Jobs aren’t fleeing Missouri after Kansas tax cuts:

The Kansas City metropolitan area is ground zero for measuring the impact of Kansas Gov. Sam Brownback’s income tax cuts on job creation.

It is an article of faith among Brownback and his supporters that slicing taxes for selected Kansans will convince people and companies to jump the state line and work in Kansas.

That crowd includes St. Louis multimillionaire Rex Sinquefield, who wants to eliminate Missouri’s income tax; right-leaning economist Stephen Moore; and Dave Trabert, president of the Kansas Policy Institute, an ultra-conservative think tank.

Trabert recently said, “You can observe firsthand businesses that have moved across the state border into Kansas in the Kansas City area.”

But is that really happening at a measurable amount?

The recent data won’t please Brownback or his allies. In fact, the Kansas side of the metropolitan area has lost its longtime advantage in employment growth over Missouri since the tax cuts took effect in January 2013.

Take a look at federal Bureau of Labor Statistics figures, released on a monthly, non-seasonally adjusted basis for the area. (Note: The total workforce on the Missouri side is a bit larger than on the Kansas side.)

— In the most recent year, from January 2014 to January 2015, employment on the Missouri side of the state line rose 3.7 percent vs. 2.6 percent on the Kansas side.

The Missouri side gained 20,300 jobs in that year while Kansas added only 11,300.

This is especially notable because it occurred when — if Brownback’s theory were working — more companies, firms and individuals likely would be expected to take advantage of the tax cuts and roll into Kansas.

— In the two years the Brownback tax cuts had been in place from January 2013 to January 2015, employment on the Kansas side was up 4.5 percent, which Missouri nearly matched with job growth of 4.2 percent.

That’s only a small advantage for Kansas. And the Missouri side actually added more jobs than the Kansas side did during this time — 23,000 vs. 19,200.

— Overall, the Kansas side of the metropolitan area added fewer jobs after the tax cuts took effect than it did during the first two years of Brownback’s term before the cuts were in place.

Meanwhile, total employment growth on the Missouri side the last two years has been more than three times higher than its job gains the previous two years.

Brownback’s backers can note that, since he took office in January 2011 and through January 2015, employment growth on the Kansas side of the metro area had eclipsed that of Missouri’s, 9.7 percent vs 5.6 percent.

However, the more recent figures show the Kansas portion of the metro area has gone from being a big winner in the battle for job gains to a point where it nows lags a surging Missouri.

Advocates for lower income taxes argue it will take more time to see whether firms will leave Missouri when their leases are up, for example, or finally decide the costs of moving are worth it.

But the takeaway for now is a rebuke to Brownback and his backers. The tax cuts have not spurred magical job growth on the Kansas side of the state line in the last two years.

Meanwhile, the cuts have produced huge revenue shortfalls that have gained national negative attention. Funding plans for K-12 schools, higher education, roads and public pensions are embroiled in legislative tugs of war, while higher taxes are on the table to plug the fiscal gaps.

With all this turmoil and potential declines in public services in Kansas, the Missouri side of the state line could be looking a lot more attractive to employers and employees.

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Springfield News-Leader, April 25

Pass the 2-cent fuel tax bill:

The Missouri Department of Transportation budget is at a critical low point and by 2017, MoDOT officials say, it will drop to $325 million.

Important: This is the agency responsible for the upkeep of the major roads running through Springfield — those most of you probably use every day — Glenstone and Sunshine avenues, Kansas and Chestnut expressways, to name just some of them.

This shortfall means a couple of things: $325 million is not only woefully short of ensuring our state highways and bridges remain safe and smooth, it also is not enough to ensure Missouri meets the funding threshold necessary to receive the matching federal funds that come when a state spends a certain amount on its roads.

That means giving up no small amount of money. Every dollar Missouri devotes to roads generates $4 in federal construction revenue. That is, IF we maintain the funding necessary to qualify for the matching funds. And, we have to point out, this is Missouri’s money, sent to Washington through our taxes. The matching funds are our own money, and some other state will get it if we give it up.

That’s why we call on the Missouri Senate to pass a 2 cent raise in fuel tax as proposed in SB 540. The bill sponsored by Sen. Doug Libla (R-25) would increase the fuel tax from 17 to 19 cents and Missouri Department of Transportation revenue by $55 million (plus $23 million for cities and counties).

With this year’s legislative session ending May 15, it’s critical this legislation get to a vote this week. If you care about the safety of Missouri roads and bridges, urge senators to pass this law.

This legislation was supported unanimously in the Senate Transportation Committee, which includes our own Sen. Bob Dixon. It’s supported also by many communities and economic organizations, including the City of Springfield and our Chamber of Commerce.

Yet when the bill was presented, it was filibustered by two senators who oppose the measure.

Two more cents a gallon won’t fix the transportation budget problem. But it’s a reasonable proposal and would not only salvage those federal dollars in 2017, it would buy some time for lawmakers to work out a long-term solution.

