector to provide the rest, could create space for competition and innovation in the transit market. Of course, a necessary first step toward that opportunity is to actually make private bus routes a legal possibility; that’s a change Kansas City and Saint Louis can and should make right away.

The post Private Buses: The Once (and Future?) Transit Option appeared first on Show-Me Institute.

If you are a Saint Louis City alderman who wants to keep the National Geospatial-Intelligence Agency (NGA) from moving to Fenton or Mehlville or even possibly Scott Air Force Base, there is a good chance that you’d say yes. That’s why plans to use eminent domain to seize property as part of the plan to keep the NGA in Saint Louis are moving forward. Yet despite this “progress,” that doesn’t mean the aldermen are correct. For the people of North Saint Louis, the abuse of eminent domain is imminent.

Eminent domain has a legitimate purpose. Sometimes it is necessary to seize property to use for the public good, such as highways or sewers. Yet, there is no reason in this case to think that using eminent domain would serve as a public good. Unlike highways, which must go more-or-less in a straight line, the new NGA headquarters is flexible in how it is laid out and where it can locate. Even if the NGA moves to the county or to Scott Air Force Base, NGA employees living in the city are unlikely to move. Why violate somebody’s private property rights when it is not necessary?

The truth is that the city stands to lose millions in earnings taxes if the NGA moves out. It’s understandable, especially when budgets are tight, that the city would want to try anything to avoid losing even more revenue. However, people’s homes matter more than extra tax revenue. Being hard up for money doesn’t give the city a valid reason to take people’s homes.

The post An Imminent Eminent Domain Case appeared first on Show-Me Institute.

Francis Howell, Pattonville, Ferguson-Florissant, and Ritenour transfer students were devastated. They had to return to a school district in which 16.8 is the average ACT score (the state average is 21.6).  In a recent Washington Post article, Emily Wax-Thibodeaux wrote:

Carmen Clemons has two teenage sons who were in advanced-placement classes. One wants to be an engineer, the other a firefighter. She describes them as “nerdy, nice kids.”

This year, they were told they had to go to Normandy High. The school didn’t have the same advanced classes they had been taking. And on Day 5 of the academic year, they told their mother they had been “jumped,” or beaten up.

“No one broke the fight up,” Clemons said. “I was never notified. I had to go running in today to talk to the principal. We’ve worked so hard to raise respectful kids. My boys are such good students, but my son came home terrified when another student said, ‘If I see those shoes on your feet, I’m gonna take them.’ ”

Now she’s calling private schools, begging for scholarships. And she and her husband, who barely make enough to pay the bills, are thinking about selling their three-bedroom house.

After Judge Michael Burton’s decision to allow the Normandy students named in the lawsuit to return to their receiving districts, Pattonville, Ferguson-Florissant, and Ritenour chose to accept all students that had reapplied for the 2014-15 school year—Francis Howell interpreted the ruling to mean only one student may return.

Since Francis Howell’s decision to reject all but one transfer student, Schindler has begun laying the groundwork for a class-action lawsuit. Watch this video to learn more about the history of the Missouri transfer law, as well as the current legal situation surrounding the law.

The post Normandy Transfers: Taking It to the Courts appeared first on Show-Me Institute.

It does not take a Ph.D. in economics to realize this is a foolish regulation. In the absence of proper competitive incentives, the other lemonade stands will continue serving sour lemonade.

Now replace the words “lemonade stand” with “three-bed hospital” and “your eight-year-old self” with “Paul McKee,” and you have a real-life situation.

McKee, a well-known real estate developer in the area, has been working on a project to renovate a portion of North Saint Louis City. On July 9, he unveiled a plan to establish a three-bed urgent care facility within the redevelopment area. According to state law, a certificate of need (CON) must be obtained in order to open a new hospital with costs of at least $1 million. It appears his proposal meets this threshold. However, requiring McKee to obtain a CON to open a small urgent care hospital in an underserved and impoverished area is a totally unnecessary government regulation.

CON programs initially were implemented in order to prevent the duplication of health services in a given geographic area, thereby controlling costs. The reasoning was that an excess supply of medical services would compel hospitals to increase prices in order to cover the high fixed costs associated with medical treatment.

