Category Archives: taxes

We Don’t Want Big Government

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—except we do want it.

I was listening to some debate in the state senate a few days ago during which one senator went off on the idea that government is too big and needs to be shrunk.  This issue has been debate fodder for decades.

Despite many cutbacks—I recall when governors proudly pointed in their State of the State Addresses how many jobs they had eliminated in the past year.

But do we REALLY want smaller government?

The appropriate answer is a familiar one:  Yes, for the other guy.   But don’t touch my programs or my benefits.

There’s an organization called NORC at the University of Chicago.  Although the outfit says, NORC is not an acronym, it is our name,” the letters stand for The National Opinion Research Center, founded in 1941. But it does businesses as NORC, the pronunciation of which always reminds us of a hilarious 1977 outtake from the Carol Burnett show in which Tim Conway, as he often did, ad-libs a story that broke up the cast, including guest star Dick Van Dyke.  Tim Conway elephant story – YouTube.

Well, anyway, The Associated Press and NORC have done a new survey.  Sixty percent of Americans think the federal government spends too much money. But 65% want more spending for education (12% want less).  Health care?  More, says 63% of the respondents; 16% want less. Only 7% of those surveyed want less in Social Security.  Sixty-two percent want less. Medicare? 59% more. Ten percent less. Increased border security spending is favored by 53% with 29% favoring less.  Military spending is pretty even—35% want more and 29% want less.

It’s interesting to see how these numbers matter in the partisan deadlock over raising the debt ceiling and/or cutting government spending. Heather Cox Richardson, whose blog is called “Letters from an American,” says Republicans are harping on Biden policies and want to slash the budget, ignoring the fact that spending in the Trump administration increased the national debt by one-fourth.  The GOPers in Congress want a balanced budget in ten years but don’t want to raise taxes or cut defense, Medicare, Social Security, or veterans benefits.  She says that would “require slashing everything else by an impossible 85%, at least (some estimates say even 100% cuts wouldn’t do it.”

She cites David Firestone, a New York Times editorial board member, who has written, “Cutting spending…might sound attractive to many voters until you explain what you’re actually cutting and what effect it would have.” Firestone asserts that Republicans cut taxes and then complain about deficits “but don’t want to discuss how many veterans won’t get care or whose damaged homes won’t get rebuilt or which dangerous products won’t get recalled.”

He opines that difference of opinion and philosophy is why Republicans in the U.S. House haven’t come up with a budget.  He says, “its easier to just issue a fiery news release” instead of dealing with the unpopularity of austerity.

What makes things harder for our people in Washington is that we want things.  And we expect them to get those things for us.  That’s why we’ve never heard a member of Congress come home and tell constituents, “I didn’t introduce the bill that would have built a new post office,” or “I didn’t work for a federal grant for the local hospital,” because the congress person didn’t want to increase the national debt.

And here’s another recent example:

Arkansas Governor Sarah Huckabee Sanders, who made a lot of political hay in her campaign by saying Arkansawyers should not allow the feds to become involved in state and local issues and who tweeted earlier this year that “As long as I am your governor, the meddling hand of big government creeping down from Washington, DC will be stopped cold at the Mississippi River,” has toured the areas of death and destruction from the tornados this week. Afterwards she said, “The federal government is currently paying 75% of all costs incurred during our recovery process, but that arrangement must go further to help Akansans in need…I am asking the federal government to cover 100% of all our recovery expenses during the first 30 days after the storm.”

She seems to be asking, “Where is big government when we want it?”

The other person is always the greedy one who wants the government to do everything for him or her until WE are that other person.

And that’s why we don’t trust politicians.  They give us what we want.  Then they argue about who is responsible for the debt.

At the basic level, folks, it’s not them. It’s us. We’re responsible for this situation.  They can’t argue with us so they argue with each other.

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“The Casinos Will Never Buy That”

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My Representative, Dave Griffith, has filed a third bill in the House that allows sports wagering.  But this bill is different because it gives the legislature an important choice—it can vote for casino industry legislation that does nothing for the state or it can vote for Rep. Griffith’s bill that says sports wagering will be permitted, but only on the state’s terms.

It’s House Bill 953 if you want to look it up on the House web page.

It says sports wagering is no different from any other kind of casino gambling, despite the industry claiming that it is some kind of special system with low returns (it’s not) and will be taxed at the same rate, 21% of adjusted revenues (what’s left after all bets are paid) instead of the 10% the casinos want.  Based on the fiscal note for the industry’s bill that passed the House but died in the Senate, the industry bill would let casinos keep more than $30 million in tax breaks while paying the state less than $13 million.  And that’s just the first of the problematic parts of the bill.

Rep. Griffith’s bill also would force the casinos to pay for the expected tripling of problem gambling that comes with sports wagering, instead of taking money away from programs and services the state committed long ago to finance with gambling revenue.

The bill also would increase the admission fee that casinos pay to the state, set in 1993 at two dollars and unchanged since.  The contemporary equivalent of two 1993 dollars is $4.10, meaning the casinos are keeping more than they are paying the state in contemporary dollars.

Fifty cents of the new admission fee will go to the casinos own host cities that have lost half of their admission fee funding as casino patronage has fallen to a decade. Fifty cents would go to the state gaming commission with the largest share of those proceeds going to alleviate some of the funding crunch at veterans nursing homes—which last year received about one-third as much as they did a decade ago.  The third fifty cents will provide funding to keep the Steamboat Arabia Museum from being bought by  Pennsylvania museum and moved to Pittsburgh.

The casinos can keep the remaining fifty cents.

The gaming commission will adjust the admission fees for inflation each year so that we don’t see the casinos getting richer and richer off of admission fees while host cities and counties and state programs grow poorer and poorer.

More times than I want to think of, members of the legislature have told me after discussing some of these ideas, “The casinos will never buy that.”