MoDOT officials have said the department needs at least $485 million to maintain roads and bridges in the conditions they are today. Without additional funding, they would enact its bare-bones plan to put most revenue toward 8,000 miles of major highways, leaving little for cities with MoDOT-maintained roadways.

Not only would poorly maintained roads diminish the look of our community, it could put wear and tear on our personal vehicles, not to mention the safety factor.

The economic impact could be even more far-reaching if new industry passes up Missouri for states that take better care of their roads.

We know in years past there’s been talk of poor budget management. We know you don’t like new taxes. Neither do we. But we are convinced that the transportation department has made the efficiency budget adjustments it needed to, and that without some kind of action, our highway system will be in trouble.

Missouri hasn’t raised its fuel tax since 1992. That 17 cent tax today is worth 8 cents, according to Sen. Libla. If the fuel tax is raised to 19 cents, it will still be one of the lowest in the country. Among neighboring states, Oklahoma also has a 17-cent fuel tax, but that state has several toll roads. Iowa recently increased a fuel tax to 30 cents per gasoline and only has 8,900 miles of road, compared to Missouri’s 34,000, according to Libla.

Not only that, Missouri is at risk in 2017 for losing roughly $165 million in that transportation revenue federal match. In 2018, it could be $400 million. Those are funds that we all pay through the 18.4-cent federal tax on fuel. Again, if we lose that match, those Missourian-paid federal dollars will be distributed to other states that do meet the match.

That’s right. Missouri roads and Missouri drivers would begin to suffer while Missouri-generated money fixes roads in other states.

Granted, 2 cents won’t fix all the shortfalls. The bill originally called for an incremental addition of 2 cents each year, over three years, until it rose 6 cents. That 6 cents would have secured the federal funding long term. Some legislators believed that couldn’t be enacted according to Missouri’s constitution, so the bill was amended to just 2 cents.

If SB 540 doesn’t pass in the Senate — and then the House — what happens? We wait until January 2016 to start the conversation over again. Becky Baltz, district engineer for MoDOT in Springfield, said it’s important to keep the public aware of the issue. “Whether something makes it through this year or it doesn’t,” she said, “we need to keep having the conversation about transportation.”

We agree. We hope Missourians won’t say “show me” when it comes to maintaining highways, bridges and the main roads in Springfield.

Because if MoDOT funding isn’t fixed, we could find ourselves being shown a lot of patched-up streets and persistent potholes.

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St. Louis Post-Dispatch, April 27

Missouri budget misses the point — and $4 billion

The Missouri Legislature last week passed a $26 billion budget. In the budget process, the most intense debates were over who loses. In the end, as is nearly always the case, children and poor people were on the short end of the stick.

The budget cut $40 million to social programs and mental health needs, though it could have been much worse. The budget, while adding about $80 million to the Foundation Formula that funds K-12 schools, still comes up about $442 million short of what state law calls for in terms of investing in education.

Lost in all the budget hubbub was an obscure annual state audit that offers a glimpse of what Missouri’s future — and for that matter, its present — could actually look like.

This is not the audit that properly dinged Gov. Jay Nixon for his $1,300 float trip or his continued tone-deaf habit of robbing from cash-strapped state departments to pay for his office’s largesse. Like the discussions in the Legislature this week over how badly to limit the damage done by an anemic budget, those indiscretions, while important, are small potatoes.

By law, the Missouri state auditor must determine every year whether the state owes taxpayers a refund under the various revenue and spending constrictions imposed by the Hancock Amendment.

That amendment, passed by voters in 1980, limits the amount of revenue the state can collect to 5.6 percent of Missourians’ total personal income, the same amount that funded state government in 1981. In effect, that is the state’s per-capita tax rate. If Missouri state government collects more than that, it owes refunds to taxpayers. A second provision also limits the amount of money the Legislature can raise in revenue each year without going to a vote of the people.

A shortsighted decision more than three decades ago resulted in a constitutional nightmare. It limits yearly budget discussions to how much damage should be done to children and poor people, rather than a debate over the best way to invest in Missouri’s future.

According to the audit released last week, Missouri is currently $4 billion under the Hancock threshold.

Think about what that means. If Missouri lawmakers had simply kept the effective tax rate in the state at the same 5.6 percent it was at in 1981, the budget on Gov. Jay Nixon’s desk would be 15.3 percent bigger. Missouri would have $30 billion to spend, not $26 billion.

K-12 schools would be completely funded. Needed university building projects would not be on hold. The state’s road and highway system — among the most poorly funded per capita in the nation — would be solvent and contributing more to the economy. There would be enough beds for mental health patients. People needing food stamps could get a live person on the phone or in an office to help them.

State government would work. The economy would be boosted. All for 1981 prices.

Instead, Hancock enshrined Missouri’s race to the bottom in the state constitution. It will get worse before it gets better.