There have been many different studies on how CON regulations impact the cost of care. A thorough survey of the relevant data reveals that CON regulations do very little, if anything, to control the overall cost of care. Furthermore, with respect to certain procedures, CON regulations have been shown to limit patient choice, resulting in worse care delivered from less capable doctors. Additionally, these regulations can create an inefficient market structure and grant existing hospitals monopolies over certain regions.

Some may even argue that McKee will attempt to use the regulatory program to prevent competitors from entering the market in North Saint Louis. Given CON rules, if his project is approved, it likely will be more difficult for new medical facilities to open nearby. But doesn’t the potential to abuse and use CON regulations to create a monopoly give all the more reason to eliminate them?

Additionally, Missouri’s CON program delays groundbreaking on new hospitals. McKee said he intends to submit his proposal by Aug. 22 and, in all likelihood, his application will not be reviewed until early November.

Christien West is an intern at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Delays and Blockades: Certificate of Need in Saint Louis appeared first on Show-Me Institute.

Smart Growth America promotes many common urban planning myths about demographic factors and magic millennials, with the main point being that people are abandoning cars and suburbs for cities and transit. But the facts are:

• Suburbs (and exurbs) are still growing faster than urban cores nationwide.
• Millennials are still driving and only using transit slightly more than past generations.
• Millennials are flocking to cities with high-performing economies regardless of their overall walkability or transit scores.

Like these myths, the idea that walkability drives wealth is likely a mirage, created by the metric for walkability itself. That’s because Smart Growth America gives higher walkability scores to areas where “…everyday destinations, such as home, work, school, stores, and restaurants, are within walking distance.”

That sounds reasonable, until one considers the type of areas that will not be considered walkable. One such type of area is suburbs like Ladue or Ballwin in Saint Louis County, with spread out single-family homes. But another is going to be poor inner city neighborhoods, such as areas in North Saint Louis. Despite the higher population densities, mixed housing stock, and narrow roads with ample sidewalks, the depressed economies and lack of safety in poorer areas mean fewer businesses, fewer restaurants, and fewer shops. Therefore, they have lower walkability scores. Use that definition of “walkable” nationally and one would erroneously conclude walkability means wealth because the definition of walkable precludes economically depressed areas.

North Saint Louis already has the infrastructure to allow residents to walk, bike, or take transit to nearby areas. It just does not have the wealth to attract enough shops, jobs, and restaurants into walking distance. The only way to fix that is to increase economic opportunity, or replace current residents with wealthier residents poached from the suburbs or other city neighborhoods. I’ll leave it to the reader to decide which route the city has taken with Washington Ave., the Northside Development Project, and Cortex in midtown.

The post Walkability In Saint Louis: My Feet Are My Only Carriage appeared first on Show-Me Institute.

When the state spends millions of dollars on one potential development, it is taking a huge risk with taxpayers’ money. The state is risking that one developer will transform North Saint Louis and remove all of its societal problems. How can we trust that the bet will pay off? Who is on the line if this project fails?

Read the full testimony:

The post House Bill 1501: The DALATC Does Not Deserve To Be Renewed appeared first on Show-Me Institute.

Given the building’s current state, it is exciting that the LRA has found a positive future for the property. The owners of CBI donated the property to the LRA with the understanding that once the current environmental clean-up is complete, the land will be given to the Herbert Hoover Boys and Girls Club.

The LRA is not responsible for the site’s clean-up, but it is responsible for what happens to the property after that. While the president of the Boys and Girls Club, Flint Fowler, said he looks forward to the Club’s expansion, some locals are wary of the property’s future. Loletta Zasaretii, a resident of the neighborhood, said she would rather see jobs created on the property instead of  “just another ball field.” Although many share Zasaretti’s desire for more jobs in North Saint Louis, the LRA is making the right decision because it is not holding onto the property.

The LRA may not be solving all of the neighborhood’s problems by handing the property over to the Herbert Hoover Boys and Girls Club, a non-profit, tax–exempt organization. But it is definitely moving in the right direction toward improving Saint Louis. Along with making the property more attractive and safer, the Boys and Girls Club — rather than the city — would be responsible for the land’s upkeep. Most importantly, the LRA deserves credit for getting the property off the city’s balance sheet and back into private ownership and productive use. Why can’t the LRA do this same thing with the thousands of other properties it owns?

The post More Like This. . .Please? appeared first on Show-Me Institute.

When the state spends millions of dollars on one potential development, it is taking a huge risk with taxpayers’ money. The state is risking that one developer will transform North Saint Louis and remove all of its societal problems. This is a gamble on a project that does not even have a concrete plan. How can we trust that the bet will pay off? Who is on the line if this project fails?

