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Episode Transcript

Susan Pendergrass (00:00):
So great to be joined today by Professor Joe Haslag of Auburn University, formerly of the University of Missouri. You’re an expert on all things economic in Missouri, and you have a new paper for the Show-Me Institute about the Missouri economy. A lot of people when they think of the economy only think of the national economy and not the fact that states have economies too, with GDPs and all kinds of things that influence them, and not all state economies are the same. One of the things I was struck by initially in the paper is that Missouri is ranked 44th for GDP growth. What do you think is going on with that? Why has Missouri fallen so far?

Joe Haslag (00:52):
We couldn’t answer that question in half an hour, Susan. That’s a big one.

Susan Pendergrass (00:55):
Yeah, well let’s just give it a shot. Why have other states’ economies grown faster than ours?

Joe Haslag (01:03):
Well, Missouri has not been a center of innovation, and those things are hard to pin down. There are states that have grown really fast. Since air conditioning has become more accommodating and cheaper, we’ve seen some growth in the South, and there are states like Florida and Texas that have opted for faster growth and attracted a lot of people. So there’s always this question of are you talking about just the total economy and how it grows, or are you talking about the economy per person? Both matter and both are relevant measures depending on the story you’re trying to tell. At the heart of it, though, where growth comes from is not just from adding a bunch of people. If that were the case, we would have grown during the Middle Ages just from population growth. It’s not just about adding people and workers, it’s about the productivity of those workers, how much each one can produce. We’ve seen innovations: the tractor was an innovation compared to the horse and plow, and computers were an innovation compared to adding machines. And when you say 44th, that’s one of the critical things. Missouri is also 44th in the average rate of productivity growth per worker. We just haven’t been a source of super

Susan Pendergrass (02:26):
Sure.

Joe Haslag (02:54):
strength in that area. And I still say “we” because I was born in Missouri and spent a major chunk of my professional career at the university there. Until we change, and it’s hard, what you’d like to say is is there an easy path? Can we just do X, Y, and Z and guarantee it? No. There is no one thing that fits all. But what we do see is that people respond to incentives. What you’d like to set up is a business environment, a tax environment, and other kinds of settings that just make people take some chances. Some are going to pay off and some are going to fail, and you recognize that, but over time you see faster growth in those places.

Susan Pendergrass (03:41):
Yeah. You talk specifically about states in terms of labor productivity. States that invest in certain sectors of the economy, particularly construction, where productivity may be growing faster than other sectors. Is that something Missouri should do? Should we be placing bets on labor sectors?

Joe Haslag (03:57):
That’s a great question. The evidence in this paper is that industrial policy is not something that works very well. Trying to pick winners and losers is exactly the kind of thing we saw in the failed experiments of the USSR and some other places. We all talk about China’s explosive growth for a couple of decades. That wasn’t part of the planned economy. That was coming from the part where they just let loose their entrepreneurs and gave them the right environment, that word again, where they could take chances and succeed. So yeah, picking an industrial policy, there’s just no evidence that growth in one sector’s labor is going to give rise to faster productivity growth.

Susan Pendergrass (05:10):
Okay, so let’s look at a different lever that we’re talking about a lot in Missouri right now, which is reducing or getting rid of the income tax. It feels like a lot of states are trying to do it. And what if all the states around Missouri did the same thing? Would that have an impact on how much our GDP benefits from it?

Joe Haslag (05:29):
Sure. I mean, if we, first of all you said something interesting at the beginning. We think about the national economy, but you can draw borders around any area you want, a state, a city, a metropolitan area like St. Louis, and ask how they’re doing. One of the things that is remarkable is the biggest metropolitan area in Missouri has been stagnant for four or five decades. The population in the St. Louis MSA has been about two and a half million people for at least thirty or forty years. Where they live on the Missouri side or the Illinois side may fluctuate, but the total hasn’t changed. And the city of St. Louis proper has this weird status. Missouri has a unique thing where the city of St. Louis is its own county entity. And the city of St. Louis is

Susan Pendergrass (06:05):
Yeah. Right.

Joe Haslag (06:25):
almost becoming a ghost town. It went from a million people in 1900 to somewhere around 300,000 right now.

