High Noon for Tax Relief

As the finish line for session approaches, the legislative process accelerates and members get more serious as they realize that time is short. But before we hit the gas, theres usually a slight pause.

By this time most of the big-ticket legislation has already crossed chambers, but isnt quite ready to be passed on the other side of the building. This week the Missouri House spent most of its time on “small” bills. These include bills dealing with non-profit food preparation, student assessments, water fluoridation, diabetes prevention, and intoxicating liquor on boats.

And we also passed two big bills. We sent a historic tax cut to Gov. Nixon, and we passed a constitutional amendment to increase early voting.

House Passes Historic Tax Cut for All Missourians

For the past decade, Missouri’s economic development approach was central planning. The focus has been on special subsidies for big businesses with the ability to hire lobbyists with access to the legislature and the ability to grease the skids at the Department of Economic Development. This approach works well for gubernatorial press conferences, but not job growth. The worst example of this was from this December when Gov. Jay Nixon asked – and the legislature delivered (but I voted no) – a $2.4 billion corporate tax subsidy offer to Boeing.

This week, the House resisted central planning style economic development. We pivoted from big businesses to every Missourian by sending Gov. Nixon legislation which would reduce taxes for everyone. Senate Bill 509 gradually reduces the states top tax rate by a little more than 8 percent, and the tax rate for small business owners by 25 percent. This tax relief is phased-in with small annual reductions contingent on actual growth in state revenues. In addition, the bill adjusts our tax brackets for inflation and increases the personal exemption by $1,000 for married couples with less than $20,000 in annual income.

I joined with 102 of my Republican colleagues to vote for the bill. Just one Democrat voted yes. Gov. Nixon has 15 days to sign the bill. Expect a veto – and a quick showdown. Because theres more than 15 days remaining, an override attempt will occur before the end of session. Its going to be close – really close. 

Early Voting Resolution Sent to Senate

On Wednesday, the House also passed legislation to increase opportunities for early voting. For statewide general elections, HJR 90 would open the polls three Saturdays before Election Day. The resolution passed by overwhelming bipartisan majorities.

Some Democrats criticized the bill because it didnt start voting early enough or have long enough hours. They would prefer voting to begin six weeks before Election Day – so they voted no. Their opposition is a prime example of people who allow perfect to be the enemy of good.

I would prefer Early Voting thats limited to just a week or two before traditional Election Day. Think of an election like a court case. Each campaign team gets months to make their case, and they expect to make their closing arguments in the last few weeks. We wouldnt want juries in a court case to decide before the parties could make their closing argument – so why should we short-circuit the democratic process?

Sen. Kehoes Small Business Unemployment Tax Protection Bill Advances

Senate Bill 673, sponsored by our own Sen. Mike Kehoe, made its way through the House Committee on Workforce Development this week. This bill protects small business owners by tying the length of unemployment benefits to the state unemployment rates. Unemployment benefits are intended to serve as a bridge to help people who lose work, through no fault of their own, to maintain an income for a reasonable time until they can find another job.

Under current law, the length of unemployment benefits is not tied to the economy. But if the purpose of unemployment is merely to provide a stopgap, so a person who has been laid-off can obtain new employment, then length of benefits should be tethered to the status of the economy.  

SB 673 provides for longer benefits in a rough economy and shorter benefits in a boom economy. In a bad economy, benefits will be available for nearly five months. In a great economy, they would be available for just over three months. This change will lower the costs of unemployment taxes for small businesses throughout the state because it ties a government benefit to its overall need.

I was honored that Sen. Kehoe asked me to carry this legislation in the House and look forward to getting the bill to Governor Nixon’s desk.

Why I Voted for Right-to-Work

This week the House considered right to worklegislation, which would ban contracts that require Missourians to join a union as a condition of employment.  I voted for RTW for three reasons: freedom of association, anti-trust balance, and economic growth.

Freedom of Association

As your state representative, my focus is protecting individual rights and empowering you to make your own choices so long as those choices dont intrude on the rights of others. I am naturally suspicious of the big” – whether it’s big government, big business, or big labor. And I generally oppose any regime that compels people to act when theyd rather not. 

Opponents often confuse or mischaracterize the concept of individualism. It is not a rejection of community. No man is an island, and community institutions are vital, not just to an individual’s sense of identity, but also to a free society: churches, labor unions, business groups – heck, even bowling leagues create a layer of society for accomplishing tasks that government cannot and should not try to accomplish.

A flourishing civil society distinguishes free from unfree societies. Consider: there were no business associations or labor unions in the Soviet Union or its satellites. In Poland, the labor movement helped  overthrow communism. But the key is freedom of association, not compelled association. RTW empowers the worker to freely associate for the obvious reason that it ensures no Missourian can be forced to join an organization as a condition of employment.

