However, last March a Cole County judge invalidated much of SB5, ruling that several of its most important provisions were unconstitutional. Although the decision will be appealed, it has jeopardized the protections that SB 5 had provided to Missourians.

Regardless of the fate of SB5, concern about court fines and fees should extend beyond traffic tickets and percentages of budgets. State Senator Eric Schmitt (the sponsor of SB5) sponsored legislation in the recently completed session to extend the protections against taxation by citation.

SB 572 (passed by the legislature this session) lowers and caps fines applicable to both municipal traffic and ordinance violations and adds municipal ordinance violations to the calculation of the 20% municipal revenue cap allowed to come from municipal fines and fees.

The use of taxation by citation in any form invites unpredictability and conflicts of interest among the courts and law enforcers. For the benefit of government and the people of Missouri, tax policies should be set so that revenue is reasonably stable and predictable.

The first step to solving any problem is admitting that one could exist. The legislature has recognized that funding municipalities using traffic fine collections, and now municipal ordinance violations, is bad policy—and that’s a great start. The next step is to fully address taxation by citation in all its forms.

The post Making Sure Municipal Courts Are Not Tax Collectors appeared first on Show-Me Institute.

When Missouri’s funding formula was rewritten in 2005, lawmakers prudently placed a limit on just how much the state’s obligation to fund education could grow from year to year. In 2009, believing gambling tax revenue was going to flush the system full of cash, lawmakers removed the cap, and the amount has grown and grown to an absurd degree. This year, the formula required almost $500 million more than the state was willing to pay.

My colleague James Shuls has been all over this issue for years. As he wrote recently:

When I make a payment on my credit card debt, the next month’s payment is lower. However, when lawmakers increase funding for the foundation formula, it triggers an increase in the funding that will be required for the next go-round. This occurs because the formula is updated bi-annually based on how much a select group of districts spend per pupil.  The legislature gives districts more money, the formula gets recalculated based on this new spending, and the target moves ever upward.   

We have created a vicious circle in which more spending begets more spending.

Now, the legislature is considering reinstating the five-percent cap. This would not necessarily fix the perpetually increasing funding cycle, but it would slow it down. It would make it more feasible for lawmakers to fully fund the foundation formula.

Ending the vicious cycle is a great first step. Here’s hoping this turns the legislature’s attention to broader issues of education reform, like the ones we outlined in 20 for 2020. 

The post House Wisely Overrides Veto on Funding Formula Cap appeared first on Show-Me Institute.

It seems that there are those in the city who want to get some type of minimum wage increase passed before the Legislature has a chance to override Governor Nixon’s veto of HB 722, which would forbid municipalities from raising their minimum wages after August 28. What’s interesting to note is that even if the Board of Aldermen passes a bill before the August 28 deadline or the Legislature fails to override the Governor’s veto, Saint Louis probably lacks the legal authority to raise its minimum wage above the state minimum wage. Regardless, a $13 per hour minimum wage would be disastrous for the city and its workers.

The Congressional Budget Office studied the effects of increasing the federal minimum wage to “just” $10.10 an hour and found that it would cost 500,000 jobs. Now this 500,000 figure is a national number, but the effect on jobs would be especially pronounced if the wage went up at the local level, because companies forced to pay the higher wage can just hop across the city border to escape the mandate. Even the liberal Vox.com thinks that $13 per hour (never mind $15) would be too high a minimum wage for Saint Louis.

What about the other cities that have raised their minimum wages? If the recent evidence from Seattle is any indicator, things aren’t looking good.There are also some signs out of Los Angeles that might give policymakers in Saint Louis pause.

                Momentum is building in some parts of Saint Louis City government to increase the city’s minimum wage, as evidenced by the convening of a special session to debate the issue. However, that doesn’t mean that such a move would be good policy. A large increase (and going from $7.65 to $13 or $15 per hour would certainly qualify as large), will end up costing jobs  and failing to help the working poor. 

The post The Idea That Would Not Die appeared first on Show-Me Institute.

