Latest Cato Research on State and Local Fiscal Policy Individual Liberty, Free Markets, and Peace (Andrew Mast) (Cato Webmaster) The Vanity of Public Transit Randal O&#039;Toole <p>Earlier this month, the American Public Transportation Association breathlessly announced that American transit systems carried more riders in 2013 than any year since 1956. The growth in ridership, said the association&rsquo;s president, was evidence that Americans want more federal investments in transit.</p> <p>A careful look at the association&rsquo;s data, however, reveals a different story: Virtually all the increase in transit ridership from 2012 to 2013 took place in New York City. New York bus and subway ridership grew by 120 million trips in 2013; nationally, ridership grew by just 115 million trips. Outside of New York City, then, national transit ridership actually declined.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">Many rail projects marginalize poor communities and waste tax dollars.&rdquo;</span></p> </blockquote> <p>New York City transit ridership didn&rsquo;t grow because of federal investments. Instead, a spokesman for the Metropolitan Transit Authority told <em>The New York Times</em> it was a result of declining unemployment rates.</p> <p>On the other hand, many cities that spent federal dollars building expensive transit projects saw falling ridership. In Portland, Ore., often cited as the model for public transit, both light-rail and bus ridership declined. Baltimore; Buffalo, N.Y.; and San Juan, Puerto Rico, also saw fewer bus and rail riders, as did urban areas with older rail systems, such as Boston and Chicago.</p> <p>Furthermore, rail ridership fell in Albuquerque, N.M.; Atlanta; Houston; Minneapolis; Nashville, Tenn.; Phoenix; Sacramento, Calif.; San Francisco; and even Washington, D.C.</p> <p>Rail ridership grew in Austin, Texas; Charlotte, N.C.; Dallas, Philadelphia and Pittsburgh, but these cities lost more bus riders than they gained rail riders. Dallas, for example, lost four bus riders for every new rail rider; Austin lost seven; and Charlotte lost 17.</p> <p>The main reason for ridership decline is that rail is expensive to build, expensive to operate and expensive to maintain. To keep trains running, transit agencies almost inevitably make cuts in bus service and raise bus fares. In 2010, the Federal Transit Administration found that the nation&rsquo;s rail-transit systems suffered from a $60 billion maintenance backlog, and it has grown since then because agencies can&rsquo;t even afford to keep the systems in their current state of poor repair.</p> <p>Regrettably, the new trains are often designed to attract middle-class travelers out of their cars, while buses are left to serve low-income neighborhoods, where people are more dependent on transit. Cuts in bus service are both unfair to transit-dependent riders and harmful to transit systems.</p> <p>The NAACP even successfully sued the Los Angeles Metropolitan Transportation Authority for discrimination when the agency cut bus service to black and Hispanic neighborhoods in order to cover cost overruns on its rail projects.</p> <p>Only a handful of places outside of New York City saw growth in both rail and bus ridership, including Los Angeles; San Jose, Calif.; and Seattle. Previous years saw huge drops in Los Angeles and San Jose transit ridership owing to the high cost of rail. Considering that Seattle is building the most expensive light-rail line in the world &mdash; a three-mile underground route expected to cost close to $2 billion—future service cuts and overall ridership drops seem likely.</p> <p>In short, far from improving transit, federal funds for building glitzy and expensive rail lines often, if not always, harm both transit systems and transit riders. Commuter trains in Dallas-Fort Worth; Nashville; and Portland, Ore., are so expensive and carry so few riders that it would have cost less (and been better for the environment) to give every daily round-trip rider a new Toyota Prius every other year for the next 30 years than to build and run the rail lines.</p> <p>The root of all these transit problems is a little-known federal fund called New Starts that gives transit agencies incentives to pick the high-cost alternative in any transit corridor. Thus, Maryland wants to build the Metro Purple Line in suburban Washington and the Red Line in Baltimore, even though environmental-impact statements for both lines say light rail will massively increase congestion and use more energy than all the cars they take off the road.</p> <p>Congress should repeal New Starts and distribute the funds to transit agencies based on the number of riders they carry or fares they collect. Cities could still build rail transit lines that are truly worthwhile for their communities, but this formula would give agencies incentives to do things that boost ridership &mdash; not costs — and help transit riders in cities all over the country.</p> Fri, 28 Mar 2014 09:20 EDT Latest Cato Research on State and Local Fiscal Policy Randal O&#039;Toole Hobby Lobby Isn't Today's Most Important Case Michael F. Cannon <p>Tuesday, all eyes will be on a <a href="" target="_blank">high-profile Obamacare case</a> before the Supreme Court. But just a few blocks away, a lower court will hear a lesser-known Obamacare case that could have a far greater impact on the future of the law.</p> <p>The Supreme Court hears oral arguments Tuesday in <em><a href="" target="_blank">Sebelius v. Hobby Lobby</a></em>, a case challenging the Obama administration&#8217;s attempt to force private companies to purchase contraceptives for their employees contrary to the owners’ religious beliefs. A ruling for Hobby Lobby would restore the religious freedom of potentially millions of employers and workers.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">Obamacare supporters call Halbig “the greatest existential litigation threat to the Affordable Care Act.”&rdquo;</span></p> </blockquote> <p>Just down the street, the Court of Appeals for the D.C. Circuit will hear oral arguments in <em><a href="" target="_blank">Halbig v. Sebelius</a></em>. Obamacare supporters call <em>Halbig </em>”<a href="" target="_blank">the greatest existential litigation threat to the Affordable Care Act</a>.”</p> <p>That description, while colorful, is not quite accurate. <em><a href="" target="_blank">Halbig</a></em> does not ask the courts to strike down any part of the law. It merely asks the court to force the administration to implement the law as Congress intended, a prospect that absolutely terrifies Obamacare supporters.</p> <p>The issues in <em>Halbig</em> are simple.</p> <p>Obamacare authorizes the IRS to provide health-insurance subsidies (nominally, tax credits) to consumers who purchase health insurance “<a href="" target="_blank">through an Exchange established by the State</a>.” That&#8217;s not a drafting error. The subsidy-eligibility rules employ that language a total of nine times, without deviation. The rest of the statue is fully compatible with this language.</p> <p>The statute is therefore clear and unambiguous: the IRS may issue subsidies in the<a href="" target="_blank">14 states</a> that established an exchange, but not in the 34 states that left the job of establishing and operating their state&#8217;s exchange to the federal government. Congress’ purpose is likewise clear. It wanted states to operate the exchanges, so it conditioned subsidies on state cooperation. Medicaid and countless other federal programs do the same.</p> <p>The IRS&#8217;s philosopher-kings have decided to issue subsidies in those 34 states anyway.</p> <p>The Obama administration has acquired a reputation for unilaterally rewriting laws (to say nothing of abusing the IRS&#8217;s powers) for political purposes, but this one takes the cake. The IRS is literally spending <a href="" target="_blank">billions</a> of taxpayer dollars not only without congressional authorization &mdash; itself <a href="" target="_blank">a federal crime</a> – but contrary to the clearly expressed will of Congress. And it gets worse. Since that spending triggers penalties under Obamacare&#8217;s employer and individual mandates, the <a href="" target="_blank">IRS</a> also plans to tax millions of Americans without congressional authorization.</p> <p>Dozens of employers and individuals who would be subject to those illegal taxes have filed <a href="" target="_blank">four separate lawsuits</a> to stop the illegal spending that triggers them. <em>Halbig</em> is the first to reach the appellate level.</p> <p>When a statutory provision is clear and the rest of the statute is consistent with that provision, that&#8217;s supposed to be the end of the story. The Supreme Court <a href="" target="_blank">has long held</a>, “[If] Congress has spoken directly to the precise question at issue…that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.”</p> <p>Yet the Obama administration fears that if consumers in 34 states experience the full cost of Obamacare, Congress will have no choice but to reopen the law. It has therefore offered numerous arguments in defense of its unauthorized spending and taxes &mdash; not because any of these arguments have merit, but because none of them do.</p> <p>Nevertheless, a district court <a href="">ruled</a> against the <em>Halbig </em>plaintiffs based on a severely distorted view of Congress’ intent. The <a href="">court wrote</a>, “there is no evidence that either the House or the Senate considered making tax credits dependent upon whether a state participated in the Exchanges.”</p> <p>On the contrary, the evidence is clear. The words of the statute themselves show that both chambers not only considered but approved that idea. The senators who enacted Obamacare <a href="">routinely supported and enacted legislation</a> conditioning health-insurance tax credits and other assistance on states establishing exchanges or taking other actions. The seven members of Congress most responsible for Obamacare &mdash; former Senate Finance Committee chairman Max Baucus (D-Mont.), Senate Health, Education, Labor, and Pensions Committee chairman Tom Harkin (D-Ia.), then-House Ways &amp; Means Committee chairman Sander Levin (D-Mich.), then-House Education &amp; Workforce Committee chairman George Miller (D-Calif.), then-House Speaker Nancy Pelosi (D-Calif.), Senate Majority Leader Harry Reid (D-Nev.), and then-House Energy and Commerce Committee chairman Henry Waxman (D-Calif.) &mdash; even admit in an <em><a href="">amicus brief</a></em> that conditioning subsidies on states establishing exchanges was part of the congressional debate. Finally, when House Democrats first read the Senate-passed bill &mdash; what we now call Obamacare &mdash; in 2010, they <a href="">recognized</a> that it conditions subsidies on states establishing exchanges, and complained that this feature would allow recalcitrant states to block those subsidies. In this instance at least, Congress knew what it was enacting.</p> <p>The purpose of these conditional subsidies was to create an incentive for states to establish exchanges. The judiciary has an obligation to make them conditional again, so that process can work. Whether the result is that Congress will reopen Obamacare or 34 more states will establish exchanges remains to be seen.</p> Tue, 25 Mar 2014 12:23 EDT Latest Cato Research on State and Local Fiscal Policy Michael F. Cannon Progressive Trickle-Down in Maryland Steve H. Hanke, Stephen J.K. Walters <p>Progressives endlessly caricature free-market policies as “trickle-down” economics&mdash;giveaways to the undeserving rich with few benefits reaching the poor. In truth, trickle-down best characterizes the economic development policies pursued in deep-blue states like Maryland, where taxpayer dollars flow to the politically connected amid grandiose claims of “stimulative” effects.