David Stokes, Elias Tsapelas, and Avery Frank join host Zach Lawhorn to outline what a responsible plan to eliminate Missouri’s income tax should include, from revenue triggers and spending restraint to rethinking other taxes. They also break down St. Louis County’s Bill 182 expanding prevailing wage and DBE mandates, Independence’s proposed TIF package for a new Wally’s gas station and what it says about corporate welfare, Missouri’s early literacy crisis and reforms like a universal third grade reading screener, mandatory retention, and banning three cueing, and what they are watching next on prefiled tax bills, data center policy, and rising property tax bills across the state.

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Timestamps

00:00 Introduction to Missouri’s Income Tax Elimination Plan
02:52 Strategies for Reducing Income Tax Reliance
05:19 Understanding Missouri’s Tax System
08:26 The Importance of Competitive Tax Policies
10:53 St. Louis County’s Prevailing Wage Bill Discussion
13:45 Economic Implications of Tax Subsidies
16:24 Independence’s Wally’s Gas Station Development
19:28 The Flaws in Tax Increment Financing
20:20 Addressing Early Literacy in Missouri
27:54 Looking Ahead: Legislative Priorities

Produced by Show-Me Opportunity

The post Eliminating Missouri’s Income Tax, Subsidies for Gas Stations, and Early Literacy Reform appeared first on Show-Me Institute.

Prevailing wage laws are harmful because they inflate the cost of projects taxpayers pay for or, in these cases, subsidize. Research on the subject suggests that prevailing wage laws can increase the total cost of public construction projects by as much as 25 percent. For local governments with many projects needing to be built, that could mean lower-priority but beneficial projects will go undone for lack of funding. Repeated year after year, the harm done by leaving these projects uncompleted compounds, leaving the community with fewer and inferior government services compared to what market labor rates would have otherwise allowed.

DBE programs require that a certain amount of work involved in a project go to contractors and subcontractors owned by women or minorities. DBE programs also inflate the cost of projects for taxpayers and have often been vehicles for fraud and abuse. Increasing costs and encouraging criminal activity . . . where do I sign up?

Finally, the proposed law requires that bidders offer apprentice-training programs, which are generally found in union shops. There is nothing wrong with apprenticeship programs, but instituting such a mandate is blatant favoritism for union shops over nonunion competitors. It would be a substantial burden for a typical independent, nonunion company to create an apprentice program before it could bid for a project. Whatever that burden may be, the county council has absolutely no business mandating it. This is a blatant ploy to guarantee that union companies will win all county bids.

Not surprisingly, much of the language in the bill was put in by unions, according to the Post-Dispatch story.

I am a strong opponent of tax incentives and subsidies for businesses, but imposing these types of regulations on all sorts of projects in St. Louis County is a terrible abuse of the political process. St. Louis County has no business making these rules, and, indeed, I question its legal authority to do so in some of these cases. Local government should address the major issue of incentive and subsidy abuse by saying “No” far more often. Saying “Yes, but with a bunch of new regulations and red tape” is the worst policy of all.

The post Two Wrongs Don’t Make a Right appeared first on Show-Me Institute.

Certificate of Need (PDF): Missouri’s Certificate of Need (CON) law restricts health care competition by requiring health care providers to get state approval before entering new markets or expanding services offered in existing facilities. This restriction hampers innovative start-ups and market newcomers that would provide Missourians care and puts upward pressure on health care prices.

Charter School Expansion (PDF): Demand for charter schools in Missouri is at an all-time high. Unfortunately, charter schools are functionally limited to the Kansas City and Saint Louis School Districts. Tens of thousands of students are denied the opportunity for a better education.

Course Access (PDF): All across Missouri, students do not have access to higher-level coursework such as AP courses, calculus, or physics. A course access program would allow students to take courses outside of their traditional public school courses using a portion of their annual per-pupil funds to help pay for them.

Earned Income Tax Credit (PDF): State spending is on the rise in Missouri, led by a growth in public welfare dollars. Public welfare spending now accounts for more than 46% of total spending and 34% of spending growth. The growth in public welfare shares of total spending has eclipsed the growth of all other general expenditure functions. 