Susan Pendergrass (06:32):
Yeah. And they of course have the earnings tax. I can definitely see the counterfactual to this argument. I know people who live in states where they keep raising the income tax and piling on other taxes, Oregon comes to mind, and people are leaving. And we know that Texas and Florida, like you said, people are moving there and they don’t have income tax.

Joe Haslag (06:50):
I think it’s more to it than just the income tax rate, but the income tax rate is part of this package of incentives. Alone, the income tax is a pretty powerful thing, because it changes the returns to every kind of business activity, every kind of trade where we’re exchanging work or productivity or investment for something. Getting rid of the income tax, and there’s a piece in the paper where there’s actually an estimate, a projection of how much, based on the evidence across the country, getting rid of Missouri’s income tax would add to the growth rate.

Susan Pendergrass (07:32):
And how much would it add to people’s pockets?

Joe Haslag (07:33):
Well, the growth rate is about between a

Susan Pendergrass (07:35):
I mean, this is a number that people have been talking about in Missouri the last year. We get rid of the income tax, everyone will have $2,800 or $2,900 more. And your estimate is $2,900?

Joe Haslag (07:39):
Right around $2,900. And it takes a few years to get there, but the point is you get an immediate pop and then faster growth for the rest of the time.

Susan Pendergrass (07:57):
And you have a similar estimate if we improve our labor productivity. How do we go about doing that?

Joe Haslag (08:02):
You create incentives. Productivity still comes from what human beings do, what men and women in the labor force do. My incentive to innovate in a state where the income tax rate is eight or nine percent is a lot lower than it is in a state where it’s one or two percent,

Susan Pendergrass (08:06):
Yeah. Right. Yeah.

Joe Haslag (08:29):
simply because I get to keep more of what the risk produces. We often talk about business as us versus them. But at the heart of the matter, there are people out there saying, I want a better standard of living for myself and my family, and I’m willing to take some risk. I may start in my basement, or in an office with just two or three people. But if my idea is a winning idea, those people who started with me, the people I employ as I expand my business, sure, do I benefit? Yeah, I do. But I also took a lot of risk to do that. I could have fallen flat on my face and come away with nothing.

Susan Pendergrass (09:05):
Yeah. I think you make that point quite well where you talk about dividing up the pie versus growing the pie. You could grow the size of the pie and everyone could theoretically get a bigger slice of it. And I think that’s where people assume everything is fixed. In fact, in the data you were analyzing, we have both the Great Recession and COVID bookending it, and that has to have some impact on Missouri’s long-term growth trajectory, right?

Joe Haslag (09:26):
Yeah, it’s harder to discern. The financial crisis cleared out a bunch of stuff where people had taken risk, some of those were financial risks, and it spread to a bigger group of people. The Great Recession

Susan Pendergrass (09:48):
Did it muddy things up at all?

Joe Haslag (10:09):
It goes back to the idea of creative destruction. Sometimes you have a big destruction and it creates an opportunity for lots of creation. Did the financial crisis of 2008 give rise to the AI expansion? It might have sped it up.

Susan Pendergrass (10:12):
Yeah. Yeah.

Joe Haslag (10:26):
I don’t know for sure, but I think COVID probably had some impacts on that as well. Since we couldn’t be with one another and couldn’t get those spillovers from working together, we relied on computer hardware and software to do those things for us.

Susan Pendergrass (10:36):
Yeah. It was an engine of change in education because people started tutoring and teaching online, realizing you could get a tutor from across the country. It really opened up a lot of interesting new things that I’m not sure have completely sifted out, and I assume that’s true throughout the economy. In a lot of ways, necessity being the mother of invention, it increased productivity.

Joe Haslag (11:16):
No doubt. But I also think that what we’re seeing is the call by so many corporations across the country that, sure, you’ve worked five days a week remote for a couple of years, but we really want you to come back. We think it’s in our best interest as a corporation, for our shareholders, for those folks to be back in the office. Maybe four days a week instead of five, but there’s something about being together that creates possibilities for innovations as well. I’ll tell you a quick story. The semester after the University of Missouri got off of any sort of

Susan Pendergrass (11:38):
Mm-hmm. Yeah. Yeah.

Joe Haslag (11:55):
remote or semi-remote teaching, I was teaching an undergraduate class. That class is typically between 60 and 80 kids, an advanced course, mostly juniors and seniors. You can tell with senioritis, somewhere about 12 weeks into a 16-week semester, you’re down to somewhere between 60 and 70 percent attendance.