</p> <p>A small but telling example is in Towson, a thriving suburb of Baltimore, where the proprietors of a sports-themed chain restaurant called the Greene Turtle recently built a rooftop bar so patrons could imbibe at altitude. Just good old American enterprise at work, except for the fact that, according to the Baltimore Sun, $505,000 of the $890,000 cost came out of taxpayers’ hides as low-interest government loans, much of which will be forgiven if the enterprise meets modest “employees added” targets and stays open five years.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">When it comes to Keynesian-style stimulus at the state or local level, the juice is rarely worth the squeeze.&rdquo;</span></p> </blockquote> <p>While local officials said the handouts were necessary to stimulate the Towson economy, the district&#8217;s state senator, James Brochin, correctly called it “corporate welfare,” and Maryland Comptroller Peter Franchot (alone among the members of the state&#8217;s Board of Public Works) voted against the appropriation.</p> <p>But the checks were cut, and at the grand opening on Jan. 2. Maryland&#8217;s First Lady, Katie O&#8217;Malley, presented a governor&#8217;s citation to the bar&#8217;s proprietors, who happened to be childhood friends. It&#8217;s remarkable how often development dollars trickle first to cronies or political donors.</p> <p>When it comes to Keynesian-style stimulus at the state or local level, however, the juice is rarely worth the squeeze. The alleged magic of the multiplier&mdash;by which extra dollars of government spending supposedly ripple through the economy and raise incomes by several times that amount&mdash;depends on spending that is financed by deficits. But Maryland and most other state and local governments must balance their budgets, and the higher taxes required to finance these development programs crowd out private spending and offset some or all of the hoped-for stimulus.</p> <p>These schemes also damage growth by misallocating capital. In markets, only projects that promise a return in excess of the cost of borrowing get built. Government allocation of capital, by contrast, exalts the judgments of politicians and bureaucrats over those of consumers and investors, and substitutes political pull for economic merit in the competition for capital. In combination, this is a prescription for inefficiency, inequity and corruption.</p> <p>Maryland supplies examples of all three. In 2006, Martin O&#8217;Malley &mdash;then Baltimore&#8217;s mayor, now the state&#8217;s governor and a presidential aspirant&mdash;decided that the Baltimore Convention Center needed an adjoining hotel. Private investors disagreed, so City Hall “invested” $300 million to enter the hospitality industry. Since opening its doors in August 2008, the Hilton Baltimore&mdash;city-owned but managed by the global hotelier&mdash;has recorded more than $50 million in operating losses.</p> <p>Baltimore&#8217;s relentless and much-applauded campaign of subsidized development along its waterfront provides another example. Tax breaks of more than $200 million for a $1 billion project on a former industrial site called Harbor Point&mdash;justified with the usual claims that this will create thousands of jobs&mdash;have provoked demonstrations by citizens who now realize that these promises are empty. Since 2001, the city has bled 49,000 jobs.</p> <p>Last summer, attired in “Tax Dodgers” baseball uniforms, members of the United Workers and Unite Here, community activist groups, staged a public protest against Harbor Point, a mixed-use business and residence project. “Time and again,” the United Workers complained on its website, “the city has awarded our resources to wealthy developers at the taxpayers’ expense in the hope that money will trickle down. This model has failed.”</p> <p>Then there is the $1.5 billion “partnership” among the state, city and developers of Baltimore&#8217;s State Center district, which will build new “eco-friendly” government offices to replace acres of Soviet-style buildings from the 1950s, &#8217;60s and &#8217;70s. Though not yet: Baltimore Circuit Judge Althea M. Handy ruled last year that the deals negotiated in 2007-09 with several connected firms&mdash;which did not involve competitive bidding and guaranteed that tenants would pay above-market rents&mdash;violated state procurement laws. He voided the contracts, and an appeal is pending.</p> <p>Officials hail every such project as a “game-changer,” but each poaches business from older areas. For every subsidized “partner” of government, there is an unsubsidized loser. Thus, Baltimore&#8217;s trickle-down policies increasingly meet opposition not just from populist community organizers, but from out-of-favor investors. The “Coalition to Save Downtown Baltimore,” made up of landlords, small retailers and the Little Italy Restaurant Association, argues that two-million square feet of vacant space is available downtown and that “It makes no sense to squander over $1.5 billion taxpayer dollars on this ill-advised project.”</p> <p>In this policy regime, connections are everything, and politicians can demand tribute from all directions&mdash;though not without risk. In separate scandals involving allegations of influence-buying by developers (one of whom was initially involved in State Center), Sheila Dixon, Mr. O&#8217;Malley&#8217;s successor as mayor, resigned in disgrace and councilwoman Helen Holton was censured and fined.</p> <p>So how are Maryland&#8217;s adventures in capital misallocation working out? To fund spending on everything from offshore wind farms to roof bars, Gov. O&#8217;Malley has raised taxes and fees more than two-dozen times, on personal and corporate incomes and on retail sales, gas, tobacco, alcohol and much else. Yet the state still faces “structural” deficits estimated at $166 million for the next two fiscal years.</p> <p>Meanwhile, the nonpartisan Tax Foundation reports that a net of 66,000 residents and $5.5 billion in taxable income fled Maryland in 2000-10&mdash;a “Free State” trend that shows no signs of abating.</p> Fri, 21 Mar 2014 12:49 EDT Latest Cato Research on State and Local Fiscal Policy Steve H. Hanke, Stephen J.K. Walters Are Recreational Pot's Low Tax Numbers Worrisome? No Jeffrey Miron <p>The Colorado Department of Revenue earlier this month released its first data on the tax, fee and license revenue from legalized marijuana sales in the state. For January, the figure is $3.5 million when you combine revenue from medical ($1.5 million) and recreational marijuana ($2 million). This implies annual revenue of $42 million for Colorado.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span> <span class="pq-body">If the lower revenue numbers in Colorado are accurate, does that weaken the case for legalization? Not in the least.&rdquo;</span></p> </blockquote> <p>The amount collected so far is below other projections. In a 2010 white paper published by the Cato Institute, I predicted that if the federal government and all states legalized, Colorado would collect roughly $55 million to $60 million per year. And as recently as mid-February, Gov. John <a href="" target="_blank">Hickenlooper predicted </a>that the taxes, licenses and fees on medical-plus-recreational marijuana would generate $134 million for the fiscal year starting in July.</p> <p>This gap between projections and the initial data may overstate the shortfall, since the legal marijuana industry could still grow over time as more retail shops open. But just as plausibly, the gap may grow as other states adopt Colorado&#8217;s model, diminishing revenue from marijuana tourism.</p> <p>If the lower revenue numbers in Colorado are accurate, does that weaken the case for legalization?</p> <p>Not in the least.</p> <p>The possibility of increased tax revenue was never the main reason for legalizing marijuana. Any added revenue is desirable, since that means taxes on all other activities can be lower. And legalization shifts profits from illegal traffickers to the population generally, a kind of redistribution that most people would endorse.</p> <p>But the most important benefit is that legalization enhances the welfare of those who use marijuana, or would like to do so. When pot criminalization is in place, users often fear arrest and fines, even when enforcement is modest. Also, users in a black market face difficulty determining the quality and safety of the marijuana they purchase, as well as paying elevated prices.</p> <p>Legalization, moreover, helps society generally by eliminating the unintended consequences of prohibition.</p> <p>The worst impact of prohibition is the increased violence and corruption generated by black markets. In legal markets, consumers and firms resolve their disputes with law enforcement, lawyers, arbitration, and the like. In black markets, participants cannot use these mechanisms, so they resort to violence. History has shown that prohibitions of many goods (prostitution, gambling and alcohol) have consistently been associated with elevated rates of violence, such as during Prohibition in the 1920s and &#8217;30s.</p> <p>The increased violence and corruption caused by criminalizing marijuana is not limited to the United States. America&#8217;s desire to enforce prohibition has led us to push prohibition on Colombia, Peru, Mexico, Afghanistan and other countries, with similar consequences. The profits generated by illegal production and trade in these countries fuel terrorism, since the traffickers use their profits to pay terrorists for protection from the criminal justice system.</p> <p>A different cost of prohibition is diminished civil liberties. Standard crimes like theft and violence generate complainants, who report such crimes to the police and provide evidence of the crime. Victimless crimes like drug transactions do not generate complaints; neither a drug buyer nor a drug seller wants to report this activity to the police. Law enforcement can therefore only enforce prohibition with intrusive tactics like undercover busts, warrantless searches, and stop-and-frisk arrests.</p> <p>Prohibition also has significant directs costs for police, prosecutors and prisons. In 2010, I estimated these at roughly $75 million per year for Colorado. And even if state and city government do not reduce their expenditure on criminal justice under prohibition, these resources can be applied against crime with true victims, and not against those buying or selling marijuana.</p> <p>But perhaps the greatest casualty of prohibition is general reduction of respect for the law. Under prohibition, many people continue to buy and sell drugs, mostly without legal consequences. Thus, everyone learns that laws are for suckers, and voluntary compliance with society&#8217;s other rules diminishes. Legalizing marijuana is, therefore, the right policy, even if it generates no tax revenue. Anything that Colorado collects is just icing on the cake.</p> Fri, 21 Mar 2014 09:05 EDT Latest Cato Research on State and Local Fiscal Policy Jeffrey Miron Choosing What to Photograph Is a Form of Speech Eugene Volokh, Ilya Shapiro <p>The past year has been good to advocates of marriage equality. The Supreme Court struck down the part of the Defense of Marriage Act that denied federal benefits to lawfully married same-sex couples. Six more states extended marriage rights to same-sex couples&mdash;Illinois will join them June 1, becoming the 17th state overall&mdash;and federal courts struck down same-sex marriage bans in four more states (now on appeal).