Anti-Trust

In the late 1800s, Congress passed anti-trust legislation to protect consumers and entrepreneurs by making unreasonable restraints on trade illegal. The theory behind anti-trust is that big organizations shouldnt be able to conspire to eliminate competition in the marketplace.

At the same time, the American labor movement was in its infancy, and workers lacked basic rights, including the right to freely associate.

In 1908, the United States Supreme Court held in Loewe v. Lawlor that federal anti-trust laws applied to the actions of labor unions. In a legal environment with no workplace safety standards, no minimum wage, and no child labor laws, anti-trust legislation made labors early difficulties even worse. In 1914, Congress acted accordingly and specifically exempted labor union activities from anti-trust laws.

By World War II, the pendulum had swung in the opposite direction. Despite the greatest battle for freedom in world history, which required huge increases in manufacturing, according to labor historian Jeremy Brecher, During the 44 months between Pearl Harbor and V-J Day, there were 14,471 strikes involving 6,774,000 strikers: more than during any period of comparable length in United States history.Strikes increased dramatically with war demobilization. They doubled in the first month after V-J Day, and then doubled again the next month.

In 1947, Congress passed the Taft-Hartley Act over the veto of President Truman to outlaw certain labor practices, empower the executive branch to stop strikes through injunctions, and allow states to pass RTW laws, outlawing closed-shop agreements. Despite his veto, Truman invoked Taft-Hartley 12 times to stop strikes.

Fortunately, the USA of 2014 is much better than that of 1914. Many of the contractual rights unions fought to win from employers are now codified in federal and state law, including but certainly not limited to minimum wages, safe workplace requirements, workerscompensation, child labor prohibitions, anti-discrimination protections, and prevailing wage. Moreover, while it was nearly impossible, if not illegal, to organize in 1914, the right to organize today is clear. Federal law prohibits employer interference with unionization drives.

Since Taft-Hartley passed, 24 states have passed RTW. The first wave of laws happened nearly immediately after passage. In recent years, RTW laws have passed in Michigan, Oklahoma, Indiana, and Idaho. By passing RTW, these states have essentially applied anti-trust principles to protect individual workers in the same way that consumers and entrepreneurs are protected.

Economic Growth

Mark Twain famously said there are lies, damn lies, and statistics.I feel the same way about most of the economic researchon RTW. Union-sponsored studies proveits Hades. Business-sponsored studies proveits Paradise. In these situations, I try to find research that is not tainted by the source of the funding.

Each side has its own irrefutable fact that it loves to cite as proof. Businesses cite the fact that RTW states have grown at significantly higher rates than non-RTW states. Unions counter that non-RTW states have lower average wages than RTW states. Both sides argue that their chosen result is caused by RTW status. However convenient, correlation shouldn’t be confused for causation.

Does RTW lead to higher rates of economic growth?  Very likely yes. Though some studies have come to the opposite conclusion, according to a senior economist at the Boston Fed, a veto-proof majority of serious studies find that the existence of a RTW law exerts a positive, statistically significant impact on economic activity.” 

The most interesting study on the topic was done in 1997 by Thomas Holmes of the Minneapolis Fed. Because of difficulty isolating the RTW variable to compare states with different policies, transportation systems, geographies, climates, histories, and cultures, Holmes examined RTW by comparing manufacturing in every county in the United States next to a border of a state with an opposing RTW policy. From 1947 to 1992, Holmes found that, in counties within 25 miles of a RTW border, manufacturing jobs increased one-third faster in RTW states than in non-RTW states.

Does RTW lead to lower wages? Very likely no. Even though states with RTW laws have indisputably lower wages than non-RTW states, it does not automatically follow that those lower wages are caused by the RTW law. One review of prior studies found that RTW laws have no impact on union wages, nonunion wages, or average wages in either the public or the private sector.William J. Moore, The Determinants and Effects of RTW Laws: A Review of Recent Literature,Journal of Labor Economics, Summer 1998.

Instead of RTW, there may be other factors causing the wage differential. For example, much depends on the starting point. Most RTW states had agricultural economies and were generally poorer than non-RTW states before adopting RTW. These RTW states started the relevant test period with significantly lower wages than the non-RTW states. As explained by Robert Reed, an economist at the University of Oklahoma, the economic past still casts a long shadow on the economic present.”  Reed conducted a study which attempted to account for these historical differences and found that, controlling for a states economic conditions at the time of adoption, average wages in RTW states were 8 percent higher as compared to wages in non-RTW states.

RTWs Likely Impact

In reality, both sides likely overstate their case. RTW is not the most important economic development bill being considered in our state capitol. Tax cuts, education reform, and Medicaid are all more important. But the economic research cited above suggests it will certainly help.