Susan Pendergrass (12:11):
Yeah. Yeah.

Joe Haslag (12:19):
That first semester back, it stayed close to 90 percent the entire semester, simply because they were dying to just be in the same room with each other. They recognized that there were spillovers from being in the classroom.

Susan Pendergrass (12:27):
Right. That’s interesting. So if you were given a magic wand and you wanted Missouri’s GDP growth to not be 44th, to be maybe top 25, what would you do with the Missouri economy to really kick-start it?

Joe Haslag (12:52):
I think two things. The easiest one is on the policy front: we just let the returns go back to the people. The tax rate in Missouri, I wouldn’t say it’s an abomination, but I just don’t think it’s been very helpful. But on top of that, our K-12 education, and this is going to appeal to you, has been an issue. We don’t have much competition. But I’m also going to put in a plug: I think Missouri has almost turned its back on higher ed.

Susan Pendergrass (13:20):
Yeah. You say this in the paper. Our educational attainment is tanking, right?

Joe Haslag (13:36):
Yeah. We just don’t have a commitment to it. The question I think would be most interesting is what would the St. Louis economy look like if Wash U wasn’t there? Wash U is an engine of innovation. There’s a lot of great things going on at the med school and the engineering school, and I think it’s just teaching people to learn how to think. Now those people end up going all over the world, but if there was a commitment to, I mean, the University of Missouri has lagged behind some of our Midwestern counterparts. Illinois, Michigan, Wisconsin are all suffering from the same straitjacket, which is that the amount of state funding they receive is down. But I’d also say Missouri is sort of doubly hurt because the state gives the university system whatever money they’re going to give, but then the university system is also controlled by the state in terms of how much they can raise tuition. So there’s no freedom to test what the market forces would look like. And at higher ed, maybe more so than K-12, spending per student at K-12 is not always the recipe for predicting success. However, at higher ed, because there are market forces that tend to work at a different level,

Susan Pendergrass (15:08):
It is not. Yeah.

Joe Haslag (15:19):
money and innovation tend to go hand in hand. Higher ed seems to be going through some sort of shift right now, and I’m not sure I understand exactly what’s going on with it. But if you were to tell me what the two big policies would be, I’m not saying the state of Missouri should spend more on higher ed, but they should loosen the purse strings and let those institutions compete with the market and see what they could do.

Susan Pendergrass (15:31):
Yeah. I think it’s one of the easier parts of the budget to cut. And as our revenue is going down, there seems to be a larger group of stakeholders in K-12: there are 520 superintendents and school boards. That’s a tougher one to cut than higher ed, and I feel like they’ve taken budget cuts.

Joe Haslag (15:55):
And maybe it’s not that the state should be paying the university systems more, but they should let them go. Let them set tuition rates at whatever they think is right. And if it doesn’t work and they fail, then you end up looking more like the University of Idaho than the University of Michigan in terms of how you’re contributing to the state economy. But

Susan Pendergrass (16:22):
Yeah.

Joe Haslag (16:37):
I think there are opportunities to exploit there and we just can’t seem to. There also seems to be this weird critical mass that’s important in higher ed. You have to have a bunch of people together who are all pulling the wagon in the same direction.

Susan Pendergrass (16:42):
Yeah. Well, we also have declining enrollment. Fewer kids coming up. I think we had our largest graduating high school class last year or the year before, so that’s going to make it tough. So just to clarify,

Joe Haslag (16:59):
Yeah.

Susan Pendergrass (17:03):
if Missouri were able to move its income tax rate down close to zero, you, based on your research, feel confident that Missourians would have more money in their pocket?

Joe Haslag (17:12):
More than confident. I think it’s unambiguous. The math is pretty straightforward. If you have a hundred-dollar paycheck and your taxes go from five percent to two percent,

Susan Pendergrass (17:15):
Okay. You heard it here.

Joe Haslag (17:35):
it was my pleasure. Susan, it’s always good to see you and cross paths. I wish I could be there on the ground and have all those conversations I had fifteen years ago when we were talking about this. Thanks for your service.

Susan Pendergrass (17:44):
We’ll welcome you back. Thank you so much. Appreciate it.