</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">Increasingly, legislative and judicial actions sacrifice individual rights at the altar of antidiscrimination law.&rdquo;</span></p> </blockquote> <p>We support the extension of marriage to same-sex couples. Yet too many who agree with us on that issue think little of subverting the liberties of those who oppose gay marriage. Increasingly, legislative and judicial actions sacrifice individual rights at the altar of antidiscrimination law.</p> <p>Consider the case of the New Mexico wedding photographer, <em>Elane Photography v. Willock</em>, which the Supreme Court is now deciding whether to take, with a decision expected soon after its March 21 conference.</p> <p>Elane Photography, a small business based in Albuquerque, declined to photograph Vanessa Willock&#8217;s same-sex commitment ceremony based on the business owners’ personal opposition to gay marriage, which is rooted in their Christian faith. New Mexico law prohibits any refusal to provide business services because of sexual orientation, however, so Ms. Willock filed a claim with the New Mexico Human Rights Commission. She argued that Elane Photography is a “public accommodation,” akin to a hotel or restaurant and subject to the state&#8217;s antidiscrimination law.</p> <p>The commission found against Elane Photography and ordered its owners, Jonathan and Elaine Huguenin, to pay $6,600 in attorney fees. The state trial and appellate courts affirmed that order.</p> <p>The case then moved to the New Mexico Supreme Court, where we filed a brief urging the court to reverse the court of appeals. Our brief explained that photography is protected by the First Amendment&mdash;even if it&#8217;s not political and even if the photos are taken for money, just as a lot of writing and art is done for money. Creators of expression have a First Amendment right to choose which expression they want to create.</p> <p>The U.S. Supreme Court ruled in <em>Wooley v. Maynard </em>&mdash;the 1977 “Live Free or Die” license plate case out of New Hampshire&mdash;that forcing people to display messages on their cars is just as unconstitutional as preventing or censoring speech. The First Amendment “includes both the right to speak freely and the right to refrain from speaking at all,” the court said. That applies even more strongly to forcing people to create messages.</p> <p>The New Mexico Supreme Court ruled against the Huguenins, holding that applying the New Mexico antidiscrimination law here “does not violate free speech guarantees because [the law] does not compel Elane Photography to either speak a government-mandated message or to publish the speech of another.” But limiting First Amendment protections in this way would lead to startling results.</p> <p>Take, for instance, a freelance writer who declines to write a press release for a religious organization with which he disagrees. By the reasoning of the New Mexico Supreme Court, the writer has violated the law because his refusal to write the press release is discrimination based on religion&mdash;much as Elaine Huguenin&#8217;s refusal to photograph an event with which she disagreed was treated as violating the law. Yet a writer must have the First Amendment right to choose which speech he creates, notwithstanding any state law to the contrary.</p> <p>The same is true of photographers who create a visual expression. The U.S. Supreme Court has said repeatedly that the First Amendment protects an “individual freedom of mind”&mdash;e.g., <em>West Virginia State Board of Education v. Barnette</em> (1943), which affirmed the right not to salute the flag or say the Pledge of Allegiance&mdash;which the government violates whenever it tells a person that she must or must not speak. Forcing a photographer to create a unique piece of art violates that freedom of the mind.</p> <p>Upholding the First Amendment against compelled speech here would ultimately inflict little harm on those who are discriminated against. A photographer who views a same-sex wedding as immoral would be a dubious choice for the couple getting married; there&#8217;s too much risk that the photographs will, even inadvertently, reflect the photographer&#8217;s disapproval.</p> <p>Those engaging in such a ceremony&mdash;or, say, entering into an interfaith marriage, or remarrying after a divorce&mdash;would likely benefit from knowing that a prospective photographer disapproves of their union, so they could then hire someone more enthusiastic. A search yields well over 100 photographers in the Albuquerque area, for example, most of whom would likely be happy to take the money of anyone who comes to them.</p> <p>Of course, a couple that is told by a photographer that she does not want to photograph their commitment ceremony may understandably be offended. But avoiding offense is not a valid reason for restricting or compelling speech.</p> <p>The Supreme Court&#8217;s ruling in <em>Wooley</em> guarantees the right of photographers, writers, actors, painters, actors, and singers to decide which commissions, roles or gigs they take, and which they reject. But the ruling does not necessarily apply to others who do not engage in constitutionally protected speech. The U.S. Supreme Court can rule in favor of Elane Photography on freedom-of-speech grounds without affecting how antidiscrimination law covers caterers, hotels, limousine drivers, and the like. That&#8217;s a separate issue that mostly implicates state religious-freedom laws in the more than two-dozen states that have them.</p> <p>The First Amendment secures an important right to which all speakers are entitled&mdash;whether religious or secular, liberal or conservative, pro- or anti-gay-marriage. A commitment to legal equality can&#8217;t justify the restriction of that right.</p> Tue, 18 Mar 2014 07:20 EDT Latest Cato Research on State and Local Fiscal Policy Eugene Volokh, Ilya Shapiro Needs Have Been Exaggerated Chris Edwards <p>The tragic gas explosion in Harlem will likely revive complaints that America is a pothole nation with falling-down bridges, and that we desperately need to boost government infrastructure spending. The reality is more complex.</p> <p>The first thing to note is that government infrastructure spending in the United States is at about the <a href="" target="_blank">same level</a> relative to the size of our economy as it is in other high-income nations.</p> <p>Another thing is that the quality of much U.S. infrastructure has been steadily improving. Federal <a href="" target="_blank">data</a> show that of the roughly 600,000 bridges in the nation, the share that are “structurally deficient” plunged from 22 percent in 1992 to just 11 percent by 2012.</p> <p>The surface quality of our highways is also improving. A <a href="" target="_blank">study</a> by Federal Reserve economists using “International Roughness Index” data found that “since the mid-1990s, our nation&#8217;s interstate highways have become indisputably smoother and less deteriorated.”</p> <p>With the Harlem disaster, people are pointing to Consolidated Edison&#8217;s 127-year-old cast iron pipes as the obvious problem. They may be, but we should not just assume that old infrastructure represents a failure.</p> <p>Con Ed has an ongoing program to replace its old pipes, but we can&#8217;t repipe and repave the entire nation every year. Instead, there is an optimum replacement rate for all infrastructure. Consider that it would be too costly for you to buy a new car every year, so you balance the new-car price with the rising maintenance costs on your old one.</p> <p>As for cast iron, note that the famous <a href="" target="_blank">Iron Bridge</a> in Shropshire, England is 235 years old and still standing.</p> <p>For governments, finding the optimum replacement rate is difficult because they operate outside of markets. So the big issue with government infrastructure spending is not so much the level of it but the efficiency of it. In my experience, much of it gets misallocated by politics, and projects are often mismanaged and go over budget.</p> <p>The good news is that four-fifths of all U.S. infrastructure spending is <a href="" target="_blank">private</a>, including everything from energy pipelines, to cell phone towers, to factories. Companies will aim for the optimum level of investment if they can earn a decent rate of return. In this regard, policymakers can help by removing tax and regulatory barriers that companies such as Con Ed face in pursuing their upgrades that benefit all of us.</p> Thu, 13 Mar 2014 10:53 EDT Latest Cato Research on State and Local Fiscal Policy Chris Edwards How to Identify Serious Pension Reform William Freeland <p>The state pension problem continues to worsen, but several states are moving ahead with positive reforms. Will Freeland is a research analyst at the American Legislative Exchange Council. We talked about which states are doing reform right and how to know if your state lawmakers are serious about fixing the problem.</p> <p><a href="">State and Local Pension Plans: Funding Status, Asset Management, and a Look Ahead</a> by Jagadeesh Gokhale</p> Tue, 04 Mar 2014 17:26 EST Latest Cato Research on State and Local Fiscal Policy William Freeland Daniel J. Mitchell discusses states without an income tax on WBAL's The C4 Show Thu, 20 Feb 2014 16:06 EST Latest Cato Research on State and Local Fiscal Policy Daniel J. Mitchell Drake v. Jerejian Ilya Shapiro, Trevor Burrus, Julio Colomba <p>From the 1939 case of <em>United States v. Miller</em> until 2008&rsquo;s <em>District of Columbia v. Heller</em>, the Supreme Court left unclear what right the Second Amendment protects. For nearly 70 years, the lower courts were forced to make do with <em>Miller&rsquo;s</em> vague guidance, which in many jurisdictions resulted in a cramped and limited right to keep and bear arms, erroneously restricted to militia service. While <em>Heller</em> did eventually clarify that the Second Amendment secures an individual right to keep and bear arms for self-defense, the ruling left many questions about the scope of that right unanswered (and 2010&rsquo;s <em>McDonald v. City of Chicago</em> merely extended the right to people living in the states, without further defining it). Since then, several courts have made clear that they plan to take only as much from <em>Heller</em> as they explicitly have to. One of these is the U.S. Court of Appeals for the Third Circuit, which last year upheld New Jersey&rsquo;s &ldquo;may-issue&rdquo; handgun law, which says that an individual may be granted a carry license&mdash;read: may be permitted to exercise her Second Amendment rights&mdash;only if she proves an urgent need to do so to the satisfaction of a law enforcement officer. In order to prove this need, one must prove, with documentation, that there are specific, immediate threats to one&rsquo;s safety that cannot be avoided in any way other than through possession of a handgun. If an individual can actually persuade the local official&mdash;who has total discretion to accept or deny the claim&mdash;then she gets a license for two years, at which time the gun owner must repeat the entire discretionary process (proving an imminent threat, etc.) to renew the permit. The effect of this regulatory regime is that virtually nobody in New Jersey can use a handgun to defend themselves outside their home. The state law inverts how fundamental rights are supposed to work&mdash;that the government must justify restrictions, not the right-holder the exercise&mdash;and the Third Circuit saw no problem with that. The court applied a deferential review far from the heightened scrutiny normally due an individual right enshrined in the Bill of Rights. It also assumed the legislature&rsquo;s good faith without requiring the state to show any evidence that a restrictive-carry regime lowers the rate of gun crime, and excused what constitutional infringements the law may cause because legislators acted before <em>Heller</em> clarified that the Second Amendment protected an individual right. The Third Circuit&rsquo;s opinion makes clear that it, like some other lower courts, is &ldquo;willfully confused&rdquo; about the scope of the right to keep <em>and bear</em> arms as recognized in <em>Heller</em> and the proper judicial methodology to apply when evaluating Second Amendment cases. We think it&rsquo;s time that circuit and state courts got some guidance from the Supreme Court, so we filed a brief, joined by the Madison Society Foundation, supporting the challengers&rsquo; petition for review. This is an excellent case for the Court to take up to begin clarifying many of the unanswered questions involving the Second Amendment&mdash;such as to what extent it extends beyond the home and whether it can be conditioned on a showing of need. The Court has been hesitant to flesh out the contours of the Second Amendment. This hesitance has caused errant rulings that leave the right to bear arms hollow.  