Nor is RTW a death knell for organized labor. Unions will still exist and will continue to work on behalf of its members. The jobs of union leaders will of course become more difficult because they will have to persuade members to join and stay. Without compulsory membership, union leaders will have to adjust to the reality faced by leaders of every other organization in a free society: they will have to convince their members that membership is an actual benefit worthy of their continued investment. 

Good unions will survive. Great ones will thrive. In Missouri, we already have RTW for public sector employees. Yet, these public sector unions still attract robust union rolls full of dues-paying members. These unions dont require compulsion to keep their members. Instead, they rely on promotion and persuasion based on effective leadership and representation.

And the end the individual will have the freedom to choose which organizations they join – a fundamental American value worthy of government protection.

Rep. Rory Ellinger: Man in the Arena

In honor of Rep. Rory Ellinger, the General Assembly and Gov. Nixon hurried HB 1320through the legislative process over the past two weeks. This common sense proposal excuses breastfeeding mothers from jury service. The speed with which it was passed was due to the declining health of Rep. Ellinger, who was recently diagnosed with cancer.

Rory and I are of different parties and opposite political philosophies. And we’ve probably spent more time debating each other on the House floor than any other members of the House. But ours has always been, I hope, a relationship of mutual respect and admiration.

Rory devotion to community improvement spans decades, beginning with his work in civil rights in the 1960s. In a building where comity and painstaking attention to detail are all too often lacking, Rory was a shining example of what a legislator should be.

As the most liberal Democrat in a Republican-controlled General Assembly, Rory realized he wasn’t going to win the big battles. But he also knew he could still make a difference. I served on five different committees with Rory. He was always prepared, always inquisitive, always seeking to improve legislation (even if he disagreed with the underlying premise), and always respectful of others – whether they were a legislator or witness with whom he agreed or disagreed.

When he served on the committee investigating Mamtek, some Democrats declined to ask tough questions, but not Rory. It was never about politics for him. It was about doing what was best for his constituents and the state of Missouri.

When we served on the Joint Committee on the Criminal Code, Rory showed up for every hearing on a nearly 1,000 page bill fully prepared and ready to dig into the details. As a tireless advocate, he pushed the committee to make more substantive changes in the law. When he was rebuffed, he persisted, he never let it dampen his spirits or diminish his support of the legislation. Instead, he continued to work to improve what was left in the bill.

Rory also knew he could improve our state by seeking out those nooks-and-crannies of the law where a small change might make a huge difference to someone. Then he worked to make it happen. HB 1320 is a perfect example of such a change. Rory identified a problem: breastfeeding mothers should not be required to serve on juries for days or weeks at a time away from their young children. Then he went about trying to fix it.

Another example, though I can’t recall the precise details: Rory had a bill to make a slight change to the composition of certain local government boards. It was non-controversial. As smart legislators do, Rory started looking for places to “hang” his bill as an amendment. Knowing a Republican would have a better chance getting his amendment on to a bill that made it to the governor’s desk, Rory sought  Republican help – and he targeted me. Then, with great patience and persistence, Rory went to work – asking at every reasonable opportunity if I’d put his amendment on several bills I was handling as a sponsor or as a committee chairman. It took probably half-a-dozen tries, but Rory finally won. I relented and took on his bill.

His work was not always in committee or side conversations. Rory was also a frequent debater on the House floor. Typically, a keen observer can accurately predict the result of any vote in the House before it’s ever taken. On big issues (pro-life, tax cuts, budget battles), most legislators know exactly where they stand – and its easy to predict how they’ll vote.

On smaller issues, though, it’s open season. With 100 things going on at any one time, it’s difficult on small bills to marshal the attention of the entire body. While debate occurs, there are other legislators preparing  their own legislation, meeting with constituents, negotiating with other legislators, or any one of dozens of other duties that go into being a state representative.

The most interesting debates tend to unfold on these small bills where things are less predictable. Rory was ready to debate any issue. And though he never rose to speak for the purpose of scoring political points or to see his name in print, he often managed both because his remarks were sincere.

That’s not to say Rory didn’t garner his share of eye rolls or “what is he doing?” moments on the House floor. Rory never quite distinguished between the proper procedure and honorifics of the courtroom versus those of the legislature. He oft referred to the Speaker as “your Honor.” When he rose to make a point-of-order, he sometimes couched it as “an objection.” And he often confused the proper protocol to even start a debate.

But once he reached the substance of an issue, the procedural confusion vanished. I was amazed in our second year in the House together when Rory nearly killed one of these small bills all by himself. As was typical of Rory, his defense that day was on behalf of a group with little political power and not many elected officials willing to fight for them – the surviving family members of prisoners who commit suicide while in jail.

