Missouri anticipated around $80 million from these frozen programs. The Department of Education’s budget summary suggests the funding for many of these frozen programs will be consolidated and given as a lump sum under the K-12 Simplified Funding Program.

This fund seems to be designed like a block grant, as it would allow states to spend money on previously allowable activities (such as after-school programs) but with fewer administrative regulations. This model is not unprecedented, as Temporary Assistance for Needy Families (TANF) is currently funded using a block grant, and there have been discussions about switching Medicaid to a block grant structure as well.

The department’s actions could signal that federal funding to states may continue to decrease, and there may be fewer strings attached to federal funding. That would mean that states, including Missouri, will have to decide which programs that rely on federal funding will be sustained, and to what extent.

Evaluating Deeper Budget Decisions

Missouri likely will need to make some hard budget decisions in the coming years. Prior to COVID, federal dollars comprised about 14 percent of Missouri’s total revenue for K-12 education. In 2021–22, an additional $1 billion in federal dollars ballooned that percentage to 28. In 2022–23, the federal share fell slightly to 25 percent. In my colleague Elias Tsapelas’ paper “Saving Federalism,” he notes that the Department of Elementary and Secondary Education’s (DESE) inflation-adjusted federal spending was roughly 45% higher in fiscal year 2022 than fiscal year 2011.

This extra money is fizzling out as the pandemic spending evaporates and the Trump Administration continues to evaluate longstanding programs and rules. The changes at the federal level should incentivize Missouri to rightsize the budget by eliminating unnecessary or unhelpful spending. Establishing a Missouri Office of Government Efficiency would be a good initial step.

Beyond that, Missouri will need to take a more proactive approach to funding specific education programs. Should we increase funding for after-school programs at the expense of a program to improve teacher effectiveness? Before the recent federal policy shift, Missouri was largely guided in these decisions by what we could get federal money for. Now, DESE and school districts will need to set their priorities.

Here’s to hoping Missouri can rise to the challenge and prioritize programs with the greatest potential to benefit students.

The post A Freeze in July? appeared first on Show-Me Institute.

For several years now, my colleagues and I have been writing about the benefits of price transparency in healthcare, and the fierce opposition the idea has faced in Jefferson City. Naively, I assumed that informing patients of the cost of healthcare services before they were provided would be uncontroversial. After all, what other expensive goods or services do consumers purchase without knowing what they’ll pay beforehand? But after several price transparency bills received hearings last year the points of contention became a little clearer.

During public testimony on House Bill (HB) 1837 last year, the Missouri Hospital Association stated that complying with the bill’s price transparency requirements would be financially burdensome. This was confusing because HB 1837 simply added state-imposed penalties if hospitals didn’t comply with federal transparency requirements that are already on the books. As I’ve written previously, back in 2019, the Trump administration issued an executive order requiring hospitals to publish a list of standard charges for 300 common procedures in a user-friendly, shoppable display. This was a requirement that has since been extended to health plans and was kept in place throughout the entire Biden administration.

But as I’ve also explained at length, Missouri hospitals have been reluctant to comply (at least in spirit) with the federal requirements. In the years since, state legislators across the country have begun filing bills to encourage greater compliance. At first, the Missouri bills languished in committee without receiving public hearings. Then, last year, bills received hearings in both chambers of the legislature and were even voted out of committee. Unfortunately, this year, the subject didn’t receive a hearing in the House and wasn’t successfully voted out of committee in the Senate.

It’s hard to know what changed since last year that led to the policy losing support among Missouri’s legislators, but I think it’s safe to assume that hospitals still oppose the effort. Going into next year’s session, I’ll continue highlighting the benefits of price transparency and the importance of policymakers taking action to help rein in skyrocketing healthcare costs. While it may be true that price transparency isn’t a silver bullet for all that ails America’s broken healthcare system, it’s a step in the right direction that shouldn’t be delayed because certain providers claim they can’t afford it. Missouri patients can’t afford the wait.

The post A Step Backward for Transparency appeared first on Show-Me Institute.

The cost of health care is hurting the state’s budget and Missourians’ pocketbooks. This year, Missouri passed the largest budget in the state’s history and Medicaid is a bigger portion of the budget than any other single item. Medicaid today consumes more of the budget than ever before, and shows no sign of slowing down. In fact, Missouri’s Medicaid enrollment today is less than it was in 2005, but the program costs nearly twice as much.

Premiums for private coverage also continue to rise, partly as a result of restrictions imposed by the Affordable Care Act. My colleagues have advocated for the expansion of short-term medical plans to help ease cost inflation. Short-term medical plans allow consumers to personalize their coverage without costly Obamacare restrictions, such as mandated maternity and mental health coverage. Bills that would expand short-term plans have received support in both chambers the past two years. Hopefully a bill expanding the availability of short-term plans will finally pass next year.

The lone bright spot in health care policy was the creation of the “Missouri Health Insurance Innovation Task Force.” When the task force meets later this year, they will “develop innovative ways to transform the health insurance marketplace” and request an innovation waiver from the federal government. I’ll be outlining some market-based reforms the task force should consider in a future blog post.