Unless the Court intends the Second Amendment to lapse back into the second-class status it had before <em>Heller</em>, it needs to set the wayward courts straight.</p> Wed, 12 Feb 2014 15:08 EST Latest Cato Research on State and Local Fiscal Policy Ilya Shapiro, Trevor Burrus, Julio Colomba No Miracle in Medicaid Expansion Michael D. Tanner <p>To hear Gov. Terry McAuliffe tell it, expanding Medicaid would provide hundreds of thousands of Virginians with better coverage, save hospitals and businesses more than $1 billion and stimulate the economy. Best of all, it would cost Virginia taxpayers hardly anything. Hallelujah, it&#8217;s a miracle!</p> <p>The problem is that he is wrong about nearly all of it.</p> <p>McAuliffe counts on roughly $14.7 billion in federal funding over the next 10 years to pay for most of the expansion. Under the Affordable Care Act, the federal government would pay the entire cost through 2016.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">Expanding Medicaid would cost Virginia taxpayers a substantial amount while providing the poor with substandard coverage.&rdquo;</span></p> </blockquote> <p>After that, the federal share would gradually decline, but it is still supposed to pick up at least 90 percent of the cost for those made newly eligible in perpetuity. This is a much higher share of costs than Virginia receives under traditional Medicaid. McAuliffe sees this as virtually free money.</p> <p>There are at least three big problems with this way of thinking. First, even though the feds will cover 90 percent, Virginians will have to pay 10 percent. Ten percent of a really big number is still a really big number.</p> <p>Medicaid already is one of the biggest drivers of Virginia&#8217;s budget, accounting for more than 18 percent of spending. That&#8217;s significantly higher than the national average, and more than the state spends for transportation, public assistance or higher education.</p> <p>Second, the increased federal funding applies only to Virginians added to Medicaid as a result of expanding eligibility to 138 percent of the poverty level. This ignores a second category of recipients likely to be added to the Medicaid rolls if this expansion moves forward, what the Robert Wood Johnson Foundation has dubbed “the woodwork effect.”</p> <p>As the Medicaid expansion moves forward, thousands of state residents will discover they are eligible under traditional Medicaid.</p> <p>Some will be uninsured, but others will either be paying for insurance themselves or receiving it from their employer. It has been estimated that roughly 20 percent of new Medicaid recipients in Virginia would be “coming out of the woodwork.” This group is not eligible for the increased level of federal funding, meaning state taxpayers must pay 50 percent of their costs.</p> <p>Overall, the Kaiser Family Foundation estimates state taxpayers would have to pony up at least $1.3 billion in additional taxes through 2022.</p> <p>Of course, any estimate assumes the federal government will keep its side of the bargain when it comes to future funding. But with Washington still facing a debt crisis, Medicaid will almost certainly be on the table.</p> <p>Indeed, in budget negotiations, the Obama administration reportedly offered to cut the 90 percent funding promise for Medicaid expansion to a lower “blended rate formula.” While the administration has backed off that offer, it shows how tenuous federal funding promises really are.</p> <p>Finally, Medicaid expansion wouldn&#8217;t necessarily provide poor Virginians with better access to health care. The Oregon Health Insurance Exchange study, the first randomized controlled study of Medicaid outcomes, recently concluded that “Medicaid coverage generated no significant improvements in measured physical-health outcomes.”</p> <p>Other studies show that, in some cases, Medicaid patients actually wait longer and receive worse care than the uninsured.</p> <p>While Medicaid costs taxpayers a lot of money, it pays doctors little. On average, Medicaid reimburses doctors only 72 cents out of each dollar of costs. As a result, many doctors limit the number of Medicaid patients they serve or refuse to take them at all.</p> <p>An analysis published in Health Affairs found that only 69 percent of physicians accept Medicaid patients. Another study in the New England Journal of Medicine found that Medicaid recipients were six times more likely to be denied an appointment than people with private insurance. And according to a third study, when they do get an appointment, they wait an average of 42 days to see a doctor, twice as long as the privately insured.</p> <p>That&#8217;s one reason why so many Medicaid patients show up at the emergency room for treatment. They can&#8217;t find a doctor to treat them otherwise.</p> <p>McAuliffe is also wrong on his expectation that increased enrollment will keep people out of ERs and reduce the cost of uncompensated care. The Oregon study found that increased Medicaid enrollment actually increased ER use by as much as 40 percent. The result was an increase in annual emergency room spending by roughly $120 per covered individual. In Virginia, that would mean almost $100 million in additional ER costs per year.</p> <p>In reality, expanding Medicaid would cost Virginia taxpayers a substantial amount while providing the poor with substandard coverage. It would encourage some recipients to drop private coverage and could make ER crowding and costs worse. That&#8217;s not quite the miracle that McAuliffe is counting on.</p> Tue, 04 Feb 2014 09:10 EST Latest Cato Research on State and Local Fiscal Policy Michael D. Tanner Cato Institute's research on stadium construction is cited on MSNBC's Melissa Harris-Perry Sun, 02 Feb 2014 13:46 EST Latest Cato Research on State and Local Fiscal Policy Cato Institute The Real Lesson of Bridgegate: Privatize the Port Authority Chris Edwards <p><a href="" target="_blank" rel="nofollow"><em>USA Today</em> reports</a>: &ldquo;The Port Authority, which operates the bridge at the heart of a New Jersey scandal, says a key appointee of Gov. Chris Christie directed the controversial closing of access lanes to the George Washington Bridge &#8230; David Wildstein and Bill Baroni, who were appointed to the Port Authority by Christie, have resigned in the wake of the scandal.&rdquo;</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">The way to reduce corruption is to separate as much of the economy as possible from the government.&rdquo;</span></p> </blockquote> <p>Don&rsquo;t you see the real problem here? It&rsquo;s that a politician or one of his staffers has the power to willy-nilly reach their hand down into the local machinery of the economy and screw-up the lives of thousands of people needing to get to work.</p> <p>The sprawling government bureaucracy that is the <a href="" target="_blank" rel="nofollow">Port Authority of New York and New Jersey (PANYNJ)</a> runs multiple bridges, tunnels, bus terminals, airports, and seaports, as well as rail transit and real estate development. It operates a range of crucial business activities as bloated monopolies.</p> <p>But why? All these things done by the PANYNJ could be done better by private businesses, and they <em>are</em> done by private businesses in many other cities around the world. PANYNJ owns five airports including LaGuardia and JFK. Why not split them apart, sell them to entrepreneurs, and have them compete against each other?</p> <p>If the governor&rsquo;s office called the CEO of a private and unsubsidized bridge company and asked her to harm her customers by creating traffic chaos for political gotcha reasons, she would say &ldquo;Are you nuts?&rdquo;</p> <p>People wonder why American government is so scandal-prone. One reason is that it is so darn big. It&rsquo;s an octopus with tentacles into everything, which may give politicians and bureaucrats ego trips, but it undermines economic growth and opens up public administration to corruption.</p> <p>Here&rsquo;s an ironic statement from Wikipedia: &ldquo;The idea for the Port Authority was conceived during the Progressive Era, which aimed at the reduction of political corruption and at increasing the efficiency of government.&rdquo; The progressives were right to go after political corruption, but they were often way off-base on how to do it.</p> <p>The way to reduce corruption is to separate as much of the economy as possible from the government, and to allow open entry for entrepreneurs into businesses &mdash; such as bridges, airports, and seaports &mdash; to stimulate competition to the greatest extent possible.</p> <p>The center of global capitalism, the city with the great beacon of individual freedom in its harbor, can do much better than this. Overgrown monopoly government bureaucracies are out of step with New York&rsquo;s famous dynamism and entrepreneurship. New York and New Jersey should begin selling off the assets and activities of the PANYNJ.</p> Fri, 17 Jan 2014 09:44 EST Latest Cato Research on State and Local Fiscal Policy Chris Edwards New York's Pursuit of Airbnb Is an Attack on Privacy Ilya Shapiro, Gabriel Latner <p>The fight between New York Attorney General Eric Schneiderman and Airbnb, the company that allows people to rent their sofas and guestrooms to out-of-towners, is reaching new heights. Airbnb just launched a clever ad campaign to get Gotham&#8217;s incoming mayor on its side: A <a target="_blank" href="" rel="nofollow">video</a> featuring New Yorkers offering to host Bill de Blasio&#8217;s friends and family during his inauguration.</p> <p>To bring you up to speed, in October the AG subpoenaed the personal information of more than 15,000 New Yorkers in order to enforce hotel zoning laws and occupancy taxes, as if Airbnb hosts were running a Marriott or Hilton out of their Hell&#8217;s Kitchen apartments. The company fought back, arguing that even if the subpoena would uncover cases where hosts broke the law, it would also ensnare thousands of law-abiding users &mdash; the equivalent of searching an entire neighborhood after anonymous reports that one neighbor is selling drugs.</p> <p>The case now awaits a judicial ruling, but legal merits aside, Schneiderman&rsquo;s pursuit of every-day New Yorkers for running &ldquo;illegal hotels&rdquo; is symptomatic of a larger problem: the implications of the government&rsquo;s regulatory and taxing power on individual privacy.