Economic Development Subsidies (PDF): Excessive use of economic development subsidies has hollowed out municipal tax bases and diverted tax revenue to specific developers. In the past 15 years, Saint Louis City alone has allocated $709 million away from municipal services through tax increment financing (TIF) and tax abatement. Studies from across the country indicate that these subsidies fail to generate promised jobs and growth. 

Education Savings Accounts (PDF): Missouri students are underperforming. On the 2015 NAEP exam, only 31 percent of Missouri 8th-graders were found proficient in math and only 36 percent were found proficient in English. For the Class of 2016, only 22 percent of Missouri ACT test-takers scored “college-ready” in all four tested subjects. Education savings accounts could help students who are trapped in failing schools via residential assignment to purchase school supplies, tutoring services, or even private school tuition.

Higher Education (PDF): The University of Missouri system, and higher education in the United States in general, are at a crossroads. Tuition is rising, resulting in over $1 trillion in student loan debt nationwide. At the same time, students who fail to secure a high-income job face serious financial consequences. As schools struggle with these crises, a rising tide of anti–free speech policy is sweeping across the higher education landscape.

Highways/Transportation Infrastructure (PDF): The Missouri Department of Transportation (MoDOT) will likely face funding shortfalls in the near future. The state will need to generate new revenue in fair and economically sound ways.

Income Tax Reform (PDF): Missouri’s economy has been stalled for almost two decades, as startup growth has slowed and entrepreneurs and taxpayers are leaving the state. Missouri is shrinking relative to other states and economies, ranking 48th out of 50 states in real GDP growth between 1997 and 2015. Individual income taxes are destructive to the state’s economic growth, productivity, and income, encouraging taxpayers to move their work or investments out of Missouri. This not only lowers economic output for the state, but also destabilizes revenue for state and local governments.

Open Collective Bargaining (PDF): Under current Sunshine Law in Missouri, government bodies may close meetings, records, and votes relating to contract negotiations until the contract is executed or rejected. This lack of transparency in negotiations between government unions and government officials can lead to contractual agreements that aren’t in the public’s best interest.

Prevailing Wage (PDF): Many government construction contracts dictate what potential contractors must pay workers. This can put projects out of reach financially for taxpayers, and can also hurt laborers by denying jobs to people who can do them at a more competitive price.

Public Pension Reform (PDF): Defined benefit (DB) pension plans promise employees annual payments for life upon retirement, but if a public plan does not have enough money to make these payments, taxpayers can be forced to fund the difference. Pension plans can come up short if they fail to make sufficient contributions or overestimate their investment returns. Nationwide, state and local public pension funds are underfunded by more than $1 trillion dollars.

Public Union Recertification (PDF): Once a government union comes to power, it can stay in power indefinitely. No further elections are scheduled and no term limits are imposed. This means workers can do little to ensure their union truly represents their interests and is held accountable.

Right to Work (PDF): Until last year, many workers in Missouri could be forced to join unions. That was unfair not only to the employees disempowered by the law, but also to employers who had to operate under it. Governor Eric Greitens signed right to work legislation into law on February 6, 2017, but in 2018 the state will hold a referendum on that law.

Sentencing Reform (PDF): High crime and incarceration rates present a significant cost to taxpayers, and imprisoning minors is especially expensive. Relaxing harsh and automatic sentencing laws for minors—while still allowing judges to try minors as adults for especially serious crimes—could reduce costs while increasing public safety.

Special Taxing Districts (PDF): Special taxing districts are political subdivisions formed to fund specific services and improvements such as fire protection and infrastructure. In practice, however, they often allow narrow special interests to tax the public for their own private gain while allowing little or no public input or oversight.

The post 2018 Blueprint: Moving Missouri Forward appeared first on Show-Me Institute.

The prevailing wage sets a floor for pay, but it can actually hurt the workers it’s intended to help by denying employment to people who can do the job at a more competitive price. To make matters worse, making projects more expensive also means that less taxpayer money will be available for other priorities.

THE SOLUTION: Let the market set wages.

Rather than dictate wages, the government should have policies that support a healthy jobs environment where higher wages for all sorts of construction projects—including public construction—develop on their own without the harmful effects of wage floors.

Policymakers must keep in mind that project delays can hurt their communities over time. It would be better to let the market set wage rates for these projects and to begin delivering those public services sooner rather than later.

WHO ELSE DOES IT? States with no prevailing wage law include Alabama, Arizona, Arkansas, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, New Hampshire, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Utah, Virginia, and West Virginia.