It’s not just that too many Republicans in the state ignore decades of Missouri’s own experience, and blindly believe that pushing taxes even lower will boost the economy. In fact, the tax cuts scheduled to go into effect in Missouri in 2017 will only make a bad situation worse. Last year, the audit shows, the state only collected 3.9 percent of Missourians’ personal income. The various elements of Hancock won’t allow the state to get back to the 1981 limit of 5.6 percent.

When a recession hits, as it did in Missouri and the nation in both 2001 and 2007, the state’s revenue declines. But when the revenue picture starts to improve, as it did in 2004 and again in 2011, the Legislature isn’t allowed to catch up, even if it had the political will to do so.

Since 2010, the gap between what voters decided was a reasonable amount of money to fund state government, and the amount the state is actually allowed to collect, has been hovering around $4 billion.

It is a sign of progress that Republicans like Sen. Doug Libla, R-Poplar Bluff, are talking about a gas-tax hike to invest in transportation, and that Democrats like Attorney General Chris Koster and Treasurer Clint Zweifel are talking about a tobacco tax hike to fund higher education. But really, unless something is done to fix the Hancock Amendment, they’re only nibbling around the edges of need.

What Missouri needs is something along the lines of the Referendum C passed by Colorado voters in 2005. That vote allowed the state to overcome its own Hancock-like amendment, called the Taxpayers Bill of Rights, or TABOR, by allowing the state to bypass the constitutional revenue limitations for five years. The vote, endorsed courageously by the Republican governor at the time, allowed the state to hit the reset button after the 2001 recession. Colorado invested billions of dollars in its people instead of cutting already tight school, social services and mental health budgets.

Sadly, Missouri is headed in the opposite direction.

A TABOR-like amendment has passed the House and is on the Senate calendar. It would add further restrictions to the Hancock Amendment, limiting spending to a formula tied to inflation and population growth.

This is economic madness, unless your goal is simply to starve state government out of existence. Goodbye public schools. Goodbye safety net for seniors, the disabled and the poor. Goodbye economic development.

If all of this forced limitation on government spending were actually as effective in creating jobs as its acolytes would like to believe, Missouri would be flowing in economic milk and honey. But it is not.

It is time to imagine a new Missouri, one in which bold leaders promise to rebuild this state’s sputtering economy while sticking to the voters’ will that no more than 5.6 percent of their personal income would be used to fund state services.

As Mr. Nixon and the Republicans who run the Legislature bicker over whose cuts do the least damage, remember that $4 billion sitting on the table, beckoning Missouri to become the state its leaders say they want it to be.

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Jefferson City News-Tribune, April 24

Audit reveals poor practice continues:

Gov. Jay Nixon continues to set a deplorable example when it comes to state spending by his office.

A state audit released Wednesday revealed the governor continues to tap other state agencies to pay expenses incurred by his office, a questionable practice uncovered in a previous audit.

Nixon has taken action — not necessarily to change his ways, but to select a fellow Democrat to lead the office.

Following the suicide of Republican Auditor Tom Schweich, Nixon appointed Democratic Boone County Treasurer Nicole Galloway to fill the vacancy.

Schweich’s deputy auditor, Harry Otto — who announced the audit findings for Nixon’s office — said he co-worker Trish Vincent, chief of staff, will be replace after Galloway takes office.

That’s unfortunate, but that’s politics.

Math, however, is not a political discipline, even when granting the benefit of the doubt. Otto gave the governor that benefit when he said: “While it’s possible to make a case that agencies should pay the costs of a governor’s office employee whose work benefits that agency, to take the National Governor’s Association dues and and the Southern Governors Association dues and have those paid by someone other than the governor’s office, I don’t see how you can make that case.”

During the audited period from July 1, 2011, to June 30, 2014, Otto reported lawmakers budgeted about $6.6 million for the governor’s office and Mansion operations. The audit found, however, $1.9 million in expenses paid by other agencies, bringing the total “closer to $8.5 million that has been spent,” Otto said.

The deputy auditor acknowledged that Nixon’s administration is not the first to charge other agencies for governor’s office work, but he said the $1.9 million “extra” funding is “not minor. It’s significant. And it’s more significant now than in prior administrations.”

In addition, Otto said the governor’s office has used funds from the 2014-15 budget to cover overspending from the 2013-2014 budget. Otto called this a new finding and added: “Even though the governor has the flexibility, authority, power to shift these dollars around, he still ran short of money in one year and couldn’t pay the bills.”

Another revelation — one likely to rankle rank-and-file state employees — was six governor’s office employees received raises ranging from 5 to 21 percent, well in excess of overall salary increases for state workers.

More disturbing than the amounts uncovered in the audit is the mindset that the chief executive’s office is exempt from the rules that apply to other sectors of government.

If anything, the governor’s office must be an example of prudence and fairness — for other branches of government, for its executive agencies, for state employees and for all Missourians.