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">Even if Schneiderman&#8217;s efforts didn&#8217;t reek of protectionism, his relentless prosecution should still be opposed as a gross invasion of privacy.&rdquo;</span></p> </blockquote> <p>Once the government is allowed to regulate a certain activity, it will necessarily begin to monitor it. Just look at the tax code. To comply with the ridiculously complex hodge-podge of rules, law-abiding citizens have to provide bureaucrats with minute details on every aspect of their lives.</p> <p>The zoning laws and occupancy taxes Schneiderman wants to enforce are no different. Actually, they&rsquo;re more invasive in the Airbnb context. That&rsquo;s because they only apply when someone is renting out space when they&rsquo;re not home &mdash; giving the government a reason to insist people tell them where and how they spend their time. The &ldquo;hotel regulations&rdquo; regular people are expected to comply with for hosting through Airbnb also require the details of their credit cards, PayPal accounts, and other information that would surprise both the IRS and NSA.</p> <p>Schneiderman has attempted to rally support for his campaign for private information by portraying his victims as tax-dodging crooks who&rsquo;ve cheated the city out of tens of millions of dollars in taxes.</p> <p>On the contrary, most Airbnb hosts are only guilty of trying to make ends meet. Take <a target="_blank" href="" rel="nofollow">Evylen Badia</a>. She was able to keep her home in Brooklyn after being laid off thanks to the income from Airbnb. In an uncertain job market, Evylen knew she&rsquo;d &ldquo;be safe financially because I had guests arriving.&rdquo; <a target="_blank" href="" rel="nofollow">Kimberly Kaye</a> has a similar story; renting her apartment out &ldquo;for a few days each month … provided immediate, safe and practical protection from homelessness.&rdquo;</p> <p>Aside from actually threatening the livelihoods of struggling New Yorkers, Schneiderman&rsquo;s pursuit of Airbnb could be bad for New York&rsquo;s economy. That&rsquo;s right, by discouraging the middle-class tourists who use Airbnb, the state stands to lose more in sales tax than it will make by collecting its &ldquo;hotel&rdquo; tax.</p> <p>Perhaps the AG is less interested in (meager) tax revenue than in shutting down a competitor to the state&rsquo;s politically powerful hospitality sector, which, it&rsquo;s worth noting, has donated tens of thousands of dollars to his campaigns over the years.</p> <p>But again, even if Schneiderman&rsquo;s efforts didn&rsquo;t reek of protectionism, his relentless prosecution should still be opposed as a gross invasion of privacy.</p> <p>While taxes are unavoidable if we want to have a government that secures and protects our rights, the Airbnb episode shows that they need to be structured in a way that minimizes constitutional intrusions. Take a flat percentage of all income, regardless of how derived, say, or get rid of income taxes altogether and just rely on a uniform sales tax. Regardless of your preferred system, if collecting taxes also requires the collection of highly sensitive personal information, you&rsquo;re doing it wrong.</p> <p>After all, the Supreme Court has rightly held, again and again, that the home is special, containing a privacy that the state violates at its peril. As Justice Louis Brandeis wrote in one of his most <span id="itxthook0p"><span id="itxthook0w">powerful</span><img id="itxthook0icon" src="" alt="image" /></span> opinions: &ldquo;The principle underlying the Fourth and Fifth Amendments is protection against invasions of the sanctities of a man&rsquo;s home and privacies of life.&rdquo;</p> <p>Surely those protections extend to queries regarding how people bank and where they spend their nights. Sounds like just the sort of thing that should pique the concern for civil liberties that animated the new mayor&rsquo;s campaign. Maybe Hizzoner ought to watch Airbnb&rsquo;s <span id="itxthook1p"><span id="itxthook1w">video</span><img id="itxthook1icon" src="" alt="image" /></span> and push back at Albany.</p> Wed, 18 Dec 2013 12:01 EST Latest Cato Research on State and Local Fiscal Policy Ilya Shapiro, Gabriel Latner Public Financing No Cure-All Jeffrey Milyo, David M. Primo <p>Public financing of elections is once again on the table in New York state. This time the call comes from New York state&#8217;s Moreland Commission, appointed by Gov. Andrew Cuomo to “restore the public trust” in the wake of continued corruption problems in the state.</p> <p>In a 98-page report released last week, the commission calls for a public financing system modeled after New York City&#8217;s, under which candidates receive matching government funds for small private donations they receive (seven of 25 members dissented).</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">Public financing of elections is once again on the table in New York state.&rdquo;</span></p> </blockquote> <p>The commission, parroting earlier claims by Cuomo, is clear about the benefits. In combination with other reform proposals, such as lower contribution limits, public financing would help restore faith in government, reduce corruption, and “invigorate citizens’ democratic participation.”</p> <p>These claims represent a wish list, and a reality check is in order.</p> <p>We have conducted some of the only research that subjects these claims to statistical scrutiny. In a 2006 study, we examined whether state campaign finance rules affect perceptions of government, specifically “political efficacy” &mdash; the sense that ordinary people can influence political outcomes.</p> <p>We compared whether people in states with restrictive campaign finance laws have higher levels of efficacy than people in states with few or no limits on campaign financing. Our study detected that public financing may have a small negative effect on perceptions of government (though we wouldn&#8217;t make too much of this finding, since the effect is substantively small).</p> <p>Research by Milyo finds no evidence that citizen perceptions are improved.</p> <p>Maybe for New York state the concern should be actual corruption. Research by Milyo and Adriana Cordis finds no evidence that corruption, measured by public corruption convictions, is reduced by public financing.</p> <p>As for voter apathy, having politicians pestering you for contributions may not be a way to revitalize your interest in politics. Our research with Matthew Jacobsmeier finds no evidence that states with so-called “clean elections” programs in place have higher turnout in statewide elections.</p> <p>Supporters of public financing do make one plausible claim: that the proposal will increase the number of individuals contributing to campaigns. This shouldn&#8217;t be surprising; when you subsidize something you get more of it.</p> <p>The real question for policymakers is whether it is worth spending millions of dollars each year to subsidize contributions to campaigns. That&#8217;s all the commission&#8217;s plan is likely to accomplish.</p> <p>The commission appears to admit as much, despite the claims made elsewhere in its report: “Public financing is no panacea. No law can stop wealthy interests and individuals from exercising influence over elections and government. No law can prevent unethical individuals from holding office or stop an elected official from succumbing to temptation. What campaign finance laws can do is &#8230; create a countervailing force of small donors to offset the impact of big money.”</p> <p>Let&#8217;s have a debate about whether increasing small donor involvement in the political process as a “countervailing force” is a worthy cause given the cost. It would be useful to stop thinking about “big” and “small” donors as monoliths that can somehow be balanced against one another.</p> <p>As the Moreland Commission continues, we implore politicians and reform groups to stop the empty rhetoric about restoring trust in government, eliminating corruption, and reinvigorating New Yorkers’ interest in politics. The overselling of public financing may have a corrosive effect on politics.</p> Wed, 11 Dec 2013 09:07 EST Latest Cato Research on State and Local Fiscal Policy Jeffrey Milyo, David M. Primo Mike Pence Ran off Rails in Bailing out Amtrak Line Tad DeHaven <p>For more than 40 years, Amtrak has relied on $1 billion or more a year in taxpayer handouts to run slow, and often late, passenger trains. Indeed, the man considered to be the &ldquo;father&rdquo; of Amtrak, Anthony Haswell, recently said that he is &ldquo;personally embarrassed over what I helped to create.&rdquo;</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">Rails are great for moving freight but just can&#8217;t compete with buses, cars and planes when it comes to convenience and cost.&rdquo;</span></p> </blockquote> <p>Passenger trains still can offer pleasure but are otherwise obsolete as a means for moving people from point A to point B. Rails are great for moving freight but just can&#8217;t compete with buses, cars and planes when it comes to convenience and cost. Even worse, Congress treats Amtrak as a form of pork barrel, sending trains with an insignificant number of riders to remote areas of the country.</p> <p>Congress did, however, take a step in the right direction in 2008 by requiring states to pay the subsidies for short-distance lines by 2013 or else the lines would be discontinued. That was a win for federalism: Federal taxpayers shouldn&rsquo;t pay for activities that benefit a particular state.</p> <p>The Hoosier State, which provides rail service between Indianapolis and Chicago four days a week, was one of the lines. Until recently, the state resisted what it absurdly claimed to be a federal &ldquo;unfunded mandate.&rdquo; Congress didn&rsquo;t mandate that the states assume the subsidy burden <em>and</em> keep the lines in operation. Indiana and other states were given a <em>choice</em>.</p> <p>At the last second, the Pence administration chose to use Hoosier tax dollars to keep the Hoosier State in operation. In a deal reached with Amtrak, the state will split with local governments that have stops along the route the $2.7 million needed to continue the line for another year. The line&rsquo;s occupancy rate is less than 50 percent, but the governor claims that the agreement &ldquo;will make Hoosier jobs more secure and preserve an important transportation link for Indiana.&rdquo;</p> <p>This observer is left to conclude that political expediency was the governor&rsquo;s underlying rationale because outside of politics, putting state and local taxpayers on the hook for the line makes no economic sense. According to a study penned by my Cato Institute colleague Randal O&rsquo;Toole, the Hoosier State costs taxpayers 80 cents for every passenger carried one mile. And that figure doesn&rsquo;t include capital and maintenance costs. The figure was the worst of 27 short-distance routes across the United States and twice as bad as the next closest line.</p> <p>O&rsquo;Toole also notes that, compared to the Hoosier State, &ldquo;buses are not only less expensive but are faster and more frequent than Amtrak.&rdquo; Indeed, it takes Amtrak five hours to complete its route (assuming it&rsquo;s on time) versus a bit over three hours for a bus. Bus fare is generally cheaper than an Amtrak ticket, and the differential is even greater when Amtrak&rsquo;s generous subsidies are included. (Yes, all modes of transportation are, unfortunately, subsidized by government to some degree, but Amtrak is the largest beneficiary on a per-passenger-mile basis.)