Indeed, they haven’t and we expect tooth-and-toenails opposition to the Griffith bill this year.

I wonder, however, if those lawmakers who have told me, “The casinos will never buy that” have ever considered how demeaning to the General Assembly that comment is, almost to the point of a self-indictment.

Who’s in charge here?   The legislature or the casinos?   The answer appears quite clear based on what legislation has been moved—although, thankfully, not finally passed.

What does that statement say about the integrity of the individual legislator or of the General Assembly as a whole?

And for those thinking of seeking higher office, what will sell better with the voters: letting them bet on tonight’s game, or standing with the state’s veterans, educators, and even the casinos’ host cities?

We think we know what the general public’s answers would be to these questions—and that answer does not bespeak confidence in those that public presumes will watch out for its interests. Why, then, are lawmakers who have said that willing to accept the premise?  What is it that they are lacking in making that statement?  And how are they fueling a political climate in which their constituents consider themselves victims of government instead of partners in it?

The casino industry has an incredible amount of influence in the capitol.  One representative told me in the first year of efforts to update casino laws and to protect the museum that the industry would be interested in what was being proposed. “I’ve already gotten two checks from them this year,” he told me.

But this year’s different.  The Griffith bill gives lawmakers a choice. Who’s more important: the people lawmakers know back home or the people who want something from them in the capitol hallways?

Is there a place for courage? Integrity?  Service in the name of the people?  Or will it be business as usual?

We’ll find out this year, maybe.   And maybe voters will remember the answer in the campaign year that comes next.

 

Support your local bureaucrat

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Governor Parson last week recommended a pretty healthy pay increase for state employees.  It’s a much-needed step for a much-underappreciated group of people.

Bureaucrats.   You know, those shiftless people who wrap everything in red tape when they’re not standing outside the front door of a state building, smoking.

Truth be told:  I’m married to a former bureaucrat.  She doesn’t smoke. She never took a state paycheck while frustrating taxpayers with poor service.  She never had anything to do with red tape. She was one of thousands of people who spent their days in cubicles performing everything from mundane tasks to examining situations that would be dangerous to public health and well-being.  She shuffled a lot of paper.  She created a lot of paperwork.  She was a necessary small cog in a very big wheel of a system designed to serve a public too easily bamboozled by opportunistic power-seekers who believe their best road to importance is attacking people such as her.

She left her cubicle behind several years ago to manage a bigger but far less lucrative project: Me.

We hope the legislature acts quickly on the governor’s recommendation of an 8.7 percent cost of living increase.  But his generous gesture constitutes a problem for some in our political world who cavalierly rattle on about shrinking government.  It also presents a problem for those who are eager to cut taxes so they have something to brag about in their 2024 campaigns.

The estimated cost of these salary increases is $151.2 million and that’s only the start.  The number will grow as time passes and more people find state salaries attractive enough to replenish a diminished state workforce—particularly in fields such as prison guards and mental health workers and social services workers, three fields—among many—that require courage and compassion many would find difficult to summon in those professional circumstances. The number also will grow as other increases are approved.

As welcome and as necessary as this expenditure is, it also should temper the enthusiasm of some to reduce the state’s ability to finance it today and properly to augment it tomorrow, lest it lead to layoffs in poorer economic times that will lessen or cancel the progress they create.

These proposed raises fly in the face of those who base their popularity on the time-worn concept of “shrinking government.”  Doing nothing has produced pretty good results for them, although it might be difficult to explain when constituents want to know why they can’t get services government should be providing but can’t get because of too many empty cubicles.

The Missouri Budget Project says the lack of more decent pay has resulted in the decline of state government jobs by 13.2 percent between February 2020 and June 2022. Governor Parson says there are 7,000 unfilled positions in state government and employee turnover is unacceptably high.

Those are numbers of which the “shrinkers” might take pride.  And now, here comes their conservative state leader trying to undo much of the hard-won results of their successful efforts to starve the beast. His common-sense proposal is a challenge to those who think effective and efficient government is possible only if fewer people run it and they’re content with being under-rewarded.  They’re just bureaucrats, you know.  Twenty-first century Bob Cratchits.

One of the goals of the suggested pay increases is to improve recruitment and retention of workers. Oh, Lord, that must mean he supports Big Government!!!

No, he doesn’t. He’s pushing for effective government and we can’t have effective government if we don’t have enough people to do the jobs that effective government requires.  And we can’t get—and keep—enough people if we (us taxpayers) aren’t responsible enough through our representatives and senators to pay them a more-worthy salary.

So, legislators, support your local bureaucrats.  And don’t follow up with something rash that will later set back whatever progress is attained through the governor’s recommendations

Is the tax cut the Christian thing to do?

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The question came up in the Searchers Sunday School class at First Christian Church in Jefferson City yesterday.

Perhaps the question arose, at least partly, because on Saturday, the third annual Prayerfest attracted hundreds of people to the Capitol to pray for ten things: marriage and family, religious liberty, fostering and adopting, law enforcement, sexual exploitation, business and farming, government, racial tensions, right to life, and education.

Lower taxes didn’t make that list.

The bill passed by the legislature last week will reduce general revenue by $764 million a year. My friend Rudi Keller at Missouri Independent has noted the state’s general revenue fund had $12.9 billion in revenue in the most recent fiscal year and the state ended the year with almost $5 billion unspent.

But shouldn’t it have been spent?

Just because the state has it doesn’t mean the state should spend it.  But Missouri clearly has public needs that are not being met.  Whether it is more responsible to give a little bit of money back to a lot of people or to use that money to served thousands is an ethical—and religious—question.

The 2003 Missouri General Assembly passed the Religious Freedom Restoration Act intended to keep the state from restricting the free exercise of religion except under specific, limited, circumstances.  But we often have been reminded that freedom carries with it responsibilities.