THE OPPORTUNITY: Moving away from market-distorting policies like the prevailing wage will help the state promote job growth and spend taxpayer money efficiently.

KEY POINTS

• These reforms would promote job growth and make public works projects more affordable.
• Taxpayers get the most bang for their tax buck when their money is spent efficiently and effectively.

SHOW-ME INSTITUTE RESOURCES

Blog Post: Special Interests Inhibiting Joplin’s Recovery?

Blog Post: Playing Favorites on the Board of Aldermen?

Blog Post: The Race Is On: Wisconsin Pushes to End Project Labor Agreements and Prevailing Wage

For a printable version of this article, click on the link below. You can also view the entire 2018 Missouri Blueprint online.

The post 2018 Blueprint: Prevailing Wage appeared first on Show-Me Institute.

But repeal of the state’s prevailing wage law won’t put Missouri’s tradespeople on the fast track to pauperdom. Indeed, in true supply-and-demand fashion, a shortage of skilled laborers in the construction industry is already driving up salaries there.

“I think that all craft professionals are in the mid-to-upper five-figures, and once you add in per diem and bonuses and incentives, it is not uncommon that we have workers making six-figures,” [Steve Green, vice president of the National Center for Construction Education & Research] said, adding that often accounts “for a lot of overtime.”

With a slew of good paying available jobs, why is the labor shortage so pronounced?

“Construction is not a sexy profession: we don’t attract the younger workers like other professions do,” NCCER president Don Whyte said, adding that his organization is trying to change public perceptions to show that through construction, families can earn a robust middle-class living.

There are a lot of layers to this policy onion. Americans have long placed a premium on a college education, viewing it as a proxy for eventual prosperity while, in important respects, stigmatizing professions where a formal education isn’t required. Certainly college-educated individuals, on average, make more than those who don’t have a college degree, but the rising cost of that education and changing contours of the modern economy have taken a toll on the economic slam-dunk that college once was. Complicating matters further is that as government has subsidized college educations, it has produced more college graduates who otherwise wouldn’t have chosen college — and who instead might have become skilled tradespeople, creating a workforce gap in an industry which, literally, builds our country.

That’s a long way of saying that Missouri probably needs to reassess the way it looks at its workforce policies. The state spends hundreds of millions of dollars every year providing Missourians the opportunity for a college education, but is focusing on college-educated professions a silver bullet for a balanced economic future? Probably not. And that’s why recent efforts to promote apprenticeship programs in the state are not only welcome, but necessary to the economic future of Missouri.

To be sure, the best way to advance that goal will require robust debate, but it’s long past time that the state looked at its workforce portfolio and recognized that a college education leading to gainful employment is good for the state—but so too is a debtless apprenticeship in an industry that will pay handsomely for those services. I hope this important workforce issue gets the attention it deserves this session.

The post An Emerging Policy Frontier: Workforce Development appeared first on Show-Me Institute.

Well, Missouri is falling behind in that race. Like Missouri, Wisconsin’s prevailing wage reforms are still being debated today, but earlier this March PLA reforms passed out of the Wisconsin assembly and on to Governor Scott Walker. Our think tank colleague in Wisconsin, the MacIver Institute, has a video account of the debate.

For those familiar with the discussion so far in Missouri, the terms of Wisconsin’s PLA debate will sound familiar.

The bill’s supporters say it will encourage more construction firms to bid on projects, leading to taxpayer savings. Opponents say it is part of a continued effort to weaken labor unions and would put worker safety and wages at risk.

“We’re saying let the market decide, let employers decide,” [Rep. Rob] Hutton told reporters before the vote. “This is really just to clarify and get the government out of the business of determining whether a project labor agreement is necessary.”

The benefit of moving away from PLAs is twofold. The first is the benefit to taxpayers being able to spend less and get more for their money, as PLAs tend to push up the cost of public construction. But the second is nearly as important: to ensure that contractors, union and not, are treated on equal footing when they bid these public projects.

Fortunately and in furtherance of both ends, a version of PLA reform is moving its way through the Missouri House after passage in the state Senate. Chances seem very good that PLA reform will happen this year, and paired with a prevailing wage reform that just passed out of the House, reform in construction labor appears to be on the way in our state. Missouri may not beat Wisconsin to the post on these reforms, but so long as the state gets there by session’s end, it’s all the same to us. Nonetheless, vigilance remains necessary, especially given the legislative drag being experienced in the upper chamber; we’ll keep you updated.