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Listen to the full show: www.kcmotalkradio.com/

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Interview Transcript

Patrick Tuohey (00:00)
Good morning, Kansas City. This is Patrick Tuohey, Kansas City’s second favorite Patrick, sitting in on the Pete Mundo Show for the whole morning. If you have read anything in the Kansas City papers about either the Royals Stadium or the Chiefs Stadium, the chances are that you are familiar with my next guest. J.C. Bradbury, a professor of economics at Kennesaw State University, has been studying the economic impacts of building stadiums, tearing down stadiums, getting teams, and losing teams. He’s got a book coming out at the end of next month called This One Will Be Different. I’ll get to the book in a second, JC, but my first question is: why do you hate baseball?

J.C. Bradbury (00:43)
Hi Patrick, thanks for having me on. I get that question a lot because I bring a lot of bad news, or uncomfortable truths, let’s say, about baseball. But I study these things because I love baseball. I’m a huge fan. I grew up an Atlanta Braves fan, but I follow baseball generally and all sorts of sports. I was an Atlanta United season ticket holder for many years. That’s why I do this — because I enjoy it.

Patrick Tuohey (01:09)
It’s funny — years ago somebody recommended Moneyball. It’s a fantastic book. The movie is just as good. I rewatched it the other day, and if you haven’t seen it or haven’t seen it in years, it really holds up. I think of that because baseball claims to be so statistics driven that you’d think fans would be more amenable to the kind of economic analysis you’re doing. But maybe it’s just love of the game and fandom that clouds their reason.

J.C. Bradbury (01:44)
There’s some of that. There are many people who are baseball fans, sports fans, who understand what I’m arguing — and I’d argue it’s more than you’d realize. But most of the people vocally speaking out about stadium issues and public finance are largely blinded by their own fandom. I deal with people on social media all the time who respond to things I say about stadiums and tell me I don’t understand the public finance — and they’re just totally incorrect. They don’t even bother to check it. It’s religion to some people. I say most people would give up their religion before they’d give up their subsidies to their sports teams.

Patrick Tuohey (02:27)
If you don’t already follow J.C. Bradbury on Twitter, I recommend it — JC underscore Bradbury. If you’re a fan of baseball, economics, or The Simpsons, you’ll love his account. So JC, tell me about your book, This One Will Be Different, which comes out at the end of July.

J.C. Bradbury (02:44)
I’ve been studying stadium subsidies and publicly funded stadiums for a very long time. I fell into it accidentally because the Atlanta Braves Stadium opened in Cobb County, a few miles from where I live — just outside Atlanta, where my family has been for generations. I had a lot of interest in how the stadium was built and funded, with three hundred million dollars in subsidies. I was familiar with a lot of the economics behind stadiums, and when I tried to share this research with other people, I was heavily rebuffed. So I began to study the issue more, and before I knew it, I had a very long book about the economics of stadiums. My idea was to explain public finance issues in stadiums using simpler methods. I use sound research methods, but I try to explain it through the narrative story of the Braves coming to Cobb County — here’s what happened, here’s what people argued, here’s what actually happened, let’s look at some of the financial numbers, and let’s understand the general intuition of why stadiums get built even though economists say they’re a bad deal. I look at the politics of it too. And one of the things I find is that these stadiums are mostly built by insider coalitions — chamber of commerce types, folks who are going to sit in the owner’s box and enjoy cocktails, or people with season tickets. They’re the large beneficiaries of the subsidy. They push these advocacy campaigns and try to get them passed as quickly as possible without going to voters if they can. That’s why we get these deals.

Patrick Tuohey (04:35)
One of the things that frustrates me about this whole issue — and I’d be curious if you agree, though I hate when TV and radio hosts make a statement and then ask the guest if they agree, and here I am — is that when St. Louis was considering funding a Major League Soccer stadium, or here in Kansas City with the Royals or the Chiefs, what I wish they would do is just say, “Hey everybody, we are a sports town. We think it’s important to have a sports team here, so we’re going to spend hundreds of millions of dollars to build something.” And just leave it at that. It would be a defensible argument. You could argue whether it’s worth the expenditure, but at least everybody would be honest. But they don’t do that. They go the extra step and say, “And we’re going to make money doing it.” That’s where they mess everything up. That’s where they get the numbers wrong. Is it as simple as that, or am I missing something?

