Sly Says It’s About Public Safety
January 25, 2016

Kansas City Mayor Sly James kicked off the city campaign to renew the earnings tax with a warning, its end could harm the city’s public safety.

“Over the next 10 years, if we have to abandon this tax by a vote, we wlil have to start shaving people very quickly,” the Mayor predicted.

He estimated 800 police officers could be laid off during the 10 year phase out of the earnings tax.

He added about 500 firefighters and emergency medical technicians would be let go as well.

James repeated the often heard figures that the earnings tax makes generates more than $230 million dollars each year for Kansas City. That is 40% of the city’s main operating budget.

Much of that main operating budget, says the mayor, goes to support the police and fire departments.

“I don’t think this mayor or city council would vote to cut public safety spending. I think if you put the question to them, clearly they would day ‘ no ‘,” countered Patrick Tuohey of the Show Me Institute, a critic of the earnings tax.

This Missouri legislature changed the states earnings tax law six years ago.

The change requires Kansas City and St. Louis to ask voters to renew the earnings tax every five years.

78% of the 2011 Kansas City voters supported the earnings tax at that election.

Mayor James says forces in Jefferson City are trying to eliminate the earnings tax in Kansas City and St. Louis for their own political gain.

State Senator Kurt Schaefer has proposed a bill that would abolish the earnings tax immediately. He does not think the tax could stand up in court after a recent US Supreme Court ruling involving a Maryland earnings tax.

Schaefer’s bill, however, is not directly tied to the earning tax renewal vote.

The election is April 5.

KC Street Car Expansion Gets State Project Money, Critics Say it Makes Funding Gap Bigger, Not Smaller
July 10, 2014

Critics of the plan to expand the Kansas City Street Car line says more money from the state cerastes a bigger funding problem for the project, rather than reducing it.
Wednesday, the Missouri. highway Commission included a total of $144 million for an expanded street car system in Kansas City, if approved on the August 5th ballot.
On the same day, voters are going to be asked to approve a one-cent increase in the Missouri state sales tax to pay for the street car expansion and hundreds of other projects around the state.
Boosters of the plan say the additional $144 million, plus about $30 million The region would receive from the state plan, means the. street car tax plan co an be reduced.
Estimates are the tax could be a quotes of a cent, rather than the full one cent that was planned for the $500 million dollar expansion into the heart of the city.
Critics, however, say it won’t work that way.
“We’ll lower our tax increase because we’re getting the state money but we’re not getting as much as expected in giving up the tax,” said Patrick auto hey, a critic of the plan.
A report by the Show Me Institute says the reduction in the Kansas City street car tax rate would make the current $35 million, a $95 million hole.
The Special Counsel For the City on the street car project, Doug Stone, disagrees.
He says no street car money will be spent until all of the $500 million is in place. Stone says he expects some of that money to come from federal grants in the next several years.
During that time, Stone says, Kansas City will save the money coming in each year from the state project. He estimates that to be about $50 million.
Stone likens it to saving to make a down payment on a house.
“I’m sure people understand that when you put more cash down on something you save money because you’ve borrowed less,” he said.
Among the other major Kansas City projects supported by Highway Commission:
-Widening I-70 to three lanes in each direction across the entire state of Missouri.
-Building a new Broadway Bridge in downtown Kansas City.
-more than $120 million on new roadwork for the I-70/435 interchange and I-435on Kansas City, Missouri’s east side.

Show-Me Institute Joins Anti Medical Tax Crowd
October 14, 2013

The conservative Show-Me institute is the latest group to come out against the Jackson County medical Research tax.
The Institute published an opinion piece Monday , the institute called it “an egregious misuse of the taxing authority,”.
Co-author Patrick Ishmael told KMBC TV News the measure doe not meet the public purpose threshold of the Missouri Constitution.
“Law firms, construction companies, and just about every other type of business provide a level of public service. Where do you draw the line on which businesses to subsidize with taxes?”
Ishmael writes “the line needs to be drawn somewhere, and this is a good place to start”.
The proposed tax would raise the county sales tax by ½ cent. Boosters say it will generate $800 million over 20 years.
The money is intended to attract cutting edge medical researchers her to a research institution in connection with several Jackson County hospitals.
A couple of other Kansas City political players have recently announced their opposition to the medical Research Sales Tax.
Over the weekend, the Kansas City Star, citing the regressive nature of the sales tax, which is not based on one’s ability to pay, came out against the plan.
Last week, Kansas City’s Citizens Association also announced its objection.
Monday, however, Jackson County Legislator James Tindall announced he supports the medical research tax plan.

Update: Missouri & Kansas Spend $200 Million Shuffling Jobs in Border War
February 8, 2013