The post Wisconsin Passes Project Labor Agreement Reform appeared first on Show-Me Institute.

Also coursing through the state House and Senate, however, are two important measures that would protect government employees as well. My former colleague John Wright wrote at length about the substance of the first measure, dealing with recertification votes and transparency in government unions. That basket of reforms will likely also include common-sense financial transparency requirements for government unions as well, consistent with disclosures private unions already file. Taken in total, that worker empowerment proposal is a game changer on its own.

The second measure, Paycheck Protection, also deserves attention from good governance supporters. Rather than forcing workers to opt out of a union, Paycheck Protection flips the presumption by allowing employees to opt-in to a union instead. It’s sort of like a mini-recertification vote; if an employee wants the union to represent her, she can confirm her support and continue the representation, or do nothing and keep her money. Either way, it’s the employee that’s empowered, not organized labor.

This year’s government union reform proposals are superior to versions that were proposed in previous years, in no small part because they don’t carve the rights of first responders from the bill. Why those rights have been carved away in the past is a subject of debate, but dealing strictly with the policy itself, passing a government reform bill that doesn’t protect first responders would be disappointing. First responders should be able to see what their union is spending money on, to keep or drop a union that represents them, and to retain or give the money in their paychecks that may currently underwrite a union’s activities. That this year’s law includes these workers deserves praise. I never understood why first responders would be deserving of fewer rights.

If these reforms are enacted, Missouri workers will have a lot to be excited about in the months and years ahead.

The post First Responders Have Rights, Too appeared first on Show-Me Institute.

But RTW isn’t the only labor reform where states are scrambling to beat their peers to the finish line. Indeed, states are also looking to reform their project labor agreement (PLA) laws, which circumscribe who can work on some public projects, and their prevailing wage laws, which can affect the price taxpayers pay for public projects.

And as in Missouri, the policy pairing of PLAs and prevailing wage has hit the top of the reform list in Wisconsin.

Prevailing wage requirements and project labor agreements would be prohibited under a proposal in Wisconsin’s 2017-19 biennial executive budget and tandem legislation speeding through the state legislature.

Gov. Scott Walker (R), already recognized for his tough stands against organized labor, included a single sentence in his 644-page budget proposal Feb. 8. The language repeals the state’s prevailing wage requirements and bans “any unit of government in the state from requiring or considering the use or lack of use of a project labor agreement by a contractor as a condition of bidding on a public works project.”

The state legislature could beat Walker to the punch under separate bills that would prohibit state and local units of government from requiring project labor agreements as part of public works programs. The Senate passed its version of the PLA bill, Senate Bill 3, by a vote of 19-13 on Feb. 8. The Assembly’s Committee on Labor approved nearly identical legislation, Assembly Bill 24, on a party-line vote Feb. 9.

The post The Race is On: Wisconsin Pushes to End Project Labor Agreements and Prevailing Wage appeared first on Show-Me Institute.

Certificate of Need: Missouri’s Certificate of Need (CON) law restricts health care competition by requiring health care providers to get state approval before entering new markets or expanding services offered in existing facilities. This restriction hampers innovative start-ups and market newcomers that would provide Missourians care and puts upward pressure on healthcare prices. Read more about certificate of need.

Charter Schools: Demand for charter schools in Missouri is at an all-time high. Unfortunately, charter schools are functionally limited to the Kansas City and Saint Louis School Districts. Tens of thousands of students are denied the opportunity for a better education. Read more about charter schools.

Course Access: All across Missouri, students do not have access to higher-level coursework such as AP courses, calculus, or physics. Read more about expanding course access.

Earned Income Tax Credit: State spending is on the rise in Missouri, led by a growth in public welfare dollars. Public welfare spending now accounts for more than 26% of total spending and 34% of spending growth. The growth in public welfare shares of total spending has eclipsed the growth of all other general expenditure functions. Read more about earned income tax credits.

Economic Development: Excessive use of economic development subsidies has hollowed out municipal tax bases and diverted tax revenue to specific developers. In the past 15 years, Saint Louis City alone has allocated $709 million away from municipal services through tax increment financing (TIF) and tax abatement. Studies from across the country indicate that these subsidies fail to generate promised jobs and growth. Read more about reforming economic development.

