Consumer-Regulated Electricity (CRE) and Data Centers

Posted on by Scott Tanner

Data centers continue to be a hot topic in Missouri. In a recently signed executive order, the governor laid out a plan to formulate a pro-business and pro-consumer framework for data centers supporting artificial intelligence. In addition, the order called for the investigation and review of energy regulations and infrastructure planning due to growing demand.

The investigation and review are intended to protect ratepayers, assess Missouri’s future energy needs, and manage Missouri’s natural resources effectively. These are good objectives, but the hard question is finding a policy solution to match all those goals.

One option I have written about, consumer-regulated electricity (CRE), is worth considering. (If you’re unfamiliar with CRE, you can click the link to learn more.)

Instead of placing new data centers on the existing regulated grid, we could match data centers with an independent CRE utility (CREU). Furthermore, if electricity demand for these data centers falls short of its sky-high projections, then the excess capacity will have been a poor investment. This protects ratepayers by putting private companies on the hook for that risk instead.

There are benefits to data center developers as well. A CREU can be structured around the developer’s reliability needs and preferred energy resources. Projects could also require less transmission, as new generation facilities could be built near their customer base. CRE could be a reliable, economical, and sustainable energy solution to meet current and future energy needs.

Speed to operation is vital in today’s economy, and data center projects have experienced difficulties securing permissions from the various layers of government. While many hurdles would still remain (like local zoning), CRE projects would not require permissions from the Missouri Public Service Commission since they would not be connected to the regulated grid. At the federal level, Senator Tom Cotton recently introduced the DATA Act, which would exempt CREUs from federal regulations not designed for on-site, self-contained power systems. While still early, this legislation is worth monitoring and could further increase the speed to operation.

The governor has made it clear that he wants to meet growing energy demand in a way that protects ratepayers and addresses Missouri’s current and future energy needs. CRE is a policy approach that matches those objectives.

Open Enrollment Would Improve Missouri’s Charter Schools

Posted on by Scott Tanner

Open enrollment has been a hot topic for many years. Discussions on open enrollment typically revolve around its effects on traditional public schools.

But the effects of open enrollment on charter schools (also public schools) are discussed less frequently. While there are a number of potential effects, one is the expansion of a charter school’s “reach” or “market.” With open enrollment, charter schools would not only be able to serve more Missourians, but they could also become more innovative.

Charter schools are essentially limited to St. Louis City, Kansas City 33, Columbia, and any district that has been provisionally accredited for three consecutive years or is unaccredited. The reason they are limited to these districts is that in all other scenarios, the local school district has to approve a charter school to operate, which in Missouri has been a nonstarter.

At the time of this writing, there are 17 charter schools in the City of St Louis, 20 charters in Kansas City 33, and 1 in Normandy Schools Collaborative (through the accreditation mechanism).

Not only are charters limited in where they can operate, but they are further limited in the student base they can pull from. Unless a student’s family pays tuition to transfer in, each charter school is limited to students within its district’s boundaries. Not every state is like this.

Arizona has bolstered its charter schools by creating a robust open enrollment program. In Arizona, charter schools are not bound to a district-wide market.

This has permitted schools such as Arizona Autism Charter Schools (AACS) to thrive and serve a wide range of families in the state. If AACS were limited just to students in one district, it may not have been able to open or stay open due to a lack of demand. But open enrollment has enabled AACS to provide a specialized curriculum for parents commuting as far as 50 miles for their children’s education.

There are so many families with so many different needs, and open enrollment would allow for Missouri’s current and future charter schools to have a greater impact and greater opportunity to innovate.

Extraordinary Economic Claims Require Extraordinary Evidence—Sports Edition

Posted on by Scott Tanner

Three pieces published on Friday tried and failed to find evidence for big claims about the economic impact of sporting events.

In a column for The Kansas City Star, I challenged the rosy claims of the alleged economic windfall from hosting the World Cup. Every group I contacted indicated they got the number from someone else. When I finally found the organization that generated the number, it did not respond.

That seems to be the standard procedure.

The Kansas City Business Journal tried to dig into how Kansas City’s tourism bureau concluded that 650,000 visitors would descend on the region. Thomas Friestad wrote: “Visit KC declined to share its specific methodology for estimating visitors, saying it is proprietary information.”