Perhaps we need a Religious Responsibility Restoration Act that relies on Cain’s refusal to accept responsibility for the welfare (or even the life) of his brother.  The Judeo-Christian tradition does say that there is a personal responsibility for our neighbors, even those we don’t like (recall the Good Samaritan story).

The Apostle Paul wrote to the Thessalonians, “Pursue what is good both for yourselves and for all.”  And he told the Romans, “Let us pursue the things which make for peace and the things by which one may build up another.”

Instead of using money legitimately gained for the benefit of many, it appears the governor and the legislature have decided to lessen the state’s ability to pay the costs of the services thousands of Missourians need.

The Missouri Budget Project reports these things:

–Between FY 2007 and FY 2020, there was a 22% cut in Missouri’s investment in programs to support independent living when adjusted to today’s dollars.

–While average incomes and property taxes increase over time, circuit breaker eligibility guidelines and the size of the credit have remained flat since the last increase in 2008. As a result, fewer people qualify for the credit over time and those that do are more likely to fall higher on the phase-out scale – meaning they qualify to receive a smaller credit. In addition, Missourians who rent from a facility that is tax-exempt were cut from the Circuit Breaker Program in 2018.

—When adjusted for inflation, required per student funding for K-12 schools was significantly lower in FY 2022 than it was in 2007. That is, the value of our state’s investment in its students is less than it was 15 years ago.   

—Missouri’s investment in K-12 education is also far below the national average. Our state revenue spending per child is less than 60% of what the average state spends to educate its children.

—Even with today’s rosy budget, Missourians can’t access long term care through the Department of Mental Health, child welfare workers are overwhelmed, and the state’s foster care system is in desperate need. Vulnerable Missourians – including kids – are being put at risk because Missouri has the lowest paid state employees in the country, resulting in staff vacancies.

Others reports indicate services (that in many cases are more important to thousands of people than a small tax refund) are badly in need of the funds the legislature and the governor want to give away:

Stats America ranks Missouri 38th in public welfare expenditures.  $1581. Mississippi is 20th at $2,098. W. Va is tenth at $2,722. Alaska, Massachusetts and New York are the only states above $3,000.

Spending on education: USA Facts. (from the Economics Lab at Georgetown University)  Nationwide, the top spending schools by expenditure per student spent $40,566 or more in 2019, more than three times the median school expenditure per student of $11,953.  Missouri was at  was $10,418.  That’s 37th in the country.

We were 26th in per capita spending on mental health services.  Missouri ranks 40th in mental health care, says Healthcare Insider.com

Average teacher pay 52,481 says World Population review. 39th among the states.

We are 32nd in police and corrections spending.

It’s not as if we are overburdened.  The Tax Foundation says we are 27th overall in tax burden, 22nd  property taxes burden.

Against that background is this assessment of the tax cut enacted by the legislature last week:

The Missouri Budget Project, which evaluates state tax policy and state needs says “A middle class family earning $52,000 will see only about $5.50 in tax savings each month. But the millionaire across town will get more than $4,200 a year.”   (To make sure that we’re comparing apples and apples, the middle class family’s annual savings will be $66 a year under the MBP projections.)

Reporter Clara Bates wrote for Missouri Independent about three weeks ago that “the Department of Social Services had an overall staff turnover rate of 35% in the last fiscal year ranking second among state agencies of its size after only the Department of Mental Health.”

It’s even worse for the Children’s Division: “Among frontline Children’s Division staff — including child abuse and neglect investigators and foster care case managers — the turnover rate last year was 55%, according to data provided by DSS. That means more than half of the frontline staff working at Children’s Division across the state at the start of the last fiscal year had left by the end of the year.”  Why the turnover?  High workloads for the staff. And the high workloads lead to more employees leaving at a time when the state needs to be hiring MORE people.

Missouri has almost 14,000 children in foster care.  The national average for children finding a permanent home within a year of entering the system is 42.7%.  The average in Missouri is “just over 30%.”

The politically-popular pledge to “shrink government” is exacting a terrible price on those who need its help.   The Department of Social Services has lost more than one-third of the employees it had twenty years ago.  The number of employees in the Children’s Division is down almost 25% since 2009

The number of full-time personnel at DSS shrunk by a third in the last two decades. The Children’s Division has had nine directors in the last ten years.

But instead of using the money the state has to ease or correct these more-than regrettable situations, the governor and the legislature are giving away $764 million dollars a year with the bill passed last week.

It’s always politically easy to cut taxes, especially in an election year.  It’s easy to talk about how much an individual taxpayer might get back.  It’s harder to confront the damage that might be done to the services that taxpayer needs or relies on.

A lot of people in the legislature and a lot of people in the broad citizenry of Missouri speak proudly of their religiosity. And many of them think the concept of “shrinking government” is a laudable accomplishment.

We should beware of the Pharisees who do not consider whether they are their brother’s keepers and who fail to realize that freedom of religion also carries a religious responsibility to “pursue what is good both for yourselves and for all.”

In the Sunday School class yesterday we asked whether the tax cut that will become law soon is the Christian thing to do—-a question that we hope bothers at least some of those who are so boastful that this is and always has been a Christian nation.

Well, is it—a Christian thing to do?

Am I my brother’s keeper?  How does saving $5.50 a month in taxes answer that?

Tread Carefully

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The Missouri General Assembly convenes in a special session in a few days to consider a significant cut in the state’s income tax and other issues.

The past and the present and two seemingly unrelated situations suggest this is a time to tread carefully—-although, this being an election year, politics could take a higher priority than should be taken in considering the tax cut.

Let’s set aside politics for a few minutes and raise some concerns based on years of watching state tax policy be shaped.

Days after Governor Parson announced he was calling the legislature back to cut the income tax, President Biden announced his program to eliminate a lot of college student loan debt.  The two issues, seemingly wide apart, actually are related in this context. It will take some time to explain.