The bill had passed out of committee without much controversy. No one expected much debate on the floor. Then Rory made his case. Fighting against distractions and the general inertia which gives every bill being debated a natural advantage, Rory made headway. He changed my mind on the bill. He must have changed dozens of minds on the bill. By the time he was finished speaking, people were talking, “Can you believe this? This bill’s in serious trouble.”

Before a bill leaves the House, there are at least two votes. There’s a vote on perfection, and a vote on third read. The third read requires 82 votes to move to the Senate. The perfection vote simply requires a majority of the people present for the day. But the majority party almost never wants a bill to pass on perfection with less than the 82 votes required to pass on third read. The logic is that you want to KNOW the votes are there for the next step, not just assume they’ll be there.

A roll call vote was requested, and as the big board opened for voting, just as many reds lit up as green. When the unexpected happens in a vote in the House, it’s fascinating to watch the reactions. Here we had what everyone thought was a non-controversial bill – and Rep. Rory Ellinger pushed it to the precipice of death with nothing more than logic and sincerity.

Republican bills, however, don’t die easily on the House floor. Rory had made a valiant effort, but the necessary votes were whipped up to move the bill along. By a vote of 74-70, well shy of 82, the bill advanced. Normally, the third read vote happens the legislative day after the perfection vote. But clearly, there was a problem with this bill that would require some whipping. We finally went back to it a week later, and it passed with 86 votes.

Rory may have lost those votes, but he won in the end. The bill never made it to the Senate floor for debate and never became law. Of course, this is the type of thing that’s rarely reported. It was a small bill, and there were countless other things happening in the Capitol on that day. But Rory proved, for at least that bill, old-fashioned debate still mattered.

I will always remember and appreciate Rory and his friendly fighting spirit.

Injecting Market Forces Into Missouri’s Health Care Welfare System

Imagine going to a grocery store where there are no prices on the food and the government has told you that it will pay for whatever you or the clerk think you need. How much restraint would you exercise? How much restraint would you expect the clerk to exercise? Most of us like to think that we’d do the right thing, and I believe most people would. But, as Madison pointed out, “If men were angels, no government would be necessary.” 

Incredibly, in many parts of our state (and nation), Medicaid operates on a fee-for-service basis similar in concept to the absurd thought experiment outlined above. A Medicaid recipient who has no money presents at a health care provider for services. The recipient pays no co-pay – or only a nominal amount. And at no point does price ever matter.  And then they send the bill to you, the taxpayer. It’s all gas, no brakes.

By contrast, in the I-70 corridor, recipients are covered by managed care plans which operate similarly to private health insurance plans. They inject a level of oversight into Medicaid transactions to protect taxpayers from wasteful and, in some cases, fraudulent health care claims. The I-70 corridor managed care plans have proven to be more affordable to Missouri taxpayers without sacrificing quality for recipients.

But Medicaid-managed care needs reform as well. Under the current system, managed care companies do not compete directly on price. Instead, the Department of Social Services names its price and asks the managed care companies to match it. Though DSS engages a top-flight actuarial firm to set its price, the more efficient approach would be to allow free market forces to establish the price, versus the decision of a single firm. If the price is too low, managed care companies will let DSS know and no bids will be received. If, however, the price is too high, no managed care company is going to tell DSS they’ve priced the bid wrong. Instead, they’ll be happy to pocket higher profits off of Missouri taxpayers.

Nor are recipients in the current managed care corridor given financial incentives to use taxpayer resources wisely. Because recipients have only limited financial resources, there are no penalties for misuse of the ER. Likewise, there are no bonuses for healthy or appropriate behaviors.

For the last two years, I’ve worked with many elected officials, health care providers, and ordinary citizens to develop a better plan for Missouri’s Medicaid system. House Bill 1901, sponsored by Rep. Noel Torpey, is one result of that work, and the House Committee on Government Oversight and Accountability has spent three weeks hearing the bill. To inject market forces into Missouri’s Medicaid system, House Bill 1901 would:

  • Eliminate fee-for-service and expand managed care statewide;
  • Require actual price competition in the bidding process for managed care companies;
  • Foster competition by allowing networks of health care providers to form Accountable Care Organizations to compete with more traditional managed care companies;
  • Turn recipients into participants by empowering them to choose their own health plan based on cost and services;
  • Encourage participants to choose low-cost plans by offering financial incentives for them to select the most affordable option. Just as you and I have financial incentives to choose more affordable health insurance plans, so should Medicaid participants.
  • Provide participants with a state-funded cost-sharing card that the participant must use each time they receive a health care service. To encourage healthy behaviors, if the participants use care efficiently and go to preventive care appointments, they should be rewarded. If they misuse the ER, they should be penalized.