The post Private Gain Will Not Solve Social Pain: Let the DALATC Expire appeared first on Show-Me Institute.

Apparently, in other circumstances, you can play big and always win big if you know the right people and have enough money. Especially if your name is Paul McKee.

I recently wrote about the lack of progress on McKee’s NorthSide Regeneration project in North Saint Louis, despite the $40 million he has already received in tax credits.

One specific state tax credit, that only McKee is eligible for, is set to expire in April. But not if he can help it. Seventeen lobbyists registered on Monday to represent the NorthSide project, which the St. Louis Post-Dispatch notes is the same amount that represents Ameren Corp. and Anheuser –Busch, combined.

When will McKee end his relentless pursuit of tax credits?

Unfortunately, priorities shift when business becomes intertwined with the government. Relying on the government often incentivizes companies to hire people with the ability to work with government, not the ability to complete projects.

Ludwig Von Mises discusses this problem in Bureaucracy (pages 76-77, if you are interested). He writes, “Why bother about bringing out better and cheaper products if one can rely on support on the part of the government? For them [corporate executives] government contracts … and other government favors [are] the main concern.”

This reliance on government favors is not necessarily McKee’s fault; he did not create the system. But this is not an excuse to let it continue. We need to change the system that encourages businesses to spend significant resources on government lobbying instead of investing efforts into their business. It is time for Missouri to cease “business as usual” and put an end to corporate welfare.

The post Gotta Spend Money To Make Money? appeared first on Show-Me Institute.

The state now has given more than $40 million in credits to the NorthSide project to redevelop a 2-square-mile area in north Saint Louis. And for all this money, there has not been much progress to show for it. So far, the state has not seen any real benefits from awarding several million dollars for this project.

If I was reimbursed for (almost) everything I bought, I would not be in much of a hurry either. McKee says he will make progress after he receives the $390 million Tax Increment Financing (TIF) package he is waiting on. As our regular readers know, we have been covering this issue for a long time. NorthSide applied for the TIF more than three years ago but it has been held up in court.

There is a chance that the Missouri Supreme Court will rule against the TIF in the next few months.

“If that doesn’t go our way,” McKee said about the potential ruling, “we’re dead.”

That would not be such a bad thing. Taxpayers would be off the hook for hundreds of millions of dollars, which are likely to be of more benefit to McKee than to North Saint Louis.

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In the ideal system, businesspeople would compete against each other on a level playing field, with their success or failure to be determined exclusively by those to whom they are marketing their products. This would mean that if an entrepreneur has an idea for a venture, they would either have to risk their own money by funding the project out of their own pocket, or they would have to generate seed money by convincing private investors that the prospects of success outweigh the potential for failure. If private investors don’t believe that the venture is likely to succeed, they won’t put their money at risk. On the other hand, if a few investors are willing to risk losses, they will be handsomely rewarded if the venture turns out to be successful. Thus, the risks of failure and the rewards of success are borne only by those who choose to participate in the venture.

Somewhere along the way, however, the government involved itself in the process. It began offering to subsidize certain ventures — or even entire industries — utilizing tax dollars, so that people managing subsidized businesses no longer had to persuade as many private individuals to put their own funds at risk. This is a negative development, for several reasons:

First, it gives an unfair competitive advantage to business owners who have the money or connections to influence those public officials who decide such matters. Receiving a subsidy may have less to do with the entrepreneurial merit of a proposal than with the number of elected officials with whom the businessperson has influence.

Second, it assumes that politicians will be adept at distinguishing ventures that will succeed from ventures likely to fail — a challenge even for experienced businessmen, much less for elected officials who may have no clue about how to make such evaluations (Ballpark Village, anyone? Sunset Hills?).

And, third, it gives both government officials and private developers a license to gamble with other people’s money and/or private property in what they perceive as a low-risk, high-reward situation. If a subsidized venture fails, developers are insulated from the risk because they will lose far less, financially, than they would have without the subsidy. Similarly, a politician might face some political backlash from a failed venture, but the politician can always deflect blame toward someone else. The politician won’t suffer any personal financial loss, and it is not very common for politicians to be voted out of office following such fiascos. On the other hand, if a venture is successful, the developer will personally realize enormous financial gains, despite their lessened personal investment, while the politician will claim credit for its success and may be able to parlay his role into a profitable or influential position once he has left office. As far as taxpayers are concerned, even if a subsidized venture succeeds, the government itself will reap the financial benefit — rather than the individual taxpayers from whom the funds were obtained.