</p> <p>The cost-benefit analysis performed by an outside firm for the Indiana Department Transportation also shows that having Indiana taxpayers foot the subsidy bill for the Hoosier State is a terrible deal. Whether service is continued as is or services are improved, the analysis shows that Indiana taxpayers would be on the hook for millions of dollars annually with minimal benefit. For example, under the four improved service options considered, the study found &ldquo;no appreciable highways congestion delay savings&rdquo; and &ldquo;no airport congestion delay savings.&rdquo;</p> <p>Other than assuaging some local special interests and rail enthusiasts, it&rsquo;s hard to understand why the allegedly fiscally conservative governor of Indiana would support even a one-year deal to maintain the Hoosier State. Decades ago, former U.S. Sen. Russell Long asked why the government was trying to get people &ldquo;to leave a taxpaying organization, the bus company, and ride on a tax-eating organization, Amtrak?&rdquo; Someone should ask Gov. Pence the same question.</p> Fri, 06 Dec 2013 10:26 EST Latest Cato Research on State and Local Fiscal Policy Tad DeHaven Kagan v. New Orleans Ilya Shapiro, Eugene Volokh, Kerrie Campbell, Michael Bhargava <p>For the second time this fall, Cato has filed a brief supporting a lawsuit challenging the power of cities to stifle and regulate speech by licensing tour guides&mdash;effectively restricting who may lawfully speak to an audience about the city&#8217;s history.  In September, <a href="">we filed a brief</a> supporting &ldquo;Segs in the City,&rdquo; a segway touring company challenging a D.C. law which made it illegal to give tours in Washington, D.C., without completing a licensing process that involves a thorough history exam. Now we&rsquo;ve filed a brief in the U.S. Court of Appeals for the Fifth Circuit, again joined by First Amendment expert Prof. Eugene Volokh, in support of a group of tour guides challenging New Orleans’ licensing scheme. (Both the D.C. and New Orleans guides are represented by our friends at the Institute for Justice.) Like D.C., New Orleans only licenses guides who can pass a history test. In addition to that blatantly unconstitutional speech restriction, the Big Easy also requires licensees to submit to periodic drug tests. All that just so they can talk about the history and culture of New Orleans without spending five months in prison! We argue that the licensing regime is a content-based restraint on speech and therefore must pass the strictest judicial scrutiny, so the government needs a compelling reason for it and has no other way of accomplishing the same goal. The law is a content-based speech regulation in that it is (a) triggered by the content of speech, and (b) justified on the basis of the content that it regulates. The Supreme Court has repeatedly held that a law regulating the content of speech&mdash;as opposed to its location, timing, or manner&mdash;is subject to strict scrutiny. The justifications offered for the licensing law refer to the &ldquo;sufficient knowledge&rdquo; of the guides and the accuracy of their speech. That is as much a content-based justification as saying that people need to be protected from hearing &ldquo;erroneous&rdquo; political opinions or &ldquo;controversial&rdquo; historical theories. Finally, we argue that tour guides are not members of a &ldquo;profession,&rdquo; such as lawyers, doctors, and accountants, which could merit less First Amendment protection in order to protect the public from harm. Unlike those professions, tour guides don&rsquo;t have intimate relations with clients. Instead, like most businesses, they simply have customers. The government can&rsquo;t possibly require authors, public lecturers, or documentary filmmakers to get licensed in order to protect the public from &ldquo;misinformation,&rdquo; and it has no more basis for licensing tour guides.</p> Wed, 04 Dec 2013 15:02 EST Latest Cato Research on State and Local Fiscal Policy Ilya Shapiro, Eugene Volokh, Kerrie Campbell, Michael Bhargava Duncan v. New Hampshire Jason Bedrick, Ilya Shapiro, Edward C. Mosca, Lauren Barlow, Andrew J. Coulson <p>Opponents of school choice are <a href="">once</a> <a href="">again</a> seeking to restrict the ability of parents to select the best education for their child. New Hampshire&rsquo;s Education Tax Credit program, enacted in 2012, permits businesses who donate to a state-approved scholarship organization to deduct 85% of that donation from their annual taxes. These scholarship organizations then offer students that meet specific criteria scholarships to attend nonpublic schools or schools outside the students&rsquo; district, or to homeschool. As a large number of New Hampshire&rsquo;s nonpublic schools are religious, opponents of school choice have challenged the program under, among other things, an 1877 amendment to the state constitution frequently referred to as a Blaine Amendment. Blaine Amendments, which were passed during that period in many states for the sole purpose of preventing Catholic schools from receiving government funding, prohibits &ldquo;money raised by taxation&rdquo; from being &ldquo;granted or applied for the use of the schools or institutions of any religious sect or denomination.&rdquo; A New Hampshire trial court found that the Education Tax Credit program violated this discriminatory amendment and that scholarship funds could therefore not be granted to students attending religious schools. But the court incorrectly reasoned that money exempted from taxation under the tax-credit program was the equivalent of a government expenditure of public funds and therefore &ldquo;money raised by taxation.&rdquo; This type of reasoning&mdash;often referred to as &ldquo;tax expenditure analysis&rdquo;&mdash;has been explicitly rejected by other state supreme courts and the U.S. Supreme Court. Indeed, as the Supreme Court held in <a href=""><em>Arizona Christian School Tuition Organization v. Winn</em></a> (2011), such an approach &ldquo;assumes that income should be treated as if it were government property even if it has not come into the tax collector&rsquo;s hands&#8230;. Private bank accounts cannot be equated with the &#8230; State Treasury.&rdquo; The trial court&rsquo;s holding is similarly at odds with the original understanding of the Blaine Amendment and is unsupported by New Hampshire case law. The State of New Hampshire and the Network for Educational Opportunity, represented by the <a href="" target="_blank">Institute for Justice</a>, have taken the case to the New Hampshire Supreme Court. Cato has filed an amicus brief supporting them, arguing that the educational tax credits are not &ldquo;money raised by taxation&rdquo; according to the original understanding of the 1877 amendment, New Hampshire case law, and U.S. Supreme Court precedent. The New Hampshire Supreme Court should reverse the trial court and restore a vital source of educational freedom and opportunity.</p> Tue, 12 Nov 2013 08:59 EST Latest Cato Research on State and Local Fiscal Policy Jason Bedrick, Ilya Shapiro, Edward C. Mosca, Lauren Barlow, Andrew J. Coulson New York's Profligate New Mayor Risks Fiscal Ruin to London’s Gain Daniel J. Mitchell <p>SEVERAL cities have declared bankruptcy in the US in the last few years, with Detroit the most prominent example. Based on this week&rsquo;s mayoral election results, it&rsquo;s not inconceivable that New York City may join the queue. The new mayor-elect Bill de Blasio has a tax-and-spend agenda reminiscent of the profligacy that led Greece to fiscal ruin.</p> <p>Pessimism is warranted because there are common themes in the local governments that have run out of money. One is government employee unions that capture the political process and insist on excessive compensation packages, including gold-plated retirement benefits. This pushes up the expenditure side of the budget.</p> <p>Meanwhile, local politicians raise taxes to facilitate their spending sprees. On paper, it appears they can achieve fiscal balance. But one thing politicians conveniently overlook is that taxpayers are not sheep awaiting slaughter; when taxes climb, particularly on highly-mobile workers and entrepreneurs, some taxpayers &ldquo;vote with their feet&rdquo; and move to jurisdictions with less oppressive systems.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">The new mayor-elect Bill de Blasio has a tax-and-spend agenda reminiscent of the profligacy that led Greece to fiscal ruin.&rdquo;</span></p> </blockquote> <p>It doesn&rsquo;t take mass emigration to destabilise a local government&rsquo;s finances, particularly when a city is very dependent on a limited number of high-income taxpayers. That is why de Blasio&rsquo;s fiscal agenda is so risky. He wants to raise the New York City income tax (which comes on top of the 39.6 per cent federal income tax and the 8.8 per cent state income tax) from 3.876 per cent to 4.41 percent for taxpayers with an annual income over $500,000.</p> <p>For those of us toiling away on middle-class incomes, a tax hike of about 0.5 percentage points may seem insignificant. But the average additional burden on New York City&rsquo;s high flyers would be almost $200,000 annually. That&rsquo;s not small change, and with upper-income taxpayers paying 43 per cent of the City&rsquo;s income tax, it matters if even a handful of these people decide they&rsquo;re tired of being fleeced. And there are plenty of zero-income tax states in the US that would roll out the welcome mat to attract fiscal refugees, like Texas, Florida, Wyoming, Nevada, and Tennessee.</p> <p>For all intents and purposes, de Blasio wants to conduct the same experiment as President Hollande in France. But tax competition and taxpayer mobility are undermining Hollande&rsquo;s class warfare, and the same thing will likely happen if de Blasio imposes his statist agenda.</p> <p>But there is some good news: New York City does not have full control of its fiscal affairs. Any changes in the local income tax or local sales tax have to be approved by the state. Democratic governor Andrew Cuomo reportedly has national ambitions, and has expressed scepticism about de Blasio&rsquo;s planned tax hike. Further, Republicans control the state senate and presumably will not be overly sympathetic to any fiscal plan that pillages Wall Street.</p> <p>So folks in places that compete with New York City &mdash; such as London, Tokyo, and Hong Kong &mdash; shouldn&rsquo;t put champagne on ice quite yet. Mayor-elect de Blasio wants to help your cities, but it&rsquo;s uncertain at this stage whether he will succeed.</p> Thu, 07 Nov 2013 09:11 EST Latest Cato Research on State and Local Fiscal Policy Daniel J. Mitchell Increasing Taxes for Mass Transit Would Hurt Central Indiana Randal O&#039;Toole <p>The Carmel Chamber of Commerce says that Indianapolis needs a regional transit system &mdash; which inevitably means higher taxes &mdash; so that the city can compete with communities such as Minneapolis and Salt Lake City.</p> <p>In fact, since 1990 the Indianapolis urban area has grown more than twice as fast as the Minneapolis or Salt Lake urban areas, and faster than any other major urban area in the Midwest, so Indianapolis seems to be competing just fine without those higher taxes.</p> <p>The Chamber would like you to believe that spending more tax dollars on transit means better transportation. But that&rsquo;s far from true.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">Transit, especially transit aimed at getting people out of their cars, costs a lot more than driving.&rdquo;</span></p> </blockquote> <p>It is important to understand that transit can have two quite different goals: first, moving people who, for one reason or another, can&rsquo;t drive; and second, getting people who can drive out of their cars.