University of Missouri to close center studying state economy, taxes

Researchers have advised lawmakers, state budget officials on revenue and policy for almost 50 years

The University of Missouri-Columbia's iconic columns, remains of the school's first building, stand in front of Jesse Hall, which houses administrative offices. (University of Missouri photo)

A little over a year ago, when the University of Missouri needed to show the value of a new research center under construction in Columbia, administrators tapped an in-house research center that’s been analyzing the state’s economy since the early 1970s.

The Economic and Policy Analysis Research Center’s report estimated that the $221 million NextGen Precision Health Institute would add $5.6 billion to the state’s economy and increase general revenue tax collections by $227 million over the next 25 years.

The estimate was not based on any breakthrough research or treatments that would have an outsized impact for the dollars invested, the center’s research team, led by director Joseph Haslag, wrote.

“Our projections are based on the average impact that investments and R&D spending have on the state economy,” the report stated.

The university touted the report in a news release and it received significant attention from the media. 

But when the NextGen building opens later this year, the economic research center will be just a memory. After July 1, the university will no longer provide the approximately $250,000 that pays three staff members and maintains the computer databases holding decades of tax and other economic data.

“We tried to implement a move to another state school,” Haslag said. “But funding was not allocated specifically for the center. In the current budget environment, cutting ‘cost centers’ has become quite common.”

The closure means the center will no longer give estimates of state revenue to budget officials or provide data to the legislature that for years has been used to calculate how much money any particular bill could cost the state.

Closing the economic research center is a matter of economics, university spokesman Christian Basi wrote in an email. It is also a question of making education a priority, he wrote.

“Currently, the center costs the university approximately $247,000 from our general operating budget annually,” he wrote.

That is enough to pay two assistant teaching economic professors who would teach 12 to 16 courses each academic year, Basi wrote.

“While we understand the value the center provides, with increasing costs and declining revenue, we must make tough choices, and our mission of educating our students is our priority,” he wrote. “Reallocating this money toward students’ education ensures that we have manageable class sizes and the necessary resources.”

The center was launched in 1972 by Ed Robb, who ran it until his retirement in 2002. It was supported in part by $30,000 annually from the Missouri Department of Revenue, which paid for analysis of income and sales taxes.

That support has dwindled and was $2,750 last year, Haslag said.

The center, with its emphasis on analysis of the impact of economic and tax policy, reflected Robb’s character, his widow, Rosa Schleeter, said.

“He just liked to do research,” she said. “He did research in his sleep.”

Robb wrote a program that merges federal and state tax return data so that he could accurately project how changes in the federal tax code would impact state revenues. That program is still being used, Haslag said, and was used extensively to interpret the 2017 federal tax cut for the state.

“They were talking to us every few hours,” Haslag said, referring to the state budget office. “We were the only ones who run the program, showing that if they are changing it this specific way, what will happen to state revenue.”

Along with that special work, the center advises the state on economic projections used to establish budget estimates and weighs in regularly on the effect of proposed tax legislation.

During the current legislative session, Haslag said, the center has provided comments for 183 fiscal notes, the cost analysis that must accompany each bill introduced by lawmakers. That is up from 82 in the 2020 legislative session and 59 in the 2019 session, he said.

The center’s reliable information helped seal the first agreement for a single, or consensus, revenue estimate used by former Gov. John Ashcroft’s administration and legislative budget offices to guide budget decisions. Previously, the administration, the Missouri House and the state Senate all operated from different estimates of how much money the state had to spend.

“Ed was really, really valuable to that procedure,” said former state Rep. Chris Kelly of Columbia, who was vice-chairman and chairman of the House Budget Committee in the 1980s and 1990s and ranking Democrat on the committee in from 2009. “He approached it in a completely nonpartisan and political way. He did a lot of good for the state of Missouri.”

Kelly and Robb were also political rivals. Robb, a Republican, was elected to the Missouri House in 2004 and served until Kelly, a Democrat, defeated him in 2008.

Along with state issues, the center has also analyzed the impact of business investment. For example, in 1989, the center produced a report on the impact of Walmart that showed retail employment and sales, as well as personal income and population, grew faster in rural counties that had Walmart stores than in those that did not.

The report came at a time when many were blaming Walmart for a loss of jobs and stores in small communities.

Schleeter said she had not heard that the center would close.

“He would be distressed,” Schleeter said. “He would be spinning in his grave because he worked so hard on it.”

Haslag said he’s asked the state to take on the expense in addition to seeking a new home at another state university. Haslag, who is a tenured faculty member, is not in danger of losing his job but would like to maintain the staff.

So far, he said, no source of funding has been secured and that means the staff will be out of a job as of June 30.

He will try to find a way to keep the computers running so the data remains publicly available. But it won’t receive any new information and there will be no more input on legislative fiscal notes. If nothing else, he said, he will pay the cost of keeping the computers going.

“It is sad to think that if I don’t put my own research funding into this the data is going to go away too,” he said.

As an economist, however, Haslag is also philosophical about the response he’s received as he sought a new source of funding.

“Maybe everybody is making a judgment that what we did wasn’t worth very much,” Haslag said.