House Bill 1901 is similar to previous proposals by stalwart conservatives like former Gov. Matt Blunt, Texas Gov. Rick Perry, and former Indiana Gov. Mitch Daniels – each of whom proposed increasing Medicaid eligibility far beyond what is contemplated in HB 1901. If passed, this market-based Medicaid plan could serve as a conservative model for the rest of the country on how to inject market forces into the system to save taxpayer money and improve the quality of care.

If we could turn the clock back to 2007, I believe HB 1901 would be considered a leading conservative alternative to ObamaCare. It extends health care coverage to the working poor who otherwise can’t  afford private health insurance. This can save money over the long-term.  I believe ideas still matter, regardless of political labels people try to affix to them, and I’m hopeful that HB 1901’s conservative plan for Missouri Medicaid will be passed into law.

How to Change State Policy – The Committee Investigation Way

As chairman of the House Committee on Government Oversight and Accountability, I’ve lead several investigations into wasteful or misguided state government programs. 

The committee was formed in 2011 to investigate the Mamtek debacle in Moberly. After a series of hearings and proposed legislation, which a blogger from Bloomberg News called the “one bright spot in this whole sad tale,” many of the committee’s recommendations were adopted by the Department of Economic Development through administrative rules.

Ever since, the committee has worked to (1) ensure the State Board of Education detects and deters cheating on statewide assessments, (2) protect the privacy of your personal information you share with the Department of Revenue, including conceal-carry permit information, and (3) protect welfare reform by persuading the Department of Social Services to cancel a contract which paid a per person bounty for every Missourian it signed up for permanent disability benefits.

In each instance, the committee made a positive impact on state law without even passing a bill. Instead, we identified a problem and worked with the relevant state agency to change state policies going forward.

Last summer, after a series of startling pieces of investigative journalism by Jeremy Kohler of the St. Louis Post-Dispatch, it appeared the committee would need to hold a series of hearings on Brownfield Tax Credits – incentives designed to help developers renovate properties with major environmental problems. Kohler’s reporting exposed a series of Brownfield projects for which it appeared that the property developer had fixed bidding processes to increase costs to Missouri taxpayers.

News coverage suggested there was a major transparency problem in the program. All of the issues raised could have been solved if Brownfield tax credit developers were required to bid and complete Brownfield projects with procedures as open to public scrutiny and competitive bidding as ordinary government spending.

In late June, I sent document requests to the state agencies charged with implementing the Brownfield tax credit program. After some preliminary discussions, I informed the decision-makers at the agencies that I believed the biggest problem was a lack of transparency and that legislation would be necessary to subject Brownfield tax credits to the same system of open bidding as occurs in typical government spending. Also, after reviewing the statutes creating the Brownfield tax credits, I was convinced that a new statute was unnecessary because the Department of Economic Development already had the authority to require public bidding by administrative rule.

Thanks to DED, I received word that it would begin the process of promulgating administrative rules to ensure more open and accountable Brownfield bids. But complicated administrative rules don’t just happen overnight. They took six months here.But on March 17, those new rules appeared in the Missouri Register.  These new rules require Brownfield developers to submit preliminary cost estimates prepared by independent, licensed architects or engineers, and to publiclybid all purchases of goods and services over $25,000. As a result, taxpayers will receive better protection against any potential misuse of Brownfield tax credit proceeds.

In grade school, we learn how a bill becomes a law. We watch the classic School House Rock video “I’m Just a Bill” and think of lawmaking as a somewhat orderly process. In practice, the orderly process is the exception. The simple bill can be killed about 40 different ways. The most common death is quiet and natural, caused by a legislative calendar that doesn’t leave enough time to pass every bill worth passing.

In fact, most new laws or state government policies come about through one of two alternative methods. It can become “law” either: (1) through a new or changed administrative rule or practice, as was the case with many of the examples cited in this article, or (2) via amendment to the old-fashioned bill, a process I’ll describe in a later column, which is a little more complicated and free-wheeling than you might think based on your grade school civics lessons.

As your state representative, I’ve used the opportunity as chair of the House’s investigatory committee to improve state policies by working with state departments to fix them without the need for legislation. It’s not ever easy. And it doesn’t work for everything. But, when we’ve had the opportunity to improve state policy for the better through cooperation rather than legislation, our committee has taken it.

Health Care Price Transparency and Reducing Misuse of the ER

Free markets improve quality and reduce prices. But, to work optimally, they require certain pre-conditions. To work properly, markets can’t conceal prices. They can’t insulate consumers from the costs of their decisions. And they can’t have buyers who are ignorant of the appropriate places to receive services because they are disconnected from the consequences of their consumption decisions. Unfortunately, such is the condition of our health care markets.  We have opaque pricing, third-party purchasers, and, in Medicaid, a lack of health care literacy by recipients who needlessly crowd our emergency rooms.