. . . residential towers, hotels, shops, a high-tech business incubator, plus wetlands, green space and parks stretching more than a mile, from the Gateway Arch grounds to the new river bridge. The plan even proposes floating-barge beer gardens and playgrounds.

In essence, this plan would be an extension of the Archgrounds revitalization, with the ultimate goal of turning the Mississippi riverfront into a first-class destination for residents and visitors. Subsidies for this development are pretty much a forgone conclusion.

The first thing to point out is that the very existence of a plan B for the riverfront contradicts some bombastic statements from new stadium supporters. For example, Gov. Nixon said at a press conference supporting the stadium plan, “If we do nothing, 10 years from now that will look exactly as it looks now. . . . This is our chance.” It turns out that not building a stadium is not necessarily the same as doing nothing.

But turning to plan B itself, it is disappointing to see that complete lack of originality of the strategy. A high-tech business incubator? Cortex (the existing subsidized innovation hub) is far from bursting at the seams. Residential towers? Saint Louis has some of the lowest rent in the nation, and the city has to subsidize nearly every new development; this does not indicate a lack of supply. Beer gardens and playgrounds? We’ve already seen how a new subsidized playground (Ballpark Village) has cannibalized the business of not only local bars but other subsidized bar districts (Washington Avenue). At this point, publicly backed residential-cum-entertainment districts are second only to building new stadiums as the city’s favored (if failed) strategy for reinventing downtown. Let’s not even get started on hotels.

Policymakers need to come to the realization that we are not one brilliant central plan (stadium or otherwise) from propelling sustained growth in Saint Louis. A turnaround is only likely when the city creates the underlying conditions that allow for bottom-up development and make the city a competitive place to do business. If Saint Louis can do that, private companies will build the floating beer gardens all on their own.

The post Saint Louis Has Plan B if Stadium Plan Fails appeared first on Show-Me Institute.

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There were some appealing aspects to his speech, like his thoughts on how to address our transportation infrastructure. Gov. Nixon stated:

One option is a toll road on Interstate 70. The Highway Commission’s recent report showed that this approach could make I-70 better and safer … and free up tens of millions of dollars for other roads around the state. Trucks and out-of-state vehicles that do the most damage to I-70 would have to pay their fair share. That deserves serious consideration. Here’s another option: the gas tax. Missouri’s gas tax hasn’t gone up a penny in nearly 20 years. It’s the fifth-lowest in the nation.  With gas prices as low as they are now, this is worth a very close look.

Kudos to Gov. Nixon for at least considering user fees as a way to finance transportation in the state. My colleague Joe Miller has written extensively about the benefits of tolling and how gas taxes are a better way to fund roads than the sales tax. Tolling is a fair way of financing improvements to Interstate 70 because it can be done in such a way as to get much, or even most, of its revenues from commercial vehicles, which cause the most damage to our roads and highways.

However, not everything in Gov. Nixon’s address was good policy. The governor still insists on expanding Medicaid.

Now I’d like to talk about another challenge … but an even greater opportunity: Strengthening and reforming Medicaid. Let me remind you, a lot has changed since last year. Since I stood here last year, Missouri taxpayers have sent $2 billion to Washington. Those dollars are being used right now, in other states, to reform and improve their Medicaid systems. That’s 2 billion Missouri taxpayer dollars.  And this year, there’s another $2 billion at stake. If we keep standing still, that’s $4 billion Missourians will have lost to other states by the end of this year. Across the country, people are moving past the politics.

To help you decipher politico speak, when the governor talks about reforming Medicaid, he really means expanding Medicaid. Show-Me Institute Senior Analyst Patrick Ishmael has done a tremendous job explaining why expanding Medicaid is a bad idea. Not only would it strain future Missouri budgets by adding billions in new spending (Medicaid already takes up 22 percent of Missouri General Revenue expenditures, up from 17.5 percent just 10 years ago), but the program doesn’t work. The poor should get decent health care; Medicaid fails on that front.