J.C. Bradbury (05:31)
Absolutely. I wish there was some honesty in these debates. The reality is that a lot of people who argue these things don’t actually believe the phony economic impact studies they put out. They do it for a couple of reasons. Number one, politically, it’s a winning issue — if you tell someone it’s good for them economically, they’re more likely to support it. But also, if you just argue it’s good for the community and we’re a sports town — okay, how much does it cost? A billion dollars. How much does that increase taxes? Three hundred dollars. Well, hold on, we’re not that much of a sports town. Think about how you make your own decisions. What kind of car do you want to drive? I want a Ferrari. Great. But to drive a Ferrari, you’d need to move into a two-bedroom apartment, never travel again, and eat ramen noodles. You know what — I’ll get the base model sedan. People make those kinds of decisions, and that’s one of the reasons they use false economic benefits — because once you start talking about social benefits, people look at the costs more closely, and it makes a lot less sense.

Patrick Tuohey (06:40)
I had your colleague Victor Matheson on a few weeks ago and we talked about this, specifically with the World Cup. I’ve also asked Neil Damas this question. In your experience, how good are journalists at reaching out to you and your colleagues to vet the numbers they’re being told by chambers of commerce or the city? Where are we now, and are we getting better?

J.C. Bradbury (07:14)
I think the situation is getting worse, and a lot of it is accidental. Newsrooms have gotten smaller and younger, so there’s less institutional knowledge. People don’t remember the last stadium being built, and they’re told to go cover this stadium story. They call a few local sources — who of course are members of the local chamber — and those people say it’s great. At best, they call a local economist who says it’s bad, and it ends up being a tie. But often they don’t even call the economist. That’s part of the nature of the news business, which is one of the reasons I think it’s so important to use social media and other mediums to get the word out. Even journalists trying to do their best often fall short. And journalists deserve some blame here — when I reach out to try to help them, they often get very defensive, and I think that needs to stop. I’m not just angry at journalists. Both my parents were journalists, and my first job was in a newsroom. I understand what’s going on.

Patrick Tuohey (08:19)
The previous segment, I talked about World Cup reporting. Local people put out outrageous economic development claims a year and a half ago, nobody questioned them, and journalists just repeated them — even though past experience hadn’t lived up to those claims. So what can we do to encourage journalists to reach out, or maybe just give them a primer on what economic impact studies look like and where the flaws are? Whether I’m looking in St. Louis, Kansas City, or around the country, they are all flawed in the same way.

J.C. Bradbury (08:56)
It’s important to always speak up. It’s easy to get tired and think you can’t keep doing it. When someone asks me to look through one of these studies, I tell them it’s not a real study — it’s a fake study. I try to spread that message. Part of the problem is that the big number is the story, and that’s what they want out there. The fact that it’s wrong later doesn’t matter. And sometimes people get mad at me because I’ll call out bad reporting. I do it not because I dislike journalists, but every time I’ve tried to be nice about it, I get told I don’t know what I’m talking about or that they don’t want to tell their boss they need a correction. I think it’s important for journalists to know that if they get it wrong, they’re going to get called on it — not to be mean, but to set the standard.

Patrick Tuohey (09:54)
And do a better job because policymakers and business owners are making decisions based on the numbers you’re putting out there. We see this with the World Cup — people were expecting much bigger crowds than they got. It’s not just a matter of being right. It’s a matter of being right so that people make decisions based on real information, not just projections. JC, I’m grateful for your time this morning. Thank you so much. We’ve been talking to J.C. Bradbury of Kennesaw State University. His book, This One Will Be Different, comes out at the end of July. We’ll be right back.

The post Why Stadium Deals Don’t Add Up with J.C. Bradbury appeared first on Show-Me Institute.

Susan Pendergrass speaks with Judge Glock, director of research and senior fellow at the Manhattan Institute and contributing editor at City Journal, about the growing debate over data centers in Missouri and across the country. They discuss why some communities are banning data centers while others are welcoming them, how Loudoun County, Virginia became the global epicenter of data center development and what it has meant for local tax revenue, whether concerns about noise, aesthetics, and energy use are valid, and more.

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Episode Transcript

Susan Pendergrass (00:00): Thank you for coming on the podcast again, Judge Glock. We’re going to talk about something that is certainly in the news and certainly good and bad for Missouri in the past week. We’ve had stories about both new data centers being announced and more communities banning them. What’s your take on that? You live in Virginia. In Missouri, we are certainly at odds with each other between one area that is going to have both a massive Amazon and a massive Google data center and then very close to that a large county that just banned them. Where do you think this is going?