Business executive Bill Hall told a Missouri House Committee Friday Missouri and Kansas have spent millions tugging business back and forth across the state line and have no created any new jobs in the process.
He said the total of the tax incentives offered by both states to Kansas City area is $200 “for no new jobs in the community”
Hall also warned that the Border War is ‘intense and escalating”.
Kansas Governor Sam Bronwback has offered another round of tax cuts for the Sunflower State lawmakers to consider this session. Kansas enacted one of the biggest tax cuts in the state’s history in 2012.
Hall repeated an earlier statistic; that after the tug of war between the two states, Kansas has gained 595 jobs at a costof $323,000 per net existing job.
Tax reform is a major issue for the House Republican majority this year. House Seaker Tim Jones attended the session at Kansas City’s Union Station, but he said little during the two-hour hearing.
Another indicator of the potential importance, is the fact that the lawmakers held a rare out-of-the-state-capitol-hearing in the midst of their session. Fridays are normally considered days off for the legislators.
Lawyer Woody Cozad has been pushing for Missouri to drop its tax rates to meet the Kansas competition.
He told the committee the state of Tennessee has passed Missouri because of its low tax approach to attracting business.
Patrick Ishmael of the Show Me Institute testified lower tax rates are better than tax incentives.
Earlier in the day, Kansas City-Mayor Sly James defended Kansas City and the Missouri side economies during a Committee hearing today.
Missouri lawmakers came to Kansas City to hear of the business poaching Border War. Kansas City and the state of Kansas have been battling over moving businesses back and forth across the state line. ” We are not afraid of Kansas,” James declared, “They don’t scare us”.
He called a series of personal and business tax cuts enacted in Kansas, “a bauble”, that may or may not work.
He said the bauble is, “cut all taxes and they will come”.
James pushed hard for state lawmakers to approve a new tax credit designed to attract new companies to the state
He also admitted the city’s main liability in the Border War may be education
The Kansas City,Missouri school district is one of 14 school systems in the city limits. The turmoil and controversy of a lack of accreditation and potential of a state takeover in that district often steers new residents away from the city James observed. He urged the law makers to pay attention to education policy.
James says ” education is the biggest economic development tool we have that we pay the least amount if attention to”.

The Case for An I-70 Toll Road
January 3, 2012

An op-ed piece ihn the Post-Dispatch from the Show-Me Institute, via :

Think about the difference in the taxes that property owners pay to fund local parks and the entrance fee your family pays to visit Yellowstone National Park. That is the appropriate framework to begin discussing toll roads. Everyone in the community can access local parks so general taxes support their existence. A much smaller percentage of people visit Yellowstone each year, and those people support it with an admission fee. Interstate highways are like Yellowstone — admission fees (tolls) are the preferred means of funding.

The Missouri Department of Transportation has announced plans to make Interstate 70 a toll road to fund renovations. Let us make two assumptions: MoDOT will overcome any legal and political impediments to do this (not a safe assumption) and the renovations to I-70 are necessary (I think MoDOT is on safe ground here). With those assumptions set, the focus simply becomes: Is tolling I-70 a good public policy decision? I believe it is.

Missouri has less history with tolling than many other states. Most toll bridges across rivers in Missouri were converted to free facilities decades ago. Two bridges continued as tolls until recently — the McKinley Bridge in St. Louis and one connecting Missouri and Iowa. The only toll facility now in Missouri is the Lake Ozark Community Bridge, which opened in the 1990s. Unlike neighboring states Illinois, Kansas, Kentucky, and Oklahoma, Missouri has never tolled its highways.

The plan is to have a private contractor reconstruct and toll the part of the highway between St. Louis and Kansas City, but leave the parts within the urban centers toll-free. Without tolls, MoDOT officials say they would have to increase the gas tax 15 cents per gallon, almost doubling Missouri’s current — and admittedly, low — tax of 17 cents per gallon. The future toll rate (or rates, if they are adjustable, as they should be) is unknown, though the rate should be high enough to fund the highway and discourage congestion, but low enough to discourage taking alternate routes.

In July 2011, I visited a gas station in downtown St. Louis to film a video on excise taxes in Missouri. We found a gas station, which at one point had cars from Illinois filling its entire lot. We spoke with the manager of an Illinois car service company that drove a dozen of its vehicles every day from Illinois to Missouri just to fill up with gas. Right now, it is inarguable that Illinois residents subsidize Missouri drivers (by buying more gas here than they consume via road usage). If Missouri raises its gas tax, thousands of southern Illinois commuters will see their costs increase too, including many who never drive on I-70 or do so merely for the first few blocks into downtown St. Louis. (And yes, the new Mississippi River Bridge should have been a toll bridge.)

A Missouri driver, using baseline assumptions of driving 20,000 miles per year in a car getting 25 miles per gallon, would pay $120 more per year in gas taxes after a 15-cent increase. That would equal eight trips on I-70 if we estimate a $15 toll to cross the state. However, all Missouri motorists and anyone else buying gas in Missouri would pay that tax increase, whether they use I-70 or not. Truckers and frequent highway travelers would likely have to pay more with a toll than with a gas tax increase. There is nothing unfair about that because they are the people choosing to use the asset and drive the road.

How should one pay for public goods and services, through taxes or user fees? Good public policy often comes down to the economic questions of rivalry and excludability. Pure public goods are non-rivalrous (meaning that your consumption of it does not limit my consumption) and non-excludable (meaning that it is difficult to prevent someone from using a particular good). Sound public policy suggests that general taxes pay for those types of public goods. A local road system is not excludable (there is no means of keeping someone from leaving their driveway and driving on the street) and non-rivalrous (your use does not impede my use, although congestion makes any road rivalrous in certain conditions). Taxes, such as a general gasoline tax, are preferred for these systems.

Interstate highways connecting major cities (and many bridges) do not meet those standards for public goods. Their limited entry points make it easy to control access, so they are readily excludable. And while highways are not considered rivalrous, they are more rivalrous than local roads because of greater issues with congestion due to peak travel time demands and limited alternative routes. Smart policy is to pay for services like this via fees — in this case, tolls.

Tolls provide the necessary funds to build and maintain the road assets that benefit certain users, such as truckers, more than others. They provide a reliable source of funds to maintain the road in the future. With the recent technological improvements to tolling, fees can be efficiently collected without the long lines at toll plazas that some people may remember. Every state should move in the direction of lower general taxes for roads and more tolls where appropriate. Missouri’s I-70 is one road where it is appropriate.

David Stokes is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.