Gov. Nixon raises the point about Missouri taxpayers sending money to Washington, and by failing to expand Medicaid, other states get to spend our money. This is also false. Patrick lays out why this claim is wrong in his most recent Forbes piece. First, Missouri is a net recipient of federal tax dollars. This means that Missouri gets more in federal aid than it sends out in tax dollars. Also, the money for Medicaid expansion is not like some large pie that gets distributed to the states that participate in the expansion. Each state has its own allotment of money to help pay for expansion. If the state doesn’t expand Medicaid, the money isn’t reallocated. That’s why you are seeing the overall cost of Medicaid dropping. Fewer states are signing up for expansion, and thus the actual cost growth of Medicaid is falling below what was projected. If the money was being redistributed, actual cost growth would be closer to projections.

Gov. Nixon’s speech was a mixed bag. The legislature should feel free to ignore the bad ideas. I hope, though, that the good parts mentioned above do more than just receive serious attention. There are serious issues in this state that need addressing, and we need pro-market solutions.

The post Thoughts on Gov. Nixon’s State of the State Address appeared first on Show-Me Institute.

Tied to our love of data is the assumption that government is transparent enough to provide it to us. Citizens of the Show-Me State should expect no less. And in that regard, Missouri is doing okay. In 1973, the state legislature adopted our Sunshine Law, making Missouri one of the first states to adopt such an open meetings law. The law in part reads:

It is the public policy of this state that meetings, records, votes, actions, and deliberations of public governmental bodies be open to the public unless otherwise provided by law.

In 2009 the Blunt administration sought for, and the legislature provided, the implementation of the Missouri Accountability Portal, and the Nixon administration has maintained it. The website allows users “a single point of reference to review how their money is being spent and other pertinent information related to the enforcement of government programs.” Though limited in scope and sometimes difficult to navigate, this site has been good for transparency in Missouri, helping keep citizens informed and the government responsive.

We’ll leave it to others to argue about the intelligence of voters or the political expediency of openness. But here in Missouri we’re grateful for the transparency we have and the data it yields.

The post We Are Thankful for Transparency appeared first on Show-Me Institute.

Details on any proposal are light, but Gov. Nixon did say that Saint Louis will remain an NFL city and that “we’re going to be partners here” in regards to upgrading the stadium. He mentioned that current funding streams will be available once payments on the original dome expire. Presently, the city, county, and state spend a combined $24 million annually on paying off the debt accrued in building the Edward Jones Dome. Gov. Nixon also was quick to point out economic benefits that having a sports team would bring.

I agree with Gov. Nixon’s desire to keep the Rams in Saint Louis. I too hope they stay, but if taxpayers are going to approve further public subsidies to the Rams, they should do so with their eyes wide open. It’s one thing if people want to pay to keep the Rams in Saint Louis because of a desire for increased civic pride or prestige. It’s another thing to claim that subsidizing construction will lead to economic growth for the area. In fact, public financing of a new stadium will not lead to increased economic growth. A study conducted by Robert A. Baade and Victor A. Matheson found that “Researchers who have gone back and looked at economic data for localities that have hosted mega-events, attracted new franchises, or built new sports facilities have almost invariably found little or no economic benefits from spectator sports.”

Again, I want the Rams to stay in Saint Louis, but I don’t want my tax dollars to be used to keep them here. New stadiums in New York and San Francisco are both 100 percent privately financed. Why should the Rams be treated any better?

The post Thoughts on Gov. Nixon’s Rams Press Conference appeared first on Show-Me Institute.

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Click here to watch the program online.

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Unlike the ongoing tax credit review commission, which is stacked with supporters of tax credits, I don’t have any animus toward this initiative. It seems to me that the people involved probably believe they have good ideas for Missouri, and that they are not participating in this project for personal gain. The politicians and the other participants involved just buy into the notion that if a number of smart and dedicated people work together to come up with a plan for Missouri’s economy, they can do great things for our state. That belief is neither malevolent nor corrupt. It is just wrong.