Blaise Mesa, writing for The Beacon, examined the economic impact claims being made by proponents of a new Chiefs stadium in Kansas. He ran into the same wall, writing, “The Beacon contacted the firm that calculated economic development data on the stadium, but they didn’t reply to requests for comment.”

It should be a red flag for even the most diehard supporters of these deals that those who promote the claims refuse to answer basic questions.

The Auditor Confirms Missouri’s Budget Problem

Posted on by Scott Tanner

For years, I have argued that Missouri’s spending trajectory needed correction, and a new report from the state auditor confirms that conclusion.

Shortly before the end of last year, the auditor’s office released a report urging lawmakers to take “immediate action” to curb the trend of deficit spending before more drastic cuts become necessary. For longtime readers of the Show-Me Institute blog, this assessment will sound familiar. The report reinforces concerns that have been visible in Missouri’s budget data for more than half a decade.

Reviewing recent revenue and spending trends helps illustrate the problem. Between 2020 and 2025, Missouri’s general revenue collections increased by 45.8 percent, largely driven by income and sales tax growth. Over the same period, general revenue expenditures increased by 53.4 percent. That spending growth more than doubled the rate of inflation, which rose 24.5 percent during those years. Even strong revenue growth was not enough to keep pace.

This imbalance was made possible by a temporary windfall. Although Missouri operates under a constitutional balanced budget requirement, lawmakers were able to commit to higher spending because of a large influx of federal COVID relief funds, combined with stronger-than-expected tax collections. That surge produced a record general revenue balance of nearly $6 billion in 2023. Rather than treating those conditions as temporary, the state locked in higher ongoing spending through pay raises and program expansions, among other things. Since then, the surplus has been largely exhausted.

Looking ahead, fiscal pressures are likely to get worse. Governor Kehoe’s recent budget recommendations project a decline in expected revenues this fiscal year and only minimal growth in Fiscal Year 2027. The outlook deteriorates further when you consider the chance of an economic downturn. Using the worst three-year revenue decline Missouri experienced between 2003 and 2025, the auditor estimates the general revenue fund would be depleted by 2027. Under that scenario, the state would face a deficit exceeding $3.8 billion. And while Missouri’s Budget Reserve Fund (rainy day fund) holds approximately $950 million, as I’ve written before, constitutional restrictions sharply limit its usefulness in addressing an ongoing budget shortfall.

As the general assembly begins working on next year’s budget, the auditor’s report should remain front of mind. There’s still time to rein in the state’s out-of-control spending if Missouri’s lawmakers are willing to start making the tough decisions that right-sizing government entails. The question is no longer whether adjustment is needed, but instead how long until fiscal disaster strikes.

Charter Schools Do Special Education Better

Posted on by Scott Tanner

A new study by Scott Imberman and Andrew Johnson shows that special education students benefit from attending charter schools.

Using data from Michigan, the authors identify the effects of charter schools on special education students by comparing special education students who enroll in charter schools early with those who enroll in charter schools late. This research design addresses a common concern in charter school research: students who choose to enroll in charter schools may differ from those who remain in traditional public schools in unobservable ways. Simple comparisons between charter and traditional public school students can therefore be misleading.

To overcome this challenge, Imberman and Johnson compare early charter entrants to late entrants. Because both groups eventually attend charter schools, they are more comparable to one another than to students who never enroll. The effect of charter school attendance is identified by examining differences in outcomes before the late entrants make the switch.

In my view, the study’s two most important findings are:

  • Charter schools use special education programs and service assignments that are less intensive and expen­sive than in traditional public schools.
  • Charter schools improve special education students’ academic achievement and attendance.

The authors also conduct a parallel analysis of general education students. They show that the positive effects of charter schools on special education students are similar to the positive effects on general education students.

This study complements recent work by Elizabeth Setren, who examines special education students in Boston who randomly win or lose lotteries to attend charter schools. Because lottery outcomes are random, this design provides especially strong causal evidence that factors other than charter school attendance are highly unlikely to drive the results. Setren likewise finds that charter schools improve test scores for special education students.

Special education students are an important subpopulation. They account for nearly 15 percent of K-12 enrollment in the United States and receive disproportionate funding. Both of these studies find charter schools serve special education students more effectively, and contribute to the large and growing body of evidence showing that charter schools outperform traditional public schools.

The Budget Mirage Reappears

Posted on by Scott Tanner

To borrow from Yogi Berra, it is déjà vu all over again. For the past two years, I have warned that Missouri’s budget totals are likely misleading. Lawmakers are routinely approving spending plans that appear smaller than they really are.