</p> <p>Indianapolis transit now mainly provides service for the former, those who can&rsquo;t drive. But the need for that is small.</p> <p>The Census Bureau says that just 7 percent of Indianapolis-area households lack cars, and just 17,000 workers live in households that don&rsquo;t have cars (nearly half of them drive to work alone anyway, presumably in borrowed cars).</p> <p>Nearly all of the region&rsquo;s car-less households are in Indianapolis itself and won&rsquo;t benefit from regional transit. Advocates of regional transit, then, are mainly interested in promoting the second goal: getting people, and particularly suburbanites, out of their cars.</p> <p>Ever since Ralph Nader&rsquo;s 1965 book, &ldquo;Unsafe at Any Speed,&rdquo; Americans have been barraged with claims from anti-auto groups that cars are evil, gas-guzzling, polluting monsters. There may have been some truth to that in 1965, but since then auto fatality rates and air pollution have declined by more than 80 percent, and cars today are 40 percent more energy efficient.</p> <p>Nationally, cars and transit are about tied for energy consumption per passenger mile. <em>IndyGo</em> actually uses more energy and releases more greenhouse gases per passenger mile than the largest sport utility vehicles.</p> <p>And transit, especially transit aimed at getting people out of their cars, costs a lot more than driving. Americans spend about 25 cents a passenger mile on driving, including all subsidies to highways. Transit typically costs four times that much, and those costs only rise when cities start running empty transit vehicles to suburbs where people have three cars in every driveway.</p> <p>Worse, the costs of regional transit are so high that most cities with regional transit systems have had to cut bus services to those who lack cars and need transit the most. Atlanta, Los Angeles and the San Francisco Bay Area are just some of the regions where transit riders have suffered in order to build a regional transit system.</p> <p>This doesn&#8217;t mean <em>IndyGo</em> can&#8217;t be improved. Contracting out bus routes to private operators can save up to 50 percent of the costs, allowing <em>IndyGo</em> to provide more service without higher taxes. Suburban cities that want to send buses into Downtown Indianapolis should be allowed to do so.</p> <p>Increasing taxes to create a regional transit system, however, will provide no significant transportation benefits while actually hurting Indianapolis’ competitiveness.</p> Fri, 18 Oct 2013 09:17 EDT Latest Cato Research on State and Local Fiscal Policy Randal O&#039;Toole Show Us the Money Jason Bedrick <p>A bank would never grant a loan to a business that failed to disclose its overhead. So why do taxpayers and state legislators consistently vote to increase spending on public schools without knowing their full cost?</p> <p>A new report from the Cato Institute finds that state education departments routinely understate the cost of public schools and often completely fail to report key spending categories. This may be contributing to the public&rsquo;s vast underestimation of the true cost of public education.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">When government agencies offer incomplete or misleading data, they deprive taxpayers of the ability to make informed decisions.&rdquo;</span></p> </blockquote> <p>The report, &ldquo;<a href="">Cracking the Books: How Well Do State Education Departments Report Public School Spending?</a>,&rdquo; assigns A-to-F grades for the completeness, timeliness, and accessibility of the spending data that the departments publish on their websites. The report reveals that very few state education departments provide complete and timely financial data that are understandable to the general public.</p> <p>The most useful figures for comparing school districts of varying sizes are the annual per-pupil expenditures (PPE). However, half of all state education departments report PPE figures that leave out major cost items such as buildings, interest on debt, and pensions, thereby significantly understating what is actually spent. Alaska&rsquo;s Department of Education website does not report PPE figures at all.</p> <p>Other important spending categories are often omitted. Eight states fail to provide any data on capital expenditures, ten states lack any data on average employee salaries, and 41 states lack any data on average employee benefits.</p> <p>Few states manage to publish timely spending data. By the end of the last calendar year, only 13 states had published per-pupil spending data for the 2011–12 school year. Most states&rsquo; data were a year behind, and for a handful of states the most recent spending data were two or three years old.</p> <p>In addition, states too often report spending data that are hard to find or interpret. For example, the commonly used term &ldquo;current expenditures&rdquo; gives the false impression that it refers to data that are recent, which is not necessarily the case.</p> <p>The average citizen is unlikely to know that &ldquo;current&rdquo; refers to &ldquo;operating&rdquo; expenditures, indicating that the figure excludes some major categories of spending, such as capital expenditures. Moreover, state education departments often use undefined acronyms that are practically impossible for the average citizen to decipher.</p> <p>This financial opacity may be contributing to widespread misperceptions about public-education spending. Despite <a href="" target="_blank">tremendous and persistent spending growth</a> in the last half-century, the public greatly underestimates how much is spent on public schools.</p> <p>A recent <a href="">survey</a> by Harvard University&rsquo;s Program on Education Policy and Governance found that the public&rsquo;s average estimate of the annual cost per student in public schools nationwide was only $6,680. The true cost is more than double that estimate, at nearly $14,000 per student annually, according to the most recent inflation-adjusted data from the <a href="" target="_blank">National Center for Education Statistics</a>.</p> <p>The Harvard survey also examined how misconceptions about education spending affect support for spending levels. The researchers randomly divided survey respondents into two groups. The first group of respondents were simply asked, &ldquo;Do you think government funding for public schools in your district should increase, decrease, or stay about the same?&rdquo; Respondents in the second group were first told what the annual per-pupil expenditures were in their school district.</p> <p>The survey found that informed respondents were significantly less likely to support increased spending. While 53 percent of uninformed respondents stated that they wanted to increase spending on public schools, support fell to only 43 percent among informed respondents, while 57 percent wanted spending to stay the same or decrease.</p> <p>The public&rsquo;s gross underestimation of education spending has real-world consequences. For example, on <a href="">Election Day 2012 in Colorado</a>, a majority of voters in 29 of 31 districts voted to increase K–12 education spending by a total of over $1 billion, approving 34 bond issues and operating-revenue increases. Nearly two-thirds of the ballot questions passed with less than 60 percent of the vote. If the Colorado voters resembled the Harvard survey&rsquo;s national sample, it is very likely that a fully informed public would have voted differently.</p> <p>An informed public is a necessary prerequisite for self-government. When government agencies offer incomplete or misleading data, they deprive taxpayers of the ability to make informed decisions. At a time when state and local budgets are severely strained, it is imperative that state education departments provide the public with accurate, timely, and accessible spending data.</p> Wed, 16 Oct 2013 12:29 EDT Latest Cato Research on State and Local Fiscal Policy Jason Bedrick A SAFE Way Out of State and Local Pension Woes? - Panel 2: Experiences from the States: Successes, Failures, and What Comes Next Tue, 01 Oct 2013 12:30 EDT Latest Cato Research on State and Local Fiscal Policy Jagadeesh Gokhale, Eileen Norcross, Richard Dreyfuss A SAFE Way Out of State and Local Pension Woes? - Panel 1: State and Local Pensions: The Problem and the Scope for a SAFE Solution Tue, 01 Oct 2013 10:30 EDT Latest Cato Research on State and Local Fiscal Policy Jagadeesh Gokhale, Preston Rutledge, Robert Clark End Federal Aid Photo-Ops, By Ending Federal Aid Chris Edwards <p>I was struck by a photo and story in the <a target="_blank" href="" rel="nofollow"><em>Washington Post</em></a> and <em>Baltimore Sun</em> earlier this week. A group of high-powered politicians had assembled at the Port of Baltimore for a ceremony to roll out a federal grant for seaport investment. The group included the vice president of the United States, the two U.S. senators from Maryland, the Secretary of Transportation, and numerous other important political leaders.</p> <p>It must have been one heck of a big grant, like maybe $1 billion or so? No, it was for just $10 million. It came from a federal program called TIGER, which has dished out grants for 52 infrastructure projects in 37 states averaging $9 million each.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">The federal government has hundreds of costly aid that could be funded more efficiently by state and local governments or the private sector.&rdquo;</span></p> </blockquote> <p>Some people may think that the purpose of this grant program is to build America and boost the economy, but that is naive. The actual purpose is to give politicians photo ops and generate positive news stories. The Baltimore event generated substantial media &mdash; and it was all favorable because everybody loves Santa Claus.</p> <p>But shouldn&rsquo;t Vice President Joe Biden have been huddled in Washington this week with his advisors dealing with the Syria crisis? Again, that&rsquo;s naïve. The truth is that many politicians are so addicted to spending that they put it ahead of national security issues.</p> <p>TIGER funding is just a drop in the bucket of total annual U.S. infrastructure spending of $2.5 trillion. It could be easily provided instead by state governments or the private sector. But federal funding has one big advantage: it allows politicians at every level of government to claim credit for the same stream of money. Think about the mountain of media those 52 TIGER photo ops in 37 states have likely created for hundreds of federal, state, and local politicians.</p> <p>Hopefully, the $10 million paid to the Port of Maryland will be put to good use. But such federal subsidies are not needed. The Maryland Port Administration reports that public and private businesses operating at the port generate a $1.7 billion in annual revenues, so they surely could have funded their own $10 million project.</p> <p>Here is the big picture: Congress faces ongoing budget deficits and is wondering how to restrain spending to meet the lower sequester levels. Why not cut the $560 billion in annual spending on aid to state and local governments? Nearly every federal department can find savings in this area since aid is handed out through 1,100 separate programs.</p> <p>Most people know about federal aid for highways and K-12 education. But the federal government has hundreds of costly but more obscure aid programs for such things as Nursing Workforce Diversity, Boating Safety, and Healthy Marriages. All these activities could be funded more efficiently by state and local governments or the private sector.