Despite these downsides, governments continue to insert themselves into the world of economic development and these policies only spur more demands for governmental handouts. Just last week, we saw the unveiling of a proposal that, if successful, would completely reshape a gigantic swath of North St. Louis. In accordance with the incentives created by these policies, the developer’s plan calls for a massive commitment of taxpayer dollars, the creation of a TIF district, and the use of eminent domain to accomplish the developer’s vision. The General Assembly has already played a role by approving a $95 million tax credit that will assist the developer, and this developer is now pursuing a hefty chunk of federal stimulus funds, as well as support from local officials for the potential use of eminent domain in pursuit of the project. Thus, the policies that our government officials have created are fueling ongoing misuse of governmental authority and taxpayer funds, all of which works to the detriment of both ordinary citizens and market participants who believe it would be wrong to take advantage of these flawed incentives.

It doesn’t have to be this way. Redevelopment can and does happen without corporate welfare and eminent domain abuse. My hope is that, as government officials and developers continue to consider the plan to redevelop North St. Louis, they will consider alternative approaches that will respect the rights of other citizens. Rather than committing public funds and tax credits, city and state officials who believe in the plan’s promise could work with the developer to identify private investors who are willing to invest in his vision. Instead of pursuing eminent domain, the developer should present offers that will entice local residents to part willingly with their homes and businesses — or, alternatively, he should figure out how to incorporate the remaining homes and businesses, intact, into his larger plan. If the North St. Louis redevelopment plan is as promising as its proponents suggest, it can and should be accomplished without resorting to corporate welfare or sacrificing citizens’ property rights.

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While speeding tickets, and citations for other violations, should only be issued to enforce traffic and safety rules, everyone knows that they are used for other purposes. Generally, in small cities, towns, and suburbs, they are used for enhancing local revenue, as the study proves. However, we all know that they are also used to keep some people out of certain areas, such as the well-known “DWB” violation.

My dearly departed friend Sherman Parker relayed a few stories about how he would attempt to tell his bosses — senators and congressmen — about the problems his white friends would have with the cops when they would try to visit his house in North St. Louis. Of course, Sherman would be crying, he was laughing so hard, when he would relay these issues to them — as we all basically found it hysterical. (“Get rid of those fireworks” was a parting line I remember from a cop, after a team of them had searched my car up and down for drugs after I dropped Sherman off one night. Although, in that particular case, I had accidentally made an illegal turn, so the pull-over was completely legit.)

Sure, it’s funny when it’s white kids from the suburbs who don’t have drugs on them getting hassled a few times for a few minutes, and then being let go when the officers realize the car is clean and the person (me) really is just visiting a friend. But it’s not funny when it happens to people often, or when there is absolutely no legitimacy to the pull-over, or when the ticket is issued solely to raise money for the city, as is the case with red light cameras.

Missouri should lower the maximum percentage that any one government can receive from traffic violations, down from the current 50 percent (I think that’s the number, and it is a good thing we have that cap there at all) to about 10 percent. There is no excuse for filling budget deficits with traffic fines, no matter how many times you amend the tickets to muffler violations.

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Brian R.: Urban decay and poverty is a problem that has been ignored in Missouri for far too long. As governor, what will you do to stimulate positive economic activity and lift people out of homelesness and poverty in North St. Louis and Kansas City? Additionally, how do you plan to address rural poverty?

Sarah Steelman: That is a very good question. I believe that any economy, including local economies, have to be allowed to grow themselves. One of the main problems in both Kansas City and St. Louis is the earnings tax. This 1% tax is levied nowhere else in Missouri. In St. Louis, you need look no further than the hole next to Busch Stadium to know that the status quo is not working. In addition, no major corporate headquarters has moved to downtown St. Louis in 50 years. The state should support economic growth in our cities.

She is just on fire this afternoon, isn’t she? The earnings tax is a terrible idea, and should be eliminated in both Kansas City and St. Louis. As Steelman notes, the earnings tax deters businesses, as well as people, from moving into affected areas. If tax revenue is needed, there are much less distortionary means to raise it, such as through a tax on sales or on the value of land.

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