Illustration by Danny Elchert
If you serve the citizens of Missouri as an employee of their state government, there is a special place for you.
It’s called “last place.”
With an average salary of $38,187, Missouri state employees ranked precisely 50th out of the 50 U.S. states in their annual compensation, according to the most recent figures available from the U.S. Census Bureau (March 2008). The average state worker here earned 26 percent less than the U.S. average of $51,507.
Missouri is looking directly up at the three poorest states in America—West Virginia, Mississippi, and Arkansas—when it comes to paying people for the wide range of key services that state government provides. In terms of human investment, it’s the Appalachia of the Midwest.
How well do you suppose a company would fare long-term if its employees earned less than any of its competitors in town, at 26 percent below the industry average?
When it comes to teachers and state troopers and conservation workers and prison officials and healthcare caseworkers—and countless others—Missouri taxpayers better hope they don’t get what they pay for. We’re dead last.
The fundamental reason for this is simple: Missouri is allergic to revenue.
As of 2007, the state ranked 47th in the amount of revenue collected per capita, and given the absolute refusal of either political party to even consider raising new money, 50th place can’t be far behind in this category as well.
This is about effort at the state level. Understand that none of the citizens of any of the other 49 states likes to pay taxes. Yet Missouri, ranking just slightly below average in median household income (35th place in 2008 at $46,857) refuses even to address the subject of adequate funding for services.
Let’s not lose sight of this basic point: Other Americans who don’t care for taxation any more than Missourians have somehow managed to bring themselves to invest at a dramatically higher level in their educational systems and their highway patrols and their prison systems and their parks and their social-services agencies.
Why not Missouri?
Gov. Jay Nixon didn’t even come close to the subject in his recent State of the State speech. As is customary, he promised to slash bureaucratic waste while making wondrous (apparently magical) improvements in education at all levels, healthcare, support for the indigent, and so on.
Nixon’s goals probably seemed downright liberal to some. After all, the last guy—Gov. Matt Blunt—essentially advocated starving poor children and throwing the disabled out of their wheelchairs to see to it that Missouri made ends meet without raising taxes.
But make no mistake: Jay Nixon uttered the time-honored Missouri mantra more than once: “We won’t raise taxes.”
In fairness to the governor, to say anything else about revenue would be to concede any possibility of his reelection in 2012. He might as well advocate an increase in teen sex.
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Nixon is no tax-and-spend Democrat, that’s for sure. Indeed, he’s a less-is-more, small-government Democrat clinging to the numbing premise that the obvious result of eliminating government jobs will be to make remaining government employees leaner, smarter, and more effective.
All of this will be accomplished, of course, without a penny of pay increase to the lowest-paid state-government workforce in America. And without so much as a single question from the state’s lapdog media as to how any of it possibly could make a whit of sense.
For example, Nixon proposed a year ago to eliminate 1,300 positions, thus producing a cut of “nearly $200 million from overhead by eliminating these positions and cutting bureaucracy.” By my math, that means the average eliminated bureaucrat would have been costing the state $153,846, which is roughly four times their average salary (not counting benefits).
Interesting.
Fuzzy math aside, it’s fascinating (unless you’re in the state-capitol press corps) to ponder the gap between rhetoric and reality for state employees. Here’s what Nixon said:
“Make no mistake, I value our state workers, and these cuts will not be easy. We must always remember that public service is among the most honorable lines of work. The folks who protect our families and keep our parks clean. The brave men and women who help our communities overcome natural disasters. As their chief executive, I stand with our state employees today and always.”
As long as they don’t mind working for less than their counterparts in every other state in America, that is.
Still, Jay Nixon is hardly the problem in Missouri. Indeed, were he to be ousted by any known Republican, it could only get worse for state employees—and everyone else—with the state moving into the Really Dark Ages.
Virtually no politician of either party has dared to speak openly, much less forcefully, about the state’s glaring revenue deficiencies in comparison to the revenues of other states. There’s no need to choose partisan sides in this debate.