Last Monday, the House Committee on Government Oversight and Accountability started hearings on House Bill 1901, the Medicaid bill sponsored by Rep. Torpey which I have co-sponsored. Our first hearing focused on these (and other) problems.

Ensuring Health Care Pricing Transparency

We’ve all been there. You or someone you love has a serious medical treatment. You’re thankful to have received good medical care. But you didn’t ask many questions about costs. In fact, had you asked, you likely wouldn’t have received a clear answer. Then you get the bill – and you’re shocked at some of the prices.

As explained by Steven Brill in Bitter Pill: Why Medical Bills are Killing Us, “When you look at the bills that … patients receive, you see nothing rational – no rhyme or reason – about the costs they faced in a marketplace they enter through no choice of their own. The only constant is the sticker shock for the patients who are asked to pay.” Brill’s article presents a compelling case for serious payment reform.  He adds, “There is little patient pushback against higher costs … because the customer getting the treatment is either not going to pay for it or not going to know the price until after the fact.”

HB 1901 attacks sticker shock by requiring health care providers to give accurate pricing information upfront. This simple provision merely requires providers to inform the consumer of the estimated costs of the health care services they are seeking. It follows a provision we added to state law last year which requires health insurance companies to provide policy-holders with accurate information on out-of-pocket costs associated with receiving medical treatments.

Cutting Down on Misuse of the Emergency Room

Another serious flaw in health care markets is that third-parties pay most of the bills. This is necessary for the largest health care bills  - the very purpose of insurance is to guard against catastrophic economic loss) –  but we still ought to mitigate the third-party payer effect.

This problem is most pronounced for Medicaid-paid emergency room visits. Though HB 1901 imposes reasonable cost-sharing on recipients, you can’t require someone to pay money that they do not have. Someone who incurs no cost to receive care in the ER is more likely to seek care there even when it’s not appropriate.

HB 1901 is designed to reduce misuse of the ER by expanding managed care statewide, providing recipients with pre-paid medical debit cards to give them “skin in the game,” and requiring reasonable cost-sharing by healthy Medicaid recipients. Federal rules, however, prohibit requiring Medicaid recipients with serious ailments from being required to be covered through managed care plans. As a result, we must do more.

Randy Jotte, an emergency room physician at BJC, testified that the top one percent of government-funded ER users in the St. Louis region averaged more than 15 ER visits per year.  These 1,088 ER super-utilizers cost Missouri taxpayers $112,000 each per year, at a total cost of $122 million. To curtail waste and abuse of Medicaid, we  must reduce these numbers.

HB 1901 attacks ER misuse. It requires DSS to incentivize the construction of urgent care clinics that operate outside of normal business hours adjacent to hospital emergency rooms. It also requires DSS to (1) identify ER “super-utilizers” – defined as those who present more than 10 times in a single year at an ER, (2) educate them about appropriate places to seek care, and (3) coordinate their care to prevent the flare-ups which cause them to go to the ER.  This second provision is modeled after work already started at Truman Medical Center in Kansas City and being implemented at BJC. In Kansas City, the program has saved millions of dollars for taxpayers.  HB 1901 would adopt these successful models statewide.

No More M.A.D. with Kansas

Missouri and Kansas have a long history of competition – and worse. In the 1860s, we fought in the Civil War. We used to compete in sports every year, until KU chickened out when Mizzou moved to the SEC. And, for the past decade, we’ve battled to lure jobs across the border by dangling so-called jobs tax credits.

In the past four years, Missouri and Kansas have collectively doled out $217 million in corporate subsidies to seduce Kansas City area businesses to shuffle jobs across state lines, but fail to add any new jobs to the region. In these years, Kansas has spent $141 million to entice the re-location of 3,433 jobs from Missouri, and Missouri has spent $76 million to lure 2,929 jobs from Kansas – for a net difference of 504 jobs at $430,000 per job. However large, these numbers still fail to take any “retention” tax credits into account to theoretically keep a company from moving jobs elsewhere.

Unfortunately, rather than create a long-term low tax climate for all entrepreneurs and families, these corporate subsidies only provide special benefits to the privileged few big enough to be aware of the benefits and savvy enough to work the system. Both states shuffle the cards around, hold celebratory gubernatorial press conferences, and pretend as if real economic growth is occurring.

In the era of a 24-hour news cycle, these perpetual press releases touting corporate subsidies create the appearance of success. These results prove that our economic development border war is not leading either state to prosperity. Instead of improving our economy, the border war paves a path of mutually assured destruction.