Education Savings Accounts (ESAs): Missouri students are underperforming. On the 2015 NAEP exam, only 31 percent of Missouri 8th-graders were found proficient in Math and only 36 percent were found proficient in English. For the Class of 2016, only 22 percent of Missouri ACT test-takers scored “college-ready” in all four tested subjects. Many students are trapped in failing schools via residential assignment and have no opportunity to pursue a better education. Read about introducing ESAs in Missouri.

Higher Education: The University of Missouri system, and higher education in the United States in general, are at a crossroads. Tuition is rising, resulting in over $1 trillion in student loan debt nationwide. At the same time, students who fail to secure a high-income job face serious financial consequences. As schools struggle with this, a rising tide of anti–free speech policy is sweeping across the higher education landscape. Read about reforming higher education.

Individual Income Tax Reform: Missouri’s economy has been stalled for almost two decades, as startup growth has slowed and entrepreneurs and taxpayers are leaving the state. Missouri is shrinking relative to other states and economies, ranking 48th out of 50 states in real GDP growth between 1997 and 2015. Individual income taxes are destructive to the state’s economic growth, productivity, and income, encouraging taxpayers to move their work or investments out of Missouri. This not only lowers economic output for the state, but also destabilizes revenue for state and local governments. Read more about reforming the individual income tax.

Open Collective Bargaining: Under current Sunshine Law in Missouri, government bodies may close meetings, records, and votes relating to contract negotiations until the contract is executed or rejected. This lack of transparency in negotiations between government unions and government officials can lead to contractual agreements that aren’t in the public’s best interest. Read more about open collective bargaining.

Prevailing Wage and Project Labor Agreements: State law governs what many government contractors must pay workers to get a government project, and it can also govern what kinds of workers contractors can use on that job. These restrictions often mean that large union contractors from big cities get jobs, to the detriment of smaller companies, local laborers, minority laborers, and taxpayers. Read more about prevailing wage and project labor agreements.

Public Pension Reform: Defined benefit (DB) pension plans promise employees annual payments for life upon retirement, but if a public plan does not have enough money to make these payments, taxpayers are legally bound to fund the difference. Pension plans can come up short if they fail to make sufficient contributions or overestimate their investment returns. Nationwide, state and local public pension funds are underfunded by more than $1 trillion dollars. Read about public pension reform.

Public Union Recertification: Once a government union comes to power, it can stay in power indefinitely. No further elections are scheduled and no term limits are imposed. This means workers can do little to ensure their union truly represents their interests and is held accountable. Read about public union recertification.

Right to Work: Many workers in Missouri can be forced to join unions. That is unfair not only to the employees disempowered by the law, but also to employers who have to operate under it. Read more about introducing right to work in Missouri. Governor Eric Greitens signed right to work legislation into law on February 6, 2017.

Tax Credit Reform: The state of Missouri uses public money to subsidize the private projects of special interests, often in the name of “economic development.” Practically, that means less money for public needs and greater difficulty in later reducing taxes for all taxpayers. Read about reforming tax credits.

Transportation: The Missouri Department of Transportation (MoDOT) will likely face funding shortfalls in the near future. The state will need to generate new revenue in fair and economically sound ways. Read more about Missouri’s transportation infrastructure.

The post 2017 Blueprint: Moving Missouri Forward appeared first on Show-Me Institute.

Click here to watch video of the event.

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The city has issued an average of $35.4 million in permits per month since the tornado. Before the tornado, the city averaged just over $2.1 million a month in building permits.

Despite this evidence of a robust private market, the Missouri Housing Development Commission has:

. . . committed about $100 million in tax credits and loans over the coming decade to spark the construction of low-to-moderate income rental units and single-family, owner-occupied homes in the Joplin area.

[A] Sept. 30 revision of the federal wage rules significantly increased those amounts. For example, the federal prevailing wage for a carpenter in the Joplin area rose from $7.98 an hour to $21.47 an hour plus $12.65 in benefits. The federal prevailing wage for a roofer in the Joplin area rose from $7.25 an hour, which matches the general federal minimum wage, to $21.30 an hour plus $8.08 in benefits.

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