We begin with the Hancock Amendment. In 1980, Springfield burglary alarm salesman—later Congressman—Mel Hancock seized on a tax limitation movement sweeping the country and got voters to approve a change to the state constitution that tied state government income to economic growth.  If the state’s tax collections exceeded the calculated amount, the state had to send refund checks to income taxpayers.

Some of the Hancock Amendment was modeled on Michigan’s Headlee Amendment adopted two years earlier. But the timing of Hancock could not have been worse.  While Michigan’s amendment was passed during good economic times, Missouri’s Hancock Amendment went into effect during a severe economic recession considered to be the worst since World War II.

Missouri therefore established a limit that had a low bar. There are those who think the state has suffered significantly because of that.

Except for one year the Hancock Amendment has worked well.  Too well, some think, because it has encouraged state policy makers to underfund some vital state programs already hampered by Hancock’s low fiscal bar.

In 1998, the state revenues exceeded the Hancock limit, forcing the Revenue Department to issue about one-billion dollars in refund checks (averaging about forty dollars per household).

The legislature decided it did not want to repeat that. So it decided to cut taxes to keep from hitting the Hancock limit again.  Not a bad idea, except that when the national and state economies took a dive, financing of state institutions and services was severely lowered.  Had the refund program remained in effect, the economic downturn would have meant no refunds but institutions and services would have been hurt far less because the tax base would have stabilized funding.

The MOST (Missouri Science and Technology) Policy Initiative, a fiscal think tank, has recorded twenty tax cuts from 1993-2013.  The result is that Missouri is almost four-billion dollars under the revenue limit set by Hancock, according to the latest annual study done by the state auditor.

Missouri is unable to do a lot of things it could be doing because the legislature eroded the state tax base instead of issuing checks.

Now the legislature will consider an even deeper tax cut.

Nobody likes to pay taxes. But there has been cultivated in our state and nation a culture that seems to think the benefits of government—education, public safety, infrastructure, care for the sick and elderly and indigent, and other parts of our lives we take for granted—should be free.  Or, to the way of thinking of some people who don’t need those things, eliminated.

How does the Biden program to forgive billions of dollars in student loans provide a cautionary element to consideration of the Parson tax cut?

When I was in college in the previous century, I knew many people who worked their way through school. Some could do it with part-time jobs on campus or in the community. I had one friend who worked for a semester and then took classes for a semester.  I have one friend who  financed his college education by selling thousands of dollars worth of Bibles and other religious books during the summer.

But the expense of a college education today makes that kind of self-financing impossible, or almost impossible.  And here is a major reason why.

Back when my generation and the generation after us, probably, could work our way through school, the state provided for a substantial cost of higher education.  Today, the percentage is much lower.

Last year, one of Missouri’s most distinguished attorneys—who also was appointed by Governor Parson to the Coordinating Board for Higher Education—W. Dudley McCarter, noted in The Columbia Missourian, “After striving to attain this goal over the past 10 years, the state of Missouri has now succeeded in becoming the state that is at the very bottom in funding for higher education. No, it is not Mississippi, Arkansas or Alabama — it is Missouri. Over the last 10 years, state funding for higher education has increased nationwide at an average of 12.40% with some states increasing funding by over 40%. In Missouri, however, funding has decreased during that same period by 13.70% — the only state that had reduced funding. When adjusted for inflation, the decrease is actually over 26%. The national average for funding is $304 per student, with some states providing over $700 per student. In Missouri, the funding is less than $200 per student.”

The downward trend has been going on far longer than that. The internet site Ballotpedia has noted that state appropriations per full-time student dropped by 26.1% in the first decade of this century, about twice the national average.

A study done a few years ago for Missouri State University showed that, nationally, student higher education tuitions made up 30.8% of higher education revenues in 1993. By 2018, tuition was financing 46.6% of higher education costs—and the costs were higher. It was during that time that student borrowing ballooned to offset declining percentages of state and federal higher education support.

The Biden student loan forgiveness program deals with those who have debts already. It does nothing to prevent current or future students from incurring crippling student debts, because government has reduced its support for higher education.  And now, the legislature is being asked to reduce state revenues even more.

We lack the expertise to get too far into the weeds of economic nuance.  But reducing the state’s ability to meet its fiscal responsibilities in the future, whether it’s in higher education or numerous other fields is a long-term issue that must be approached with great caution.

Things are flush right now, thanks partly to inflation and the massive injection of federal Covid relief funds in the last few years.  But Missouri still is far short of its own limit on the state tax burden and still far short in funding numerous human-service needs.

It is politically popular in an election year to cut taxes. The public seldom recognizes the long-term penalties that might result.  Tomorrow’s college graduates might be among those paying a high price for today’s popular tax cut and incurring new student debt burdens.  And if a recession hits next year, as some economists keep predicting, some unfortunate results of this year’s tax cut could become painfully clear.

Governor Parson has taken a wise step in meeting with members of both parties to explain why he thinks a tax cut is appropriate today. We suspect he had an easier sell with member of his own party than he did with the other side. We expect some passionate discussion of this issue during the special session.

We also expect a cut will be enacted.  We hope, however, that we do not have a repeat of the unfortunate post-refund tax cuts of decades ago. We must be careful as we consider what we might do to ourselves, our children, and our friends.  Tread carefully.

Abdicating Authority

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The Senate Appropriations Committee has sent a House-passed bill on sports wagering to the floor for debate.  The bill taxes proceeds from sports wagering at eight percent rather than the 21 percent rate for all other forms of gambling.  Committee Chairman Dan Hegeman says there will be a substitute bill offered on the Senate floor that changes some of the provisions of the House bill.

I could have opposed this bill when it was before the committee a couple of weeks ago but decided not to do it because I’ve told this committee and House committees for about three years why the legislation written by the casino industry should be rejected—-because it does nothing or almost nothing for the state’s interests and, in fact undermines them.