There is no debate.
Missouri has a time-honored, bipartisan tradition of overreaction to state-government taxation. In 1980, the voters passed the dreaded Hancock Amendment, which forever tied state revenues by a specific ratio to Missourians’ personal income (using that year’s number as an index). Voters doubled down on the madness by requiring in 1996 that virtually all tax increases be put to a vote.
The result has been a disaster, says Amy Blouin, executive director of the Missouri Budget Project, a nonprofit think tank/advocacy group based in St. Louis that tackles statewide economic issues. Blouin’s is a rare public voice complaining that Missouri’s revenue shortage is “absolutely” hurting state residents, especially those on the lower end of the economic ladder.
“Hancock was a significant part of the problem for two reasons,” says Blouin. “One is that in the 1990s, when we were doing so well as a state economically, we reached the revenue lid under Hancock and had to refund $995 million [to taxpayers] over about a 5-year period. We’d have been much better off to place that money into a savings account for when we’d need it later, as we do now.
“Second, and even more significant, hitting that lid created this mentality that we were flush with money. State legislators started cutting taxes in the ’90s—they cut another $1 billion over those five years—and they haven’t stopped cutting since.”
Blouin says a long list of deficiencies can be attributed to the revenue shortage, starting with the aforementioned 50th-place ranking in state salaries and overall investment in infrastructure. She also notes Missouri has the third-lowest Medicaid eligibility level for low-income parents in the nation and the fourth-lowest income eligibility level for Child Care Assistance to help low-income families keep working. And on and on.
Blouin points out that the price Missourians pay is often indirect, such as in higher education, where Missouri ranks 44th in higher-education spending, or 24 percent below the national average (in relation to personal income).
“We end up paying more for basic services like tuition in higher education because we don’t invest in our educational system as much as other states,” she says.
On this point, Nixon has offered radical news, at least for the next fiscal year: In exchange for a bold offer to keep Missouri’s pitiful support for higher education at its existing level, the governor has extracted a promise from the state’s public colleges and universities not to increase tuition.
That’s progress, Missouri-style, circa 2010. Nixon can rightfully claim that he’s far more committed to higher education than most other politicians have been.
But did you hear anything about bridging that 24 percent gap between our state and the national average in terms of per-capita-income support of higher education?
Uh, no.
Missouri cannot even begin to correct its rampant underfunding of education, state-police salaries, social services, and the rest unless it’s willing to look at raising revenues. Somehow. Some way.
There are plenty of places to look. As discussed in this space previously, Missouri strangely has the second-lowest tobacco taxes in the nation. It’s seventh from the bottom in alcohol taxes.
And here’s a better one: Missouri has the lowest net corporate income-tax revenues in America, with the exception of the four states that have no corporate income tax. The national per capita average is $201. Missouri is at $66, less than one-third of the national average.
Ah, you say. Keeping these corporate taxes low is a key part of our economic development strategy. Just look at how attractive it makes our state to major companies.
OK, let’s look. The national magazine Chief Executive conducts an annual survey of CEOs regarding the “best and worst states for business.” Low-tax Missouri ranked right smack in the middle, 26th on the list. (One of the four no-corporate-tax states, Washington, is 40th).
On closer inspection, it’s true that CEOs ranked Missouri near the top nationally for “cost of business.” But they rated our state 39th in quality of life, and 43rd for its economy. Maybe that’s why CEOs preferred 22 states with higher taxes over Missouri.
And it’s why raising corporate taxes should be the subject of serious debate, not a taboo. While we’re on the subject, individual taxes per capita, while ranking a more reasonable 27th in the nation, are still roughly 18 percent below the national average.
And what does Missouri have to show for it?
Ask a state-government employee. The answer is in their paycheck.
SLM co-owner Ray Hartmann is a panelist on KETC Channel 9’s Donnybrook, which airs Thursdays at 7 p.m.