When Governor Kehoe signed the FY 2026 budget into law last June, after vetoing more than $2 billion in spending approved by the legislature, the total came to nearly $51 billion, with $15.4 billion coming from state general revenues. Given that Missouri’s budget totaled barely $27 billion less than a decade ago, it may seem hard to believe that a $51 billion budget could still understate the cost of state government. Nevertheless, the budget left out more than $1 billion in anticipated Medicaid spending.

This is not a matter of miscounting or bad estimates. While projecting costs more than a year in advance is never perfect, what is happening here is more straightforward. State lawmakers are knowingly approving budgets that do not include enough funding to last the full fiscal year. Missouri’s budget director acknowledged as much when he testified before the House Budget Committee this past week.

Although the issue likely extends beyond Medicaid, the program provides the clearest illustration of the problem. For the vast majority of enrollees, Medicaid costs the state a predictable monthly payment to a managed care provider (essentially a health insurance company). Enrollment today is roughly the same as it was one year ago. Yet the supplemental funding request for FY 2026—the amount needed to carry the budget through June 30—exceeds $3.2 billion, with more than $1 billion devoted to Medicaid alone. That increase far outpaces any reasonable measure of inflation and reflects a budget that did not include a full year of known costs.

This is not a new pattern. When I wrote about Missouri’s budget mirage last year, the legislature was facing a nearly $2 billion supplemental request, with Medicaid again serving as a significant driver. In practical terms, the $51 billion budget approved last year is now expected to end closer to $54 billion in total spending. With the governor’s FY 2027 budget recommendations totaling $54.5 billion, including $16.3 billion from general revenue, taxpayers are left to wonder how closely that figure will track reality.

Much has been said about the need to rein in Missouri’s out-of-control spending. But a necessary first step in rightsizing state government is being clear about how much it costs in the first place. Systematically underfunding known obligations and backfilling them later makes it difficult for taxpayers to understand the true size of the budget and the choices policymakers are making. Perhaps more importantly, an understated baseline makes it harder for lawmakers to evaluate new spending proposals or identify meaningful savings because they aren’t aware of the true cost of their existing commitments.

As legislators begin work on next year’s budget, the best place for them to start is with transparency.

Missouri Forms an Advanced Nuclear Task Force

Posted on by Scott Tanner

Governor Kehoe recently signed an executive order establishing the “Missouri Advanced Nuclear Task Force” as part of an “all-in” commitment on nuclear energy in Missouri.

The new task force is modeled similarly to Tennessee’s nuclear advisory council, which I have written about extensively. This nuclear-focused group will identify strengths to leverage, highlight regulatory and practical reforms worth considering, and serve as a touch point for potential partnerships both nationally and internationally.

After forming its nuclear advisory council in 2023, Tennessee saw notable success in attracting nuclear supply-chain and research investment, as well as a new small modular reactor (SMR) project. With a similar structure now in place, I am hopeful Missouri can achieve comparable success in bringing new nuclear investment to the state.

Missouri’s Advanced Nuclear Task Force Makeup

The task force is structured much like Tennessee’s; it is composed of different stakeholders from government, higher education, and the energy sector.

The task force is currently not a permanent body, and is required to submit an annual report to the governor and the Missouri Senate and House energy committees with a list of barriers to nuclear energy deployment and actional recommendations. It is set to dissolve after the submission of its third annual report, unless it is extended or dissolved beforehand.

What the Task Force Is Charged with Doing

As outlined in the executive order, the task force will help facilitate actionable next steps and reforms for nuclear power in Missouri.

Just as importantly, it will also be tasked with identifying public–private partnership opportunities and advising the governor on regulatory, technological, and economic developments in the nuclear sector.

With significant momentum and change in nuclear energy (trust me, I had to update my recent report on nuclear energy many times), the task force will be useful in helping Missouri policymakers remain informed and competitive.

One Suggestion in Implementation

While the executive order does not explicitly require national or international experts, the governor is granted latitude to appoint additional members. That flexibility should be used. Expertise in areas such as nuclear engineering, mechanical and civil engineering, and environmental law could meaningfully strengthen the group’s work.

Hopes for the Future

Missouri has taken a meaningful step toward nuclear investment and development. If the task force is used as intended, I am hopeful that Missouri can succeed the same way Tennessee has.