The worst thing the bill proposes—so far—is a series of deductions from the taxes the casinos will pay the state.  The goal, plainly stated in the bill, is to let casino accountants turn profitable days into unprofitable days and then to carry over any paper losses to the next day’s calculations. And if the accountants can show enough days were losers, then an entire month will have no revenues that can be taxed.

This is what I told the committee—with some editorial modifications because this is a column not testimony.

First: The fiscal note on this bill talks about how much the state will gain, which isn’t much, but it does not talk about how much the state will lose because of the ultra-low tax rate proposed and other factors in the bill.  Eight percent of nothing is the same as 21% of nothing, and “nothing” is the goal.

The other two points unfortunately are combined.

This not only is the thirtieth anniversary year of the vote to legalize casino gambling, it also is the thirtieth anniversary of approval of term limits.  This legislation represents an unfortunate combination of these two issues.

We have seen the realization of two important things that critics warned would happen if term limits were adopted.

One was that imposition of term limits would eliminate the institutional memory of the General Assembly.

Institutional memory is passed along by the Elders in any society to newcomers.  It consists not only of previous experiences in what works and what does not. In the legislature’s case, it was a matter of teaching new members about traditions, practices, rules (written and unwritten), and behaviors that are essential to good governing.

It is a matter of understanding why people are “Ladies” and “Gentlemen” in the House and why the phrase, “Everyone is a Senator” is vital to the operations of the Senate.  Both standards are matters of respect and based on the idea that policy is shaped by debate among equals.  A debate between two gentlemen, two ladies, or a lady and a gentleman is a debate between equals. It is a matter of parliamentary discipline and political respect regardless of party, geography, color, gender, faith or any other factor.

“Everyone is a senator” is the same.  Senators debate Senators.  It is not us-versus-them.  Senator-to-Senator does not infer that one is superior to the other.

Institutional memory used to teach respect for the understanding that today’s opponent likely will need to be tomorrow’s friend. It was a system that worked for about 175 of Missouri’s 200 years. The sad result of the loss of that memory has been played out in the Senate this year.

The third warning we heard is that after institutional memory is gone, the General Assembly would lose the structure that protects its role as the people’s policy-maker.  Without that structure, without that discipline—critics warned—the power to make policy shifts to two elements that are permanent parts of government outside the chambers—the bureaucracy and the lobbyists.

The warning was that while legislators will come and go, both the bureaucracy and the lobbyists are permanent and their power grows.  And so it is with this bill.

In the last five years, the gaming industry has given legislators 29 bills on sports wagering with the expectation those bills will be passed.  In these five years, not one member of the House and the Senate—I haven’t counted but probably 230 or more people have served in either chamber during that time—not one member of the House or the Senate has independently introduced a bill that puts the General Assembly in charge of this issue.

Not one bill has been written by any member of the Missouri Legislature that legalizes sports wagering on the state’s terms, that asserts the General Assembly’s authority to act on behalf of the people who elected its members. 

And so the warnings from 1992 have come sadly true.  For five years the Missouri General Assembly has abdicated its authority—on this issue—to those who are not physically Ladies, Gentlemen, or Senators, none of whom have any responsibility for, or obligation to the people who sent you here.

And that is why you are being asked by backers of this bill to tell the people who sent you here that it is okay with you if your veterans continue to see declines in financing for their nursing homes, why it is okay with you if the state’s promise of education funding from casino gambling is broken, why it is okay with you if the cities some of you represent that play host to casinos will continue to lose thousands and millions of dollars every year because the gambling industry tells you not to update outdated laws.

It’s not too late to regain control of the process. Committee or floor substitutes, or committee or floor amendments can do it.

But the industry doesn’t want you to do it.  So you have a choice.

When you go home on the evening of May 13th and you have coffee the next morning with some constituents and one asks if you did anything good here this year—what will you say?

—that you stood up for your teachers and your veterans and your home dock cities…..

Or will you say, “I voted to let you bet on a baseball game tonight.”

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Time is running short and pressure to pass what the industry wants in this election year is likely to increase. Now we will learn if the legislature has the spine to act on behalf of the people they meet at home or whether they’ll go with the people they meet in the Capitol halls.

We hope the teachers and the veterans and the college kids looking for state scholarship help, or the city leaders of towns with casinos—and even families of those who become addicted to this industry’s product—ask in these weeks before the election whether their legislator abdicated policy-making power to the people in the halls.

Reductio ad absurdum

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The life of retirement on this quiet street provides an opportunity for time to reflect on some of the great political thinking of our times as well as some of the not-so-great ideas. State legislators can be counted on as great thought-fodder producers. They’ll be back in the big-time fodder-manufacturing business in about, hmmmm, ten weeks.  Personal experience has led to the observation that selective self-righteousness always produces fodder. The quality of the fodder sometimes can be measured by a Latin phrase.

Latin does not often spring to the mind of the journalist, but we recall that the introduction of a couple of proposals during the 2015 legislature sent us scurrying to our source for Latin expressions.  It was the first session in which we were not present to subtly suggest some ideas were bereft of intelligence.

One proposal could have eliminated the sales tax that provides the bulk of funds for the Missouri Department of Conservation.  The department wanted to know where the state would find the $110 million dollars to pay many department’s bills if voters kill the tax. The representative didn’t have an answer to that question.

On the other side of the rotunda, a senator wanted to eliminate hunting and fishing permits because, he said, Missourians already pay the conservation sales tax and charging a fee to hunt the critters the conservation sales tax provides habitat for is double taxation.  That’s another $40 million dollars the department would not have so it can pay for all of the stuff it does.

Neither of these fellows suggested how the department could continue to function if it lost $150 million dollars a year, about 85% of its funding.  And if you think the legislature would look very hard for a new funding source, you don’t have a clue about the ideology of the legislative majority.