Judge Glock (00:36): In some sense, it’s going the way of a lot of American projects in that there’s going to be a diversity of local responses to them, which I think is actually quite OK. One of the things I gather when I talk to some of my friends across the pond in the UK or in Europe is that they basically have to have this grand national debate about data centers, whether to allow them and where to allow them. That’s obviously an important and worthwhile debate, but in America what we’re going to have, and what we’ve already had, is a near infinitude of local debates about data centers. I think that’s the right path. When you nationalize or centralize these issues, you create more veto points for people who want to refuse any sort of growth. You also force certain kinds of growth on people in areas that aren’t necessarily favorable to them or most likely to benefit from them. The American system of fairly decentralized governance, combined with a fiscal horse-trading side where the main benefit of local data centers is the fiscal bump local communities can get, I think is going to lead to a more positive outcome than a more centralized system that tries to create a single answer for a whole country or state.

Susan Pendergrass (02:07): But we have at least one county in Missouri that within the last few days said, regardless of the money, we’re a community and these things ruin towns and communities. I wonder if it isn’t going to be like driving across some states like West Virginia where the biggest, ugliest, most pollution-spewing plants are there. I wonder if it’s because Virginia was willing to have them. Now you have these communities in Missouri that are like, we’ve got acres and acres of land and we don’t care what it looks like, versus these other communities that are saying we don’t want big white buildings everywhere. That to me is a very interesting dynamic, because I feel like they’re going to end up in places where nobody wants to build anything else.

Judge Glock (03:02): Yeah, and that might not be the worst outcome. Can I give a quick segue into the history of something called environmental racism? This was a movement started to some extent in the South in the 1970s and 1980s to meld general anti-industrial, pro-environmental sentiment with the burgeoning civil rights movement. The argument at that time was that evil polluters were forcing their factories into places that were poor and largely Black or minority-majority areas, and that this was a travesty because it was burdening people with increased environmental harm, pollution, and factory soot. The problem with that analysis, which has been carried out by the federal government for decades, is that a lot of times poor and minority communities really, really wanted these factories. They were willing to accept the trade-offs of the environmental harms for the fiscal and monetary benefits in a way that wealthier communities were not. Precisely because they were poor, they usually put a lower value on the environmental concerns that exercised a lot of high-income people and put a much higher value on getting good jobs and all the rest. There’s a famous case from the 1990s where I believe the Clinton administration sued a Louisiana parish and a company that was trying to place a factory in a majority-minority district, claiming it was an example of environmental racism. It actually turned out that the largely Black politicians in the local area were saying this was insane, that they were being sued by the federal government for being racist against themselves when they wanted the factory. That’s a long segue into environmental racism, but I think it’s the sort of analysis we should apply to data centers. There are going to be some areas that put a higher value on the fiscal benefits of data centers than others. On the whole, I imagine those will be poorer areas that care a bit more about reducing property taxes and perhaps the fairly small but not insignificant job benefits of data centers. Estimates suggest a finished data center will create around 50 or so permanent jobs, though certainly hundreds during construction. Some of those communities will be more likely to accept them than maybe wealthy suburbs or other areas that don’t want them for various reasons. Now there are exceptions to that general framework, and I’ve written a bit about Loudoun County, which is a very strange case study.

Susan Pendergrass (06:02): Tell me about that, because I’m surprised that it’s the data center capital of the world given what I’ve seen in Loudoun County.

Judge Glock (06:08): I happen to live in Fairfax, Virginia, in part of the suburbs, and grew up in the general area. So it surprised me to learn not too long ago that Loudoun County, just a little further west from Fairfax, a county generally considered ex-urban and rural, and by one measure, median income, the richest county in America, with a median household income of around $170,000 a year. And yet despite this reputation as a wealthy Northern Virginia ex-urban community, what Loudoun has actually become is the global epicenter of data centers. By some measure, the amount of gigawatts used by data centers, the only place close is Beijing, and they’re not even close, at about half the level of what Loudoun and Northern Virginia have. As I showed in an article I wrote for City Journal that got some attention, that came from a particular confluence of events, a history of Defense Department buildup that left a lot of what’s called dark fiber in the area, which created what’s known as low latency, meaning data centers there could communicate with each other very quickly. That made it a good place to locate internet and communication-focused data centers, and today data centers focused on inference for AI, that is the answering of AI queries. That history made it a particular location. But the other side of the Loudoun story is that for decades, and especially in the last decade, the county just recognized the fiscal benefits. Right now data centers are paying for 45% of all taxes in the county, which is pretty remarkable.