The work of this task force and the reforms they consider could bring substantial health care savings for Missourians. Sadly, the implementation of any reforms won’t be completed until at least next year.  It’s nice to have a glimmer of hope for the future, but that doesn’t make the present any less disappointing.

The post Another Year without Reform appeared first on Show-Me Institute.

The excitement surrounding such a reform is not reserved to Missouri. The Trump administration itself has pushed very hard for such expansions, and central to that push is the secretary of the Department of Health and Human Services, Alex Azar. At a conference late last month, he laid out why this reform is important.

“We believe sensible state regulation of [short-term health insurance plans] is important,” Azar said. “But millions of Americans are in need of affordable insurance options, and states can help build this market outside of Obamacare’s broken regulations.”

As more Americans enter the new economic environment, they find themselves unable to purchase quality health insurance, Azar told the audience. The new policy will give states greater flexibility to create more affordable insurance options for all consumers, especially those workers who do not receive health insurance through an employer, Azar says.

“While these plans aren’t for everyone, we believe they can be an important option for many—people who have been priced out of Obamacare plans, who are between other sources of coverage, or who are independent contractors in today’s gig economy,” Azar said.

You can find out more about short-term medical insurance here. It’s my hope that Missouri makes liberalization of short-term medical insurance one of its highest priorities next year.

The post HHS Secretary Talks Up Short-Term Medical Insurance Plans appeared first on Show-Me Institute.

So why is President Donald Trump taking Harley-Davidson—another U.S.-based global super-brand—to task?

A day after the company announced plans to serve the European market with motorcycles built in Europe, the president thundered: “A Harley-Davidson should never be built in another country—never!” He accused the company of hoisting the “white flag” of surrender and predicted “If they move, watch, it will be the beginning of the end.”

Harley-Davidson, Inc., made its announcement after the European Union raised tariffs on U.S.-made motorcycles by 25 percent—in retaliation to the 25 percent tariff on European exports of steel to the U.S. imposed by the Trump administration. Noting that the higher EU tariff would add approximately $2,200 to the average cost of a motorcycle exported from the U.S. to Europe, the company said:

Increasing international production to alleviate the EU tariff burden is not the company’s preference, but it represents the only sustainable option. Europe is a critical market for Harley-Davidson. In 2017, nearly 40,000 riders bought new Harley-Davidson motorcycles in Europe, and revenue generated from the EU countries is second only to the U.S.

The president said that he had “chided” Harley-Davidson executives on an earlier occasion for moving production to India as a way around high motorcycle tariffs in that country. But is it reasonable to expect a profit-seeking enterprise to keep all production and employment in the U.S., regardless of the cost in lost sales, profit, and overall competitiveness?

Certainly, the Trump Organization has not followed such a policy. Under licensing or other arrangements, it has fancy hotels bearing the Trump name in four different cities in India (Mumbai, Delhi, Pune, and Kolkata). Apart from Chicago, however, the Trump Organization has no luxurious hotels anywhere in the great American heartland. Why not?

Presumably, it made more sense from a business perspective to build hotels for the super-rich in India—though other cities in the American Midwest would have welcomed the same investment.

The president faulted Harley-Davidson for not being more “patient”—suggesting that his deliberately provocative approach to trade negotiations would force other nations to bend to his will for fear of losing access to the rich U.S. marketplace. As he said a couple of months ago— “Trade wars are good, and easy to win.”

But as Joe Haslag, the chief economist for the Show-Me Institute, notes, the president is playing “a very dangerous game,” because “the size, scale, and scope of the products that we are now talking about in increasingly acrimonious trade negotiations are staggering—a potentially U.S.-GDP-changing event.”

A grand strategy? Maybe, but early results are not promising. Mid Continent Nail in Poplar Bluff says its orders have dropped in half as a result of having to raise prices to make up for the higher cost of importing steel from Mexico. It has laid off 60 workers and says it may have to dismiss all of its 440 remaining workers by Labor Day.

In 2017, the Trump administration withdrew from the Trans Pacific Partnership—an agreement that would have reduced tariffs in Asian markets on motorcycles made in the U.S. That seems to have prompted Harley-Davidson’s earlier decision to build a manufacturing plant in Thailand. It may also have been a factor in the company’s decision to close its Kansas City manufacturing facility by 2019.

What caused the world-famous company with the “HOG” stock exchange symbol to make those choices? Surely it was rising tariffs on manufactured goods—a problem that does not exist in the luxury hotel business.

The post Trump vs. Harley-and the World appeared first on Show-Me Institute.

Taxes will not be collected until construction is ready to begin.

But the tax funds will not come close to covering the cost of building the new line. The KC Streetcar Authority will also seek $100 million in federal funds. Earlier this year Congress rolled back the Trump administration’s proposed deep cuts in transit funding. But the outlook for help from Washington remains uncertain.