For example, the legislature started fiscal year 2014-2015 more than $400 million short of the amount it promised public schools they’d be getting by then under the school funding formula.  Do you really think a legislature that lacks interest in meeting its responsibility to pay for the education of Missouri’s children would show any great interest in finding new money to take care of deer, turkeys, otters, elk, prairie chickens, trout, bats, hellbenders, glades, and what little prairie there is left in Missouri?

The legislature solved the problem of funding shortages for education.  It rewrote the formula to reduce its responsibility.

We think the Latin phrase that tops our discussion today means “reduction to absurdity,” a concept that goes back to the great Greek seekers of logical thought who tested the truth of an  argument by seeing if it remained valid when extended to the point of absurdity.

The representative who wanted an end to the conservation sales tax said it’s not “good politics” to have a funding source “that never has an end to it.”  He wanted a statewide vote on whether to continue it.

Hmmmm.   Let’s extend his argument. Had he thought of a proposal for a statewide vote on the income tax?   The state sales tax?  The cigarette tax?   The alcoholic beverage tax?  Since the Farm Bureau jumped to support his bill back then, we wondered if the same standard should apply to the soil conservation and state parks sales tax. Those taxes don’t seem to have any ends either.

There were all kinds of opportunities for “good politics” then.  And if we listen to our legislators who continue to argue that lower taxes will mean more businesses will come to Missouri and create all kinds of new jobs, the expansion of the “good politics” plan could create a business development expansion that would make the Oklahoma Land Rush look like a small-town homecoming parade.

Now, let’s look at the senator’s double taxation argument.  There are all kinds of double taxation that also should be eliminated under his reasoning. We pay a sales tax for the opportunity to own our cars and our trucks and our snowmobiles and our wave runners.  But then we pay a second tax so we can stick a license plate on the front and the rear of the things, or put decals on the side.  And then we have to pay a third tax if we want to put fuel in them. And property taxes, don’t forget them. Forget double taxation.  We’re talking about QUADRUPLE taxation!!!

We pay property taxes that help finance our public schools and universities.  But then we have to pay laboratory fees, sports fees, band fees—and we have to pay to buy or rent textbooks so our children can learn something in the schools we’ve already paid taxes to support, sometimes higher taxes because the legislature continues to refuse to meet its self-imposed obligations. Clearly, those who use our schools are being taxed every bit as unfairly as the people with guns and bows and arrows are being taxed (don’t forget the sales taxes they paid to buy those things) to use the woods where the deer and the turkey play.

We pay taxes to finance our court systems at the county level.  And then we pay additional tax after tax after tax hidden behind the phrase “court fees” for various and sundry parts of the judicial system.  People who make mistakes that put them in court are being double-taxed. In fact, they’re being taxed in multiples, not just as a double tax.

There are astonishing possibilities for even more “good government” in other categories we haven’t touched on here.

The Representative withdrew his proposal fairly soon after introducing it after publicity about it raised big questions about the devastation it would cause. The Senator’s bill underwent major modification and was reduced to something that applied only to people living outside Missouri but who owned at least 75 acres here, which doesn’t exactly peg the logic meter.

We realize it’s never fair to criticize the efforts of others if the critic has no alternatives to offer.  In that spirit is a suggestion that lawmakers should avoid such pennyy-ante tax and fee proposals and focus on a broader “good government” system that lets taxpayers decide how to spend their money—because as we have often heard some legislators say, the taxpayers know how to spend their money better than government does. For example:

—-A law that designates each month as “pledge month” for certain government programs and services.  Let Missourians phone in amounts they would pledge for those services.   January could be Department of Natural Resources and Department of Public Safety Pledge Month.  February could be Department of Transportation and Department of Agriculture Pledge Month.  And so it would go.  We could eliminate an entire large state agency under this plan and that would make advocates of smaller government ecstatic.   We wouldn’t need a Department of Revenue any more. We could set up a smaller Office of Pledge Compliance and save a bundle.

We wonder how things would go for Legislature and Elected Statewide Officials Pledge Month.

Or perhaps we could have a statewide car wash for the Highway Patrol weekend.  A Statewide Social Services Bake Sale weekend.  A statewide garage sale for Mental Health.

Take a Conservation Agent to Lunch Day at the venison chili parish picnic.

See, folks, all the great thinking is not exclusive to legislative chambers when it comes to tax policy.  Any of us can think of things those people think about.

 

 

 

 

Jurassic government

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How many times will we hear the cheap, vague, promise to “fight big government” in this campaign year.  Candidates pressed by their voters—and the voters need to do this is great intensity—might come up with a statement that equally cheap and vague.

We’ve run into someone who actually thinks about that. He’s also realistic about what needs to happen—and what realistically can NOT happen,

Maybe he’s just whistling in the wind, but Professor Donald Kettl is suggesting the push toward smaller government is counterproductive.  He’s not arguing for bigger government but he does argue that there is an alternative to the philosophy that cutting “the size” of government is the silver bullet that will solve government’s problems.

Kettl is a former dean of the University of Maryland’s School of Public Policy and is a senior fellow at the Brookings Institution, one of the most prominent think tanks in Washington.  It calls itself non-partisan although media reports put it barely on the left side of the liberal-conservative scale (53 on a scale of 100).  Regardless of where you fall on that scale, his observations are worth evaluating.

Unlike many who rail against “big government” or proclaim government is “too big,” Kettl puts some serious thought behind what his contentions.

Kettle begins his 2016 book, Escaping Jurassic Government, with an observation partisans on both side of the government aisle seem to agree on: “There is a large and growing gap in American government, between what people expect government to do and what government can actually accomplish.”   Government, he offers, comes out poorly when the public compares what it can do with what the private sector does, an image worsened by the cynical “and sometimes nasty view” expressed through social media.

But he points to the contradictory nature of the public’s attitude toward government when he speaks of “citizens’ rising—and sometimes impossible—expectations about what government ought to do for them,” and continues, “No matter the issue, the first instinct when problems arise, even among the biggest advocates for smaller government, is to see government as the cavalry and wonder why it doesn’t arrive faster to help save the day….Almost no one likes big government, but no one expects to have to cope with problems alone.”