Live By the Sword, Die By the Sword

Posted on by Scott Tanner

Show-Me Institute analysts have been writing and talking about Paul McKee’s Northside (St. Louis) development plan since it started almost 20 years ago. The Northside project plan was to acquire and redevelop large, struggling parts of north St. Louis. The entire project was backed by huge amounts of state and city tax subsidies.

How has the project worked out? Did the promises of redevelopment of this part of the city and a great return on the public tax investment pan out? Or did the warnings and concerns of people like Institute analyst Audrey Spalding prove correct?

Of course, Northside has been a total failure, and Audrey and others were correct.

The latest update on almost 20 years of policy failure is that a batch of McKee’s properties (which taxpayers bought for him) is being seized by the city via eminent domain. More of his properties may face the same fate soon. In this particular case, the properties are needed for the National Geospatial Intelligence Agency (NGA) project, so the eminent domain seizures are for legitimate public use. The city tried to buy these properties from McKee, but no agreement could be reached on price, so the city is taking them. The final price paid for them will almost certainly be determined by a court.

Everything you need to know about why economic development using subsidies is a road to failure is wrapped up in this story. The entire project began not based on market forces, but on the forces of lobbyists, lawyers, and politicians. It was sold as a way to save parts of north St. Louis from decades of poverty and blight—conditions that were created in part by government policy in the first place. The entire Northside redevelopment project has been a colossal failure from the start, and the city and state should never have authorized tax subsidies for it. In the state’s case, it created a brand new law just for McKee to do this.

I would hope the city and state would learn a lesson from the failures of tax incentives and subsidies from this project. I doubt very much that they will. As Orwell said, to see the things in front of one’s nose requires a constant struggle—a struggle that politicians rarely have any incentive to engage in.

Missouri’s Sunshine Law Needs More than Good Intentions

Posted on by Scott Tanner

Missouri’s Sunshine Law was a product of the Watergate era, passed in 1973 with a clear message: the public’s business should be done in public. But in the decades since, while the language has been modestly updated, the spirit of the law has too often been ignored—and in some cases, actively undermined.

Across Missouri, public officials routinely delay, dodge, or deny access to information that taxpayers are entitled to. They charge outrageous fees, cite vague exemptions, lose track of requests, or hide behind non-disclosure agreements, treating transparency as a nuisance rather than a requirement.

Years ago my colleagues wrote about the prohibitively high fees municipalities sought just to turn over the most basic financial data—the city checkbook. That’s just the beginning.

Consider Kansas City’s downtown ballpark negotiations. Mayor Quinton Lucas indicated he was willing to share details, so I took him up on it. I filed an open records request through the city website. Having received no response for almost two weeks (state law requires action be taken within three days), I followed up only to be told that the request had been wrongly assigned and had been sitting idle. A city employee resolved the issue, adding, “Let’s keep our fingers crossed” that it works this time. Two weeks later I was emailed: “All responsive records pertaining to this request are closed records pursuant to Sec 610.021(12) because such records are related to negotiations for a contract prior to its execution.”

The Kansas City Star reports that the city is again in negotiations with the Royals to subsidize a downtown park. Elected leaders are apparently eager to make sure the deal is not only kept secret, but also that it avoids any public vote.

In August 2025, I asked the Kansas City Streetcar Authority for records about the construction costs of its new Main Street extension—reported to be the most expensive streetcar line in the country at over $100 million per mile. My request was redirected to city staff who told me the matter was under review. I followed up in late October and was told the city would contact me by the end of that week. It’s been almost three months with no update.

In one recent case, a state employee told me the data I needed would take just 20 minutes to find—but only after a formal Sunshine Request was submitted and processed. This person did not know how long that would take. I got the information five days later, and I was grateful. But it underscored a troubling reality: a process meant to promote transparency is now often used to delay it.

Then there are the NDAs. The director of Missouri’s Department of Economic Development signed one with both the Royals and Chiefs—and indicated in a legislative hearing that she may not be able to answer questions. PortKC even requires companies sign an NDA in its application. While sealed bids may serve public interest in competitive contracting, secrecy around subsidies undermines the very idea of public oversight.

Missouri’s Sunshine Law could be a valuable tool, but it needs to be refreshed and its exceptions narrowed. Doing so would not merely combat waste, fraud, and abuse, but would also encourage better public policy.

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