Susan Pendergrass (08:12): How much are they taking in from data centers in person?

Judge Glock (08:15): For the next fiscal year, the estimate is that data centers will bring in $1.3 billion in county revenue. That’s about 45% of all local tax revenue. But maybe an even more startling way to frame it is that all local government uses and projects outside of schools are a little less than what Loudoun raises from data centers alone. So the local residents of Loudoun County effectively get free police, free firefighters, free animal control, free roads, and so on.

Susan Pendergrass (09:00): Have they lowered their property taxes?

Judge Glock (09:02): Yes. Thanks to this absolute boom in data center revenue, Loudoun not only has very well-appointed and well-funded schools, roads, and police departments, but they’ve also lowered their property tax rate pretty continuously for over a decade. It’s about 40% lower than it was in the early 2010s. Now that’s offset to some extent by increases in assessments and other rates, but it is much lower than what I pay over here in Fairfax, about a third lower. So data centers for Loudoun, which can kind of be seen as the first area to really embrace them, and home to one of the first significant data centers in America built by a now large firm called Equinox in the late 1990s, has worked really, really well for that county. I don’t think it’s necessarily going to work as well for every possible county that doesn’t have the same advantages Loudoun does, but it does show that for those that embrace them, there can be real benefits. It clearly hasn’t hampered the ability to attract high-income, well-funded residents with good jobs and a nice community. On the whole it seems to have been beneficial, even if you’ve seen growing opposition there as you’ve seen elsewhere.

Susan Pendergrass (10:46): Virginia horse country. But now it feels like the word is out and people are hearing that there could be health risks, that the buildings buzz, that they use all the water. I’ve seen some recently that have like some blue stripes and stuff on them, but the originals were pretty plain. The latest vote in Missouri was in St. Charles, and people cheered and wrote all these emails saying we don’t want them in our backyard because of health risks and noise. How valid are those concerns?

Judge Glock (11:22): Before I was celebrating the local diversity of responses to data centers relative to the alternative, but I don’t want to slight the classic concerns with local NIMBYism, the not-in-my-backyard movement, or the idea that local governments often try very hard to restrict new development of housing or other projects in their area, which can be a substantial burden for people looking for housing or hoping for jobs and fiscal revenue. On the whole, I think the competitiveness of local governments will help wash that out. If St. Charles or another county refuses to build a data center, it’s often not too difficult to find another county willing to accept one. But I do think a lot of this anti-data center hysteria is driven by people with not just local concerns, which can be legitimate though to my mind often vastly overblown, but with a general anger at technological civilization and AI writ large. A lot of that has been strangely channeled into specific local opposition to data centers. That old leftist slogan of think globally and act locally presents a problem here: a lot of local issues don’t really map well to global concerns about climate change or AI. If someone has an issue with AI and they ban a local data center, that is in no way going to stop AI. Stopping a data center nearby is not going to stop the revolution. It will barely even slow it down. There is a lot of generalized opposition to modernity and technology that gets channeled into opposition to local data center construction, which is totally irrelevant to that debate. As for the actual local concerns, when I was reporting on the story for Loudoun, I spent some time driving around and checking out these data centers. For those who have not seen one, or frankly a park of them, it’s a pretty amazing sight. These things can be huge, nearly approaching a hundred feet tall, very solid concrete boxes, not often the most beautiful structures you’ve ever seen. The trend now is placing blind windows in them randomly to make them look better, though depending on your preference that may or may not help. I think a lot could be done to address the aesthetic concerns. Those are real. If you look at some parts of Loudoun and elsewhere, there are data centers built right next to housing subdivisions, and it can feel uncomfortable to have a looming concrete block right next door. The other local concern I think is somewhat legitimate but again overblown is the noise. Data centers, mainly because of their cooling systems, emit a fairly regular hum. It’s a low frequency, low decibel hum, but at a low frequency it can go through walls and subtly shake things. It can be irritating. I personally would not like a low frequency hum right next door. But the solution, as with the visual impact, is simply to push them back a bit. This is not like a local school that needs to be right next to a subdivision. If you’re talking a few hundred yards down the road, you’ve pretty much solved most of the hum and visual impact issues, especially if you surround it with some trees or berms or other methods to both hide the structure and limit the noise. Those two issues, the noise and the visual impact, are real. I understand why people are concerned, but they can be and have been easily addressed. In most of the debates you see, that’s not really the issue. It’s these generalized concerns about AI or false concerns about water.