The result is what he calls Jurassic government.  “Like the dinosaurs, government is strong and powerful. But like the forces that led the dinosaurs to extinction, government is failing to adapt to the challenges it faces. American government struggles with its most important and fundamental decisions. Even worse, it too often fails to deliver on the decisions it makes. That wastes scarce public money and leaves citizens disappointed,” he writes.

How did we get here?   It’s simple, he says.  This country has lost its commitment to competence in government.  And he argues that competence cannot be restored simply by cutting funding for programs and agencies.

His book focuses on the federal government.  But the points it makes apply, too, to state government.  The goal, he says, is competence, not necessarily size.  “We need to restore government’s capacity to deliver on what we decide as a country we ought to accomplish…We do have it within our grasp to restore confidence that what the government seeks to do it will do well.”   But it won’t be easy.

Kettl notes that the growth of government has been a bipartisan affair—Democrats creating three and turning one into two.  Republicans have created three new departments and have reduced one (Nixon kicked the Post Office out of the cabinet).  But in terms of the thirty-two countries in the Organization for Economic Cooperation and Development, the United States has has fewer government employees as a share of the national workforce than the average among the OECD countries).  It might be surprising to realize that only one in eight federal bureaucrats work for the federal government.  Government spending as a share of the economy  is less than the average spending of those 32 nations.  Kettl says government employment has been flat at the state and local levels since the days of Ronald Reagan. The number of local government workers  has increased, however, as population has increased.

Is privatization the answer to reducing government costs? Kettl maintains it is not and, in fact, reduces accountability.  He cites several instances in which government has been criticized for failing to do its job—but it is the private contractor to whom that job has been outsourced that has failed—and accountability has suffered.

He notes the greatest increases in government costs is in entitlement programs while total government spending has stayed pretty flat.

He thinks liberals who want to increase government spending won’t get far because slow long-term economic growth will not provide much new money to pay for many initiatives.  And while conservatives want to cut government spending, most of the federal budget is consumed by payments on the national debt, entitlements, and defense spending.

At the state level, he says, the outlook is not good.  “The U. S. Government Accountability Office forecasts that state and local governments could face structural deficits for the next fifty years,” he writes.  Aging populations will put pressures on state governments while public opposition to higher taxes “make it unlikely” that state spending will grow.

The upshot of all of this, he suggests, is-–as he puts it in one of his chapter titles—“Government’s Size Can’t Change (Much),” and to condense much of the book into a line or two: cutting government’s ability to pay its bills only reduces government’s ability to do the things it is supposed to do well.

There is much, much more in Kettl’s book, a lot of it challenging traditional political rhetoric.  He thinks today’s efforts to “cut” government size actually is cutting government’s competence and it is the declining competence of government that creates a distrustful public that criticizes the government for not meeting its obligations. It seems to this reader that he is pleading for those in government as well as those who pay government’s bills and want government services to throw away the bumper stickers and to put on their thinking caps.

If you’re in government, his study is worth reading.  If you are one of those paying the taxes and taking the services, it’s worth reading, too.

The dinosaurs, he says, didn’t think about the changing world around them and move realistically to adapt.  And we know what happened to them.

We think that his thoughts are worth serious consideration whether you’re the 53 or the 47 on the liberal/conservative scale.

Escaping Jurassic Government: How to Recover America’s Lost Commitment to Competence,  by Donald F. Kettl, published by Brookings Institution Press, Washington, D.C., 2016.

0000

Electronic Wampum

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Saw an article in The Hill last week that, “The value of most cryptocurrencies have plummeted in recent weeks, wiping out billions of dollars of wealth.”

Aside from the story needing a good editor (it should be “the value….HAS plummeted), I confess that I do not have the slightest idea why I should buy, sell, or invest in cryptocurrency.  And the Super Bowl commercials for it were pretty useless for me.  I wonder if they were paid for in cryptocurrency.

As I understand what I read from “helpful” internet sites, it’s a kind of currency that exists “digitally or virtually.”  There is no central or national issuing agency for the stuff.  There’s no FDIC.  It seems to be an anarchic system that creates something out of nothing other than the mind of someone who decides to start issuing “it.”  That person decides how many dollars buy a unit of whatever “it” is and people go nuts buying some of it. The person who creates it gets a lot of dollars and the person who buys it gets——

Well, some kind of units that have no physical properties. In other words, you can’t reach in your pocket and pull out some cryptochange to put in the parking meter. There’s nothing printed on paper for me to pull out of my wallet to buy a lottery ticket.

I get the idea that beads, shells, buttons, coins, and pieces of paper have value only if two parties agree on what their value is. But there seems to be no single worldwide party that determines what any particular “unit” is worth, as in an Indian Rupee is worth so many United States dollars, which are backed by a bunch of gold stored in Kentucky, which is itself valuable because somebody has decided it is.  But at least it is something somebody can see, touch, feel and perhaps even smell.

How much in “real” money will it cost me to buy 1,000 cryptosomethings?  And if I buy it or them as an investment, how will I realize any “real” money in return? Is this stuff more secure than the money I have stashed through the investment counselors at my local bank—who I don’t think have any, of my chidren’t inheritance invested in this electronic wampum.

Apparently there are coins of some kind, or tokens, or something in at least some of these operations but what is the common substance or means of exchange that establishes their worth—as in a dollar is the equivalent of so many Euros, or so many rubles equal a dollar?

Can I pay my taxes in cryptocurrency? When I look in the church offering plate and see that it’s pretty empty of tangible funds can I be comforted to know that it is heaped with non-tangible units?  Some sources say this stuff appears to be like stock.  If I buy some for $X and then sell it for $Z I might be liable for a capital gains tax and I would have to pay that in dollars.

Right?