The governor laid it out plainly in Kirksville (emphasis added):

“We can’t go down every road,” Nixon said. “We need to act, not react, and in order to do that we need a plan.”

No, we don’t need a plan. Missouri’s economy of the future will be shaped by individual people taking risks and seizing opportunity. The government has absolutely no idea what the economy of the future will — or, more importantly, should — look like. Committees like this (as common as they have been in our history) buy into the idea (intentionally or not) that the government should be involved in crafting the elements of our economy. That is a frightening notion, and one filled with enough examples of failures using public dollars that I would have thought the idea would have been disposed of by now.

My favorite example is the 1947 St. Louis plan that called for the destruction of Soulard often mentioned by Bill McClellan. (You can read about Bill’s column from a blog post by someone who considers himself a libertarian but supports Paul McKee’s grand plans for the north side of St. Louis. Crazy, eh?)

Here’s a realistic plan for actual growth: Perform the core functions of government as efficiently as you can, and reduce the tax and regulatory system as much as you can within the constraints of democracy (i.e., I recognize that other people want the government to do more things than I want it to do). Then sit back and let individuals and companies succeed or fail based on market interactions and their own efforts. That is the only plan we need for our economy.

The post Planners Save Missouri! appeared first on Show-Me Institute.

Far too frequently, bureaucratic inertia allows certain government programs, positions, and workers to continue on well beyond the point at which they are more expensive than is justified by the value they provide to citizens. Sentimentality and political concerns make it difficult for elected officials to fire government workers, which is one reason why the government tends to be less efficient than private businesses, which are under constant pressure to discard workers or divisions that are no longer creating enough value to justify the expense. Gov. Nixon has pledged to cut nearly $200 million from the budget by treating the government more like a business. I’m certain that this is an unpopular position among many people with whom the governor associates, but it is one that — assuming he follows through with it — will be very good for the state. And, for all those worried about what will happen to the government workers who will be downsized, remember that if they are as good and effective workers as we hope they are, they should have little trouble finding a job somewhere in the private sector.

Gov. Nixon also announced his intention to review the state’s system of tax credits, suggesting that he will work to eliminate those that are corporate welfare masquerading as the public good. This is an excellent idea. Tax credits can be very useful to encourage private businesses and citizens to invest in Missouri, but they should never be used to give a special advantage to certain businesses, industries, or interest groups. Examples of good tax credit programs are those that lighten the tax burden for people who donate to chartities — such as domestic violence shelters, food pantries, and the Higher Education Scholarship Program. Examples of negative tax credit programs are those that lighten the tax burden only for specially favored businesses and industries, such as last year’s proposed Bombardier tax credit, the Hazelwood Ford Plant tax credit, or the tax credit for grape and wine producers. While we don’t know which tax credit programs Gov. Nixon will eventually target, his stance offers hope that he will work to end corporate welfare tax credits.

There are certainly points in the governor’s address that I disagree with, and you can be assured that I’ll address those points in the future. But, for now, I just want to say that I applaud him for the positive positions that he seems to be taking in regard to improving government transparency and efficiency, and targeting the misuse of tax credit schemes.

The post Another Take on Gov. Nixon’s Speech appeared first on Show-Me Institute.

Most are eligible for coverage under the state’s Children’s Health Insurance Program but haven’t signed up.

“That’s unacceptable,” Nixon said. He promised to start identifying eligible families, who can make up to three times the federal poverty limit, or $63,600 for a family of four.

Now’s a good time to review what Dave said:

Some types, generally of the left-leaning persuasion, just can not understand that people eligible for government aid might still prefer to make it by on their own.

And for the good news, here are Nixon’s words on reducing the number of Missouri state employees:

In total, my FY10 budget proposes the elimination of more than 1,300 positions. We will cut nearly $200 million from overhead by eliminating these positions and cutting bureaucracy.

I’m glad he isn’t using the economic situation as an excuse to add government jobs.

The post Best and Worst Parts of Nixon’s Speech appeared first on Show-Me Institute.