</p> <p>Consider seaports like Baltimore&rsquo;s. They would be more competitive if they were unsubsidized and operated as private businesses, as they are in some of our trading partners. Many British seaports, for example, are private after Margaret Thatcher&rsquo;s reforms in the 1980s. That same is true for federal aid to airports. We should end the subsidies and privatize our airports, as many other countries have.</p> <p>There are many economic problems with federal aid, such as wasting resources on pork barrel projects. But there is another problem with aid that does not get enough attention: it distracts federal policymakers from their proper national responsibilities. Akin to Joe Biden handing out subsidies in Baltimore, remember that George W. Bush&mdash;as part of his K-12 school subsidy efforts&mdash;was reading stories to a classroom in Florida when 9/11 happened.</p> <p>President Calvin Coolidge recognized this problem when it was first developing in the 1920s. He argued against federal intervention in local activities because it was &ldquo;encumbering the national government beyond its wisdom to comprehend, or its ability to administer&rdquo; them. &ldquo;The wiser policy,&rdquo; he said was &ldquo;to leave the localities, so far as we can, possessed of their own sources of revenue and charged with their own obligations.&rdquo;</p> <p>Since we focused on the Baltimore port, let&rsquo;s give a Marylander the final word on the issue. Here is Democratic Governor Albert Ritchie in 1925 on the federal aid system: &ldquo;The system ought to be abolished, root and branch&rdquo; and &ldquo;stricken from the federal budget.&rdquo;</p> <p>It&rsquo;s time to revive the Ritchie &ldquo;root and branch&rdquo; plan, and cut those activities from the federal budget that have no proper place in Washington.</p> Fri, 13 Sep 2013 08:04 EDT Latest Cato Research on State and Local Fiscal Policy Chris Edwards Political Sins, More than Guns, Drove Colorado Recall David B. Kopel <p>The Colorado vote to <a href="" target="_blank">recall</a> two Democratic state senators is a major win for the Second Amendment and for responsible law-making. Although guns were the reason for the recall campaign, Senate President John Morse of Colorado Springs and Senator Angela Giron of Pueblo lost primarily because they misused their powers, not for any stand on principle. Their misjudgments may mean the end of the state&rsquo;s new gun control laws.</p> <p>As of today, those laws are still on the books. The Senate used to be split 20-15 with a Democratic majority. The majority is now reduced to 18-17. More important, because the Senate&rsquo;s two pro-Second Amendment Democrats voted against it, the <a href="">magazine ban</a> passed by only a single vote. After the recall, the Colorado Senate has a pro-Second Amendment majority &mdash; enough to repeal the ban on magazines holding more than 15 rounds.</p> <p>In the state&rsquo;s House of Representatives, there may already be a majority for repeal. The magazine ban passed the House in February by only three votes, and by March widespread buyer&rsquo;s remorse had spread among Democrats who voted in favor of the ban. That&rsquo;s a reason the bill&rsquo;s managers couldn&rsquo;t let the bill go back to the House for amendments, even after it became clear that the bill had major drafting defects.</p> <blockquote class="pullquote right"> <p class="pq-quote"><span class="open-quote">&ldquo;</span><span class="pq-body">The Colorado vote to recall two Democratic state senators is a major win for the Second Amendment and for responsible law-making.&rdquo;</span></p> </blockquote> <p>The bill only passed the House in the first place because Vice President Joe Biden called undecided state Democratic representatives and essentially ordered them to vote for it. After this week&rsquo;s recall, White House promises of electoral protection for legislators who vote against guns no longer have credibility.</p> <p><strong>Governor Weakened</strong></p> <p>There&rsquo;s no expectation that Governor John Hickenlooper would sign a bill repealing the law. But he might not be governor for a lot longer. His <a href="" target="_blank">approval ratings</a> are underwater with 48 percent of voters saying he shouldn&rsquo;t be re-elected in 2014. One big reason for Hickenlooper&rsquo;s lackluster polling numbers is his stance on guns; Coloradoans disapprove of his handling of the issue by 17 points.</p> <p>Hickenlooper made the situation worse in August by <a href="" target="_blank">blocking</a> the execution of Nathan Dunlap, who killed four people during a 1993 robbery of a Chuck E. Cheese restaurant.</p> <p>For some Coloradoans, it was galling to see Hickenlooper thwart justice for a heinous gun criminal while cracking down on law-abiding gun owners. The governor retains strong support among Democrats, but his approval rating has plunged among a plurality of Republicans. Hickenlooper is also underwater with independents.</p> <p>After the vote this week, Hickenlooper said, &ldquo;Obviously I&rsquo;ll have to do a better job of getting the facts out there&rdquo; about the gun control bills. The voters&rsquo; message, however, wasn&rsquo;t that gun control advocates don&rsquo;t talk enough. The problem was how little they listened during the legislative process.</p> <p>In the last half-century, the Colorado legislative leader who had been the most notorious for abusing the rights of the minority party, and for bullying dissidents in his own party, was Republican <a href="" target="_blank">Carl Beverly Bledsoe</a>, who was speaker of the House from 1981 to 1991. Things became so bad that Colorado voters in 1988 took the extraordinary step of adopting a constitutional amendment to reform the legislative system, curbing Bledsoe&rsquo;s power.</p> <p>The only legislative leader in the last half-century who may have exceeded Bledsoe&rsquo;s abuses of power was Senate President Morse in 2013. As with Bledsoe, Colorado voters ultimately decided they needed to take special action.</p> <p><strong>Flawed Legislation</strong></p> <p>Morse, who was elected Senate president by his party&rsquo;s left wing, treated moderate Democrats almost as badly as he treated Republicans. As with the gun legislation, he rammed complex bills on education finance, wind-power mandates and election law revisions through the Senate so quickly that errors were often overlooked. Later, when the mistakes became obvious, corrections weren&rsquo;t allowed. Senator Giron was a reliable supporter of Morse, and he appointed her to be chairman the State Affairs Committee.</p> <p>The Colorado Legislature has a long-standing tradition of allowing every citizen who wishes to testify the <a href=";blobheader=application/pdf&amp;blobkey=id&amp;blobtable=MungoBlobs&amp;blobwhere=1224913761877&amp;ssbinary=true" target="_blank">opportunity to be heard</a>, at least briefly. Legislators have endured many long committee hearings listening to citizens argue for and against gay rights, motorcycle-helmet mandates, immigration and other hot topics.</p> <p>During the gun bill hearings this year, Giron followed Morse&rsquo;s orders to limit testimony to 90 minutes per side. Hundreds of Colorado residents, some of whom had driven hours to get to Denver, were turned away.</p> <p>Back home in Pueblo (where the Democratic sheriff was among the opponents of the gun bills), Giron compounded the problem &mdash; declaring that because she had taken questions about guns at one town-hall meeting, she didn&rsquo;t want to talk about the subject at any other town halls. Giron&rsquo;s district has a 24-point Democratic advantage among registered voters and voted for President Barack Obama by a 19-point margin in 2012. She was ousted this week by 12 points.</p> <p>The recall of Giron and Morse was partly a repudiation of substance of the gun laws, but more so, it was a rejection of their political high-handedness. In Colorado, and elsewhere in the U.S., the process matters &mdash; even, or especially, if you disagree on principles.</p> Thu, 12 Sep 2013 09:29 EDT Latest Cato Research on State and Local Fiscal Policy David B. Kopel Taxpayers Disserved by Inacurrate School Spending Data Jason Bedrick <p>Do you know how much it costs to educate a student in Oklahoma? It&#8217;s likely more than you think, and the state Department of Education is keeping you in the dark.</p> <p>In Oklahoma the total annual cost per pupil is $8,630 on average, according to the most recent data from the National Center for Education Statistics (2009-10). However, according to the state Department of Education, the average per-pupil cost was just $7,760 that year.</p> At a time when state and local budgets are severely strained, it is crucial that spending decisions reflect sound and informed judgment.[/pullquote <p>Why the discrepancy? Despite referring simply to &ldquo;per-pupil expenditures,&rdquo; the agency actually only publishes operating per-pupil expenditures, omitting big-ticket items like paying off debt for school buildings.</p> <p>That&#8217;s one of the reasons Oklahoma earned an F-minus in a new report from the Cato Institute, which grades all 50 state education departments for their financial transparency. Oklahoma is the fifth worst in the nation.</p> <p>A business that acquired a bank loan while understating its expenses would be in serious trouble, yet state education departments like Oklahoma&#8217;s routinely understate the costs of public schools. It&#8217;s no wonder a recent Harvard survey found the public&#8217;s average estimate of the annual cost per public school student nationwide was less than half what is actually spent.</p> <p>The department&#8217;s website fails to provide any data regarding average salaries, employee benefits, or pensions. It is also a near-impenetrable labyrinth, with cryptic jargon around every turn. By contrast, New Mexico earned the report&#8217;s only A for providing complete, timely and accessible spending data. Oklahoma should look to New Mexico&#8217;s example.</p> <p>The Harvard study also examined how misconceptions about education spending affect support for spending levels. The researchers randomly divided survey respondents into two groups. They asked the first group whether &ldquo;government funding for public schools in your district should increase, decrease or stay about the same.&rdquo; They asked the second group the same question but prefaced it by informing respondents how much was currently being spent annually per pupil in their district.</p> <p>Fifty-three percent of the uninformed group wanted to increase spending on public schools; only 43 percent of the informed group did. Fifty-seven percent of the informed group wanted spending to stay the same or decrease.</p> <p>The widespread underestimation of education spending has real-world consequences. On Election Day 2012 in Colorado, voters in 29 of 31 districts voted to increase K-12 education spending by over $1 billion. The results for nearly two-thirds of the ballot questions passed with less than 60 percent support. As the Harvard survey suggests, a fully informed public would likely have voted differently.</p> <p>When government agencies provide incomplete or misleading data, they deprive taxpayers of the ability to make informed decisions. Voters should have accurate information about how much they&#8217;re spending before deciding whether to spend more. At a time when state and local budgets are severely strained, it is crucial that spending decisions reflect sound and informed judgment.</p> Sat, 07 Sep 2013 08:43 EDT Latest Cato Research on State and Local Fiscal Policy Jason Bedrick