But when I buy stock in American Veeblefleetzer, I know there’s a brick and mortar building tht is making veeblefleetzers.  If I invest in cryptostuff, am I investing in air?

I went to Kaspersky.com, which seems to know something about this, but I was not comforted when I was told, “If you own cryptocurrency, you don’t own anything tangible.  What you own is a key that allows you to move a record or a unit of measure from one person to another without a trusted third party.”

Kind of like our ancestors traded three beaver skins for a knife, I guess.  Except it’s not.

In this case it seems as if it’s more three  beaver skin units for a VIRTUAL knife unit—which I guess can be used to skin more beavers units that are chewing down tree units and building dam units on stream units.

Are the human equivalents of this system Unit-arians?   I spoke to a group of them a few months ago.  They looked pretty real to me.  I think I touched one or two of them and they seemed very solid.  Not virtual.

Curiously, Kaspersky says using a credit card to buy cryptothings is “risky.” Well, I guess using a piece of tangible plastic to buy a virtual unit of something that is stored in an electronic wallet that I cannot carry my credit card in, in my pocket, is——

Darned if I know.

Can you imagine what a turmoil things would be in if Missouri tried to pay for Medicaid expansion in cryptocurrency?

Here’s something else that I wonder about:

If, sometime in the future after I have departed this bewildering new economic world, these means of exchange that have been so common for centuries are completely replaced by cryptothings, what will be the purpose of Fort Knox?

Will gold reserves mean anything in a world where there is no central or issuing agency for various cryptocurrencies that might be established, the value is which is determined by whomever does the establishing?

Will a Pound still be a Pound the world around? You know, pound, as in £?

The Yen?

The Rupee?

The Leu?

The Sol?

The Euro?

I guess they’ll have value as collector’s items.  And then people will use virtual currency to buy them as decorative collectables and people of the future will look a our clothes and wonder what pockets were for.

The Casinos in Our Pockets

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We lived in an “appointment” world in 1993, when the first Missouri laws governing casino gambling were written.  Voters had approved riverboat gambling, as it was called then, in 1992. The first casinos on boats would open in the spring of 1994.

Many of us still got our national news with the 5:30 network newscasts on television and our local news at 6 and 10 p.m. when those laws were written.

If we wanted to buy new clothes, we went to a clothing store during the hours it was open.  We went to grocery stores during their open hours to get our food.

We knew when each day we could go to the mailbox to get letters from friends and relatives.

And by the end of the year we knew that if we wanted to gamble we would have to go to the riverboat at a certain time to be admitted.

The Station Casino-St. Charles and the President Casino on the moored Admiral riverboat opened May 27, 1994. Gamblers could board the boat in St. Charles from 9 a.m. to 1 p.m. for a two-hour cruise (for which they paid three to five dollars, depending on the day). If they missed the cruise time, they had to wait for the boat to come back so we could pay to get aboard for the next trip.

The President never cruised. It was permanently moored near the Gateway Arch because the old aluminum Admiral had no engines. Gamblers would pay two dollars during the week and five dollars on weekends and could board every two hours from 10 a.m. to midnight.

But the world was changing and the change accelerated each year. “Appointment living” was beginning to diminish although many of us did not realize it at the time.

There were some hints, however.

The Pew Research Center reported in 1994 that the percentage of Americans getting news from the internet at least once a week had more than tripled since 1991, going from 11-million to 36-million news users.

The number of hosts on the internet tripled from January, 1994 to January, 1996, the year something called a “browser” was created—Netscape, the same year that the island nation of Antigua and Barbuda passed a Free Trade and Processing Act allowing licenses to be given to companies wanting to allow internet users to gamble. By the end of the year there were fifteen gambling websites. The next year there were 200 and by 1998, a study was published showing online gaming revenues had topped $830-million. Modern online gambling in this country dates from November 22, 2010 when the New Jersey Senate passed a bill allowing certain forms of online gambling.

It was about that time that the casino industry was starting to see an erosion in patronage. In Missouri, casino admissions reached almost 54.3-million in FY 2005 then declined for three years before climbing back to almost equal 2005’s number. Admissions began annual declines after FY 2011.  In FY 2019 (the last full year before the pandemic crippled casino business), casino admissions had declined by 49%.

Various reasons for the decline can be suggested but the end result seems to be the same—people just don’t go to where casinos are.

So the casinos have to go where the people are.

The situation is not unique to the casino industry. It is part of our changing lifestyles and those changes have become more obvious with the COVID-19 Pandemic that has forced casino closures for in-person business and quarantines for many who would patronize them.

We no longer live in an “appointment” world.  We can buy clothing at any time of the day off the internet.  We can use the internet to get our groceries delivered.  We can order deliveries to our homes from our favorite restaurants.  The same with our pharmaceuticals. Telemedicine is eliminating some office and hospital trips.

Casino betting can happen 24 hours a day because, as one source has observed, “everyone has a casino in their pocket.”  Casinos are looking for new products that can be offered through the ubiquity of the internet that we call up on our ubiquitous cell phones.  First is sports wagering. But later, Missouri legislators are likely to be asked to let table game betting to take place remotely.

Those who find gambling a reprehensible sin will find nothing redeeming about gambling on the internet.  But thousands of other Missourians will welcome the opportunities—as they welcome opportunities to grocery shop from home.

In a world where less and less of life is lived by appointment, the gaming industry knows it must change. And it is, as it should.

Missouri’s casino gambling laws must change, too.  Laws written and fees created in the days of physical customer presence in casinos need to be changed to account for virtual presence.  State services relying on gambling fees and taxes will be increasingly diminished as appointment gambling diminishes.  Casinos, profiting from laws of the 1990s appointment culture, resist modernization of the law. It is understandable that they do.

What is not understandable is why the Missouri General Assembly would not want to protect the state’s interests by bringing our laws from the appointment era into the virtual, but very real, era.