The state of Missouri is in the hole — facing a shortfall between $600 million and $1 billion under the 2012 budget. As a guide to resolving the shortfall — and, more than that, to achieving higher levels of performance across a range of services — the Show-Me Institute has prepared a list of five New Year’s resolutions for Missouri lawmakers, educators and other public servants.
Resolution #1: Adopt a whole new mindset. Tell yourself at the beginning of every day: More spending is not the answer. Repeat: More spending is not the answer.
If you are a school superintendent faced with the challenge of raising test scores and educational achievement, it’s not how much money you spend per pupil that counts. It’s how wisely and well you spend the money you have. The same goes for lawmakers, mayors and other elected officials. The best and only way to promote faster growth in our state and communities is to cut spending on things that don’t matter and learn to do more with less.
Resolution #2: End the sacred cow status of state tax credits. These subsidies to favored builders, developers and others are not “free money.” They represent a serious drain on future tax revenues. They are one of the prime reasons our fiscal house is not in order.
It is therefore time to rein in the sacred cows of historic tax credits, development tax credits and film tax credits, and make these and other tax credit programs subject to ordinary budgetary processes and disciplines. Rather than being automatically rolled over (or increased) from one year to the next, the legislature should aim to make deep cuts in these programs on grounds of inefficiency, waste and the need to put a stop to crony capitalism and corporate welfare.
Resolution #3: Abolish the state income tax.
Nothing would do more to promote the growth and competitiveness of our state than the elimination of the state income tax — on both corporations and individuals. This can be done swiftly or in stages over four or five years. We can pay for a large part of reductions in the corporate income tax through the elimination of wasteful state tax credits. This would level the playing field (lowering taxes for all businesses, not just a favored few).
Resolution #4: Root out cronyism and abuse of subsidies at all levels — including local and municipal government.
One key reform for 2012 should be a change to the tax increment financing laws (TIF). Currently, individual cities within counties are able to override rejections by county-wide TIF commissions in pressing ahead with subsidies for shopping centers and other commercial ventures. This allows mayors and city managers to grand-stand in supporting pet projects that have the effect of draining resources from schools and others who are dependent upon the revenue streams sacrificed to tax abatement.
For similar reasons, Show-Me Institute policy analysts advocate for defeat of the attempt to eliminate the sales tax pool in St. Louis County. The pooling of sales tax revenues helps to prevent beggar-thy-neighbor overbuilding of retail space — with the concomitant problems of crony capitalism and abuses of eminent domain.
Resolution #5: Give families real school choice and make sure that all schools (not just private schools and charter schools) are able to fire bad teachers (and bad administrators) and reward good ones.
Parents should be given greater freedom both to trigger reform in failing schools and to move their children to other schools. It is time to begin implementing serious teacher tenure reform. The problem with failing schools is not a simple lack of money (indeed, per pupil spending is often highest in the worst school districts). Important problems include a lack of choice and an absence of competition.
Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute, which promotes market solutions for Missouri Public Policy.