Both states give hard-earned taxpayer dollars to businesses to move just a few miles. Their employees probably never move. They don’t start shopping in new places. They don’t generate new economic activity for the region. The only change is the address from which they operate.

This is insane economic policy. And it illustrates the fundamental problem with our so-called jobs tax credits: they don’t actually create new jobs, especially when the subsidies are spent in competition with Kansas.

House Bill 1646, sponsored by Speaker Tim Jones (R-Eureka), directs the Governor and the Department of Economic Development to negotiate a corporate subsidy ceasefire with Kansas for the nine combined border counties in the Kansas City metro area. It tells Kansas that we’re willing to work for the greater benefit of the entire Kansas City region, but we’re not going to unilaterally disarm. If Kansas passes a similar law, we’ll call a truce.

This limited bill enjoys broad support in the legislature. As one who is skeptical of the entire corporate subsidy shell game, I’m hopeful that it’s the first of many steps to re-examine our economic development policy. Going forward, we should pursue an interstate compact with several other states to shift the focus away from specialized giveaways and back to lower taxes for everyone.

Hammerschmidt on Steroids

The House also re-passed legislation this week streamlining the process of building out telecommunications infrastructure in our state. The really interesting thing about this legislation, however, isn’t the details. It’s the process.

If you step into the capitol late in session, you’ll often hear cries of Hammerschmidt! This isn’t some bitter German lager, but instead the name of the leading case on the Missouri constitution’s prohibition against log-rolling different subjects into the same bill. Last year, a circuit court decision struck down legislation we passed on multiple different subjects under Hammerschmidt relating to, among other things, telecommunications and railroad rights-of-way. So now the legislature is back to re-pass all of the same laws in different bills.

That recent decision – the Steroidal Son of Hammerschmidt – has caused great concern in the capitol. Many are worried that legislators can no longer attach their random bits of flotsam and jetsam late in session to the dwindling legislative boats still afloat. Instead, many bits of legislation will simply sink. While others may worry, I think it’s great for conservative governance.

Ending the Medicaid Poverty Trap With Welfare Reform

As Pope Francis has explained, “Work is fundamental to the dignity of a person. Work…‘anoints’ us with dignity, fills us with dignity, makes us similar to God” and “gives one the ability to maintain oneself, one’s family, to contribute to the growth of one’s own nation.”

In 1996, President Clinton and a Republican Congress enacted welfare reform legislation requiring welfare recipients to work. The concept is simple. Americans – and Missourians – are not stingy when it comes to helping people who are willing to help themselves. We’re willing to help those who have fallen on hard times temporarily so that they may get back on their feet. But we aren’t willing to continue to distribute hard-earned taxpayer dollars to people who show no personal responsibility and would rather live off a government check. Welfare programs should be a safety net for the industrious, not a hammock for the indolent.

For the able-bodied, a life without work is a life lacking purpose. Welfare reform rejected the idea that certain people were destined for a lifetime of poverty and unable to help themselves. It insisted that they use their talents to live a productive life. And it worked. Employment and earnings for single mothers increased significantly. Welfare caseloads decreased. The Brookings Institute, a liberal think tank, concluded welfare reform “has been a triumph for the federal government and the states – and even more for single mothers.”

House Bill 1901, which I have co-sponsored, attempts to bring the principles of welfare reform to our state Medicaid program by requiring able-bodied Medicaid recipients to participate in the workforce to remain eligible for Medicaid. Under the current system, it is morally reprehensible but economically rational for a person at the lowest end of the income scale to refuse work in order to remain eligible for Medicaid. Consider a single mother who makes $3,000 a year. If she accepts a job that pays her an additional $5,000 per year, she loses health care coverage worth approximately $5,200. It is economically rational for her to refuse the new job because. After all, she’s essentially working for free. But by turning down this first job, she’s much less likely to get the next job which may lift her out of poverty. The current system is a welfare trap.

HB 1901 moves Missouri out of the welfare trap. It compels capable recipients to work, and it rewards such work by increasing eligibility for the working poor. By passing this bill, Missouri could lead the nation in bringing welfare reform to Medicaid.

On Monday, the House Committee on Government Oversight and Accountability heard three other bills designed to ensure welfare benefits are reserved for those who need it most and to improve health outcomes of recipients.

House Bill 1861, sponsored by Rep. Wanda Brown, is a direct response to an expose from Auditor Tom Schweich, who uncovered 366 cases of welfare recipients spending Missouri welfare benefits for several months in other states, including one such recipient, for five months, in the Virgin Islands. HB 1861 would bar benefits for any recipient who doesn’t use them in Missouri for 90 days – eliminating wasteful and fraudulent entitlement spending by recipients who are no longer Missourians.