That assertion isn’t wrong, but it is woefully incomplete. As we’ve reported previously, the Jackson County court ruling allowing for the creation of the transportation development district that will levy taxes for the streetcar includes an important restriction: No taxes or assessments are to be collected from within the district until enough external funding—in this case federal funds—is available.

And those federal funds are indeed uncertain. The Trump administration position seems to be that it won’t hand out construction money for transit capital grants unless a previous administration signed a full-funding grant agreement, and no such agreement is in place for Kansas City’s streetcar. The Federal Transit Administration has previously called for the New Starts/Small Starts grant program—on which the Kansas City effort is dependent for funding—to be scrapped. As of now it is authorized only through 2021, after which it will cease to exist. Congress seems unwilling to reauthorize it.

Even if the occupants of Congress or the White House change significantly in 2018 or 2020, we are a long way from receiving any federal money for the streetcar, money necessary to permit the TDD to collect taxes and assessments. In the meantime, expect streetcar advocates to start looking elsewhere for their financial support.

The post The Asterisk in Streetcar Reporting appeared first on Show-Me Institute.

You can find video of the speech here. While the President’s talk was about federal taxation, I hope that his visit to Missouri will also renew the needed discussion for tax reform at the state and local levels as well. Indeed, 2018 could be a big year for tax reform nationally and in Missouri. Let’s hope.

The post President’s Visit to Springfield Sets Stage for Tax Reform Fights appeared first on Show-Me Institute.

Trump’s budget, which would go into effect in October if Congress approves it, would eliminate the Transportation Investment Generating Economic Recovery (TIGER) grant program, a nearly $500 million grant program run by the U.S. Department of Transportation.

The streetcar expansion plan is reliant on federal support. According to a 4-page document put out by the Kansas City Regional Transit Alliance, $100 million of the $227 million expansion cost to expand the downtown streetcar line would be provided by the federal government through the Small Starts program. But that program is also facing a funding freeze:

The New Starts program, which helps fund local transportation projects costing over $300 million (a sister program, Small Starts, assists with projects under that threshold), would be frozen. New applications to the program, which currently has $2.3 billion to spend annually through 2020, would be outright rejected, limiting any new grants and placing the onus on local and state government to fund additional projects. [Emphasis added.]

This means the Kansas City request for streetcar money could be rejected outright. And that money is required for the extension to take place. According to the Kansas City Regional Transit Alliance,

The project will require federal grant funding, and the applicant and recipient would be the City just like with the starter line. If federal funds are secured, public involvement in the engineering and design is required.

The language from the court ruling allowing the new transportation development district (TDD) throws another wrench in streetcar advocates’ plans: no taxes or assessments can be collected from within the district until enough external funding—in this case federal funds—are available. The Trump administration has made the availability of federal funds highly unlikely. Congress could seek to continue federal New Starts funding, according to Rich Sampson of the Community Transportation Association of America, but it will be an uphill climb. And even if streetcar funding is provided by Congress, the administration may choose not to spend it.

Voters are being asked to take the risk of expanding the TDD and levying on themselves a special property tax assessment and a sales tax contingent on the Trump administration coughing up 40% of the total streetcar expansion cost. Laying aside the merits of the policy at hand, voters should be wary of approving something that is dependent on a funding source that may be little more than wishful thinking.

The post Can the Kansas City Streetcar Expansion Be Built Even If It Wins? appeared first on Show-Me Institute.

That view is wrongheaded on both counts, and I certainly hope the Carrier "deal" doesn't presage future deals the President Elect will be cutting over the next four years. The reason is straightforward. In return for not following through on its threat to move, Carrier will receive $700,000 per year from the state of Indiana, for at least 10 years. If that kind of cronyistic deal sounds familiar to you, it should; the Carrier agreement is like many of the "deals" to "save or create jobs" that have been made, and that we have criticized for years, here in Missouri. As one economist observed after the Carrier deal was announced, "[e]very savvy CEO will now threaten to ship jobs to Mexico, and demand a payment to stay." Yup.

Even with the financial gift from Indiana, it doesn't sound like every job will be staying at the plant anyway, or at another nearby facility that was also slated to be closed. In return for the money, Carrier said it will keep about 1,000 jobs in Indiana, but that about 1,300 Indiana jobs were going to be sent to Mexico anyway, despite the public giveaway.

We have to reiterate: It is not the role of the government to pick winners and losers in the tax code, whether the tax code in question is at the local, state or federal level. More to the point, allowing powerful companies to issue threats as a way to compel public financial support for their private operations is a road policymakers should not go down. Most employers could never dream of getting such generous concessions, and if the tax burden needs to be reduced to make one big company profitable, policymakers, whatever their level of government, should instead work to reduce the tax burden for all companies—large and small, politically connected or not.

Indiana should not export its corporate welfare to Washington DC. If it does, it will be to the detriment of the American public and taxpayer interests.

The post The Indiana Carrier Deal: State Cronyism Shouldn’t Be Nationalized appeared first on Show-Me Institute.

The post Michael McShane Appears on Fox and Friends To Discuss Nominee for Secretary of Education appeared first on Show-Me Institute.