House Bill 1864, also sponsored by Rep. Brown, requires the Department of Social Services to use data analytics software to cross-check the eligibility of welfare recipients to ensure that they are indeed eligible. The department estimates that it will save at least $4 million a year in Medicaid. As chairman of the committee, I plan to combine these bills and require an eligibility cross-check for recipients who have left the state, likely increasing savings.

House Bill 1879, which I sponsored, encourages healthier lifestyles for food stamp recipients by starting a pilot project to provide bonuses for purchases of fresh fruits and vegetables at Missouri  farmers’ markets. The goal of this legislation is to help fight the public health crisis of obesity. We know that eating fresh fruits and vegetables leads to better health, but they aren’t always available or affordable for food stamp recipients. This bill gives an added incentive and ability for recipients to eat healthier foods. Plus, the bill benefits local farmers and small business owners by growing the market of people likely to buy their homegrown goods.

The committee will combine these bills and a few others to create a welfare reform omnibus bill, carried by Rep. Brown, to save taxpayer money and reduce waste, fraud, and abuse.

Growing Our Economy by Encouraging Small Business Growth

Over the past twenty years, Missouri has spent a lot of time and way too much taxpayer money on centrally-planned economic development programs that hand taxpayer subsidies out to the privileged few and ignore the small businesses and entrepreneurs that are the backbone of our economy.

This approach has failed. Missouri lags behind our neighbors in economic growth. Most striking is the contrast between Missouri and Tennessee, a state with similar demographics and geography but no state income tax. Over the past 17 years, private sector economic activity in Tennessee has grown 120 percent faster than in Missouri. Likewise, if you look nation-wide, states with no income taxes have grown 150 percent faster than states with high taxes.

In December, I voted against legislation to give a $2.4 billion subsidy to a single company. I don’t believe it’s appropriate for the state legislature to pick winners and losers by directing massive subsidies to big corporations who know how to work the halls of the Capitol and grease the skids at the Department of Economic Development.

Gov. Nixon understands that tax rates matter. Promptly after the $2.4 billion subsidy bill passed, Gov. Nixon’s DED sent a letter to Boeing informing it of the package he would offer. In a moment of intellectual clarity and in the very first substantive paragraph of that letter, DED argued Boeing should consider Missouri because we are a low tax state.

This week, the Missouri House took a step in a better direction. HB 1253 provides tax relief to small business owners by reducing the tax rate on “pass-through” income from six to three percent. If passed into law, this would give Missouri one of the ten lowest marginal tax rates in the entire country.

Gov. Nixon has taken to calling HB 1253 a tax cut “for lawyers and lobbyists.” But only a politician who’s been in office for three decades could say such a thing with a straight face. HB 1253 reduces the tax burden for farmers, pharmacists, florists, doctors, tech start-ups, accountants, dentists, restaurant owners, mechanics, landscapers, engineers, small manufacturers, and many, many more. This tax cut encourages job growth for the small businesses that fuel economic growth – the shopkeepers and entrepreneurs that have made our country great.

House Democrats offered an alternative of their own this week. Their solution would hike the top marginal tax rate in Missouri to eight percent. If you consider earnings taxes in St. Louis and Kansas City, the Democrat’s “tax solution” would give Missouri the fifth highest marginal tax rate in the entire country – higher than Massachusetts and New York. This solution would chase even more jobs out of our state – particularly in Kansas City.

After listening to debate this week, I think I’ve figured out why. In the Democrats’ world, it’s all about the theory of “fairness.” They want to raise the top marginal income tax rate because it’s only fair that those who work hard to make more money have to pay not just more taxes, but also at a higher tax rate.

Their arguments reminded me of a comment President Obama made in a presidential debate when he was a candidate in 2008.  The debate moderator reminded then-candidate Obama that raising the capital gains tax rate had resulted in lower government revenue while, paradoxically, lowering the rate had resulted in higher government revenue. To Obama, this didn’t matter. His proposal to raise the capital gains rate was for the “purpose of fairness.” That’s right, never mind the real-world results, the motivation is to make it seem like things are fairer – even if it results in less revenue for government.

Fairness is a virtue. But President Obama and House Democrats’ theory on taxes is anything but fair.  It’s not fair, and it doesn’t make any sense, to target successful small business owners and doctors with the 5th highest marginal income tax rate in the country. It’s not fair for anyone to hike taxes on the few without even increasing government revenues. That’s a tax policy based on punishment, not fairness.

The better approach is to encourage entrepreneurship and job growth through lower taxes for those Missourians who work hard and make the courageous decision to start their own small business. That’s exactly what HB 1253 does, and why I was pleased to support it.