Susan Pendergrass (16:03): What about the use of energy?

Judge Glock (16:19): Again, to some extent this is another local versus global problem where the local energy use of a data center is not really going to change the price people pay on their local residential energy bill. Most energy here in Virginia and elsewhere is part of a big interconnection, which is a market where different energy producers and power plants share electricity across large transmission lines. The price for electricity, besides state-level mandates, laws, or environmental regulations, is usually determined in that general market. Yes, a data center will drive up electricity costs somewhat in that general market, but it’s not necessarily a substantial driver of that. One new data center will have a very minimal impact on anybody’s bills across the whole region and will have no real effective impact on somebody’s local energy bills. To some extent, data center builders have also been doing a lot more work to construct what’s called off-the-grid or behind-the-grid energy production attached to the data centers. That can be problematic because of increased noise, even in Loudoun and elsewhere where a lot of places just have backup diesel generators that can produce a loud crack when the backup energy turns on, since data centers want to be running constantly. But in general, as before, you have very localized concerns about noise that you want to address with very localized attempts to limit those impacts, either through distancing the data center or finding ways to cover it and limit the noise it emits. The electricity issue is real in the sense that demand for electricity is going up because of data centers, and as economists like to say, supply is inelastic, meaning supply of energy is not going to ramp up as quickly as demand. That means prices are going to go up a little bit nationally because of that. But as long as the value of these data centers is there and people are going to build them, they’re not really going to have a meaningful impact on local electricity prices, and the data center builders are going to find other ways to get electricity and make sure that generation capacity comes online.

Susan Pendergrass (19:28): Missouri is building these two massive data centers not far from our one nuclear plant, and I know that’s something that has been discussed. When I hear that Loudoun County was the first to do this in such a massive way that they could bring in half of their income from data centers, it feels to me like when Colorado legalized cannabis and was the only state to do so. They took in so much money that residents got money back on their income taxes, and every other state said they were going to be just like Colorado. But Colorado was the one that did it first. Maybe Loudoun is the one that did it first with data centers. So now when a community brings in a data center, it’s not going to have the same impact it had in that first wild test case that was Loudoun County, right?

Judge Glock (20:18): I think that’s correct. I would note though that for some smaller communities, especially small rural communities with relatively small populations, such as some of these Texas counties, a single data center can become a third or more of the city’s or county’s budget overnight. So they can have a huge impact on smaller and poorer areas. But do most data centers as they’re built today have the huge fiscal impact that Loudoun got? Absolutely not. The other side of the fiscal story, though, and one that will apply more universally, is that data centers require very little in the way of services. When a city allows a new subdivision or apartment building, it gets more property taxes but also has to pay for schooling for the kids, roads, fire departments, and all the rest. When a city allows a new office park, there are similar property tax benefits but fewer service costs than residential development. According to one estimate I saw, for every dollar a typical office building or commercial retail project generates, a city spends about 25 cents on actual services to it. For data centers, because there’s basically no one in them, that number drops to about four or five cents. They basically need nothing. As I talked to some of the local officials in Loudoun, they said these things don’t send kids to school, they don’t even put cars on the road. There’s basically no impact on anything else. Once it’s built, it just sits there and throws off property tax revenues. No trash pickup, no breaking up fights at a local bar. It’s just money that keeps flowing in. So even if the property taxes aren’t as massive as they are in Loudoun, local communities still aren’t going to have to worry much about services, and they’re still likely going to see a big net benefit. Some people point out that data centers don’t offer many jobs over the long run, and a lot of industrial projects get approved because of job creation. But the flip side is that very few jobs also means low services and low impact. A big concern with local communities approving projects is traffic, and data centers just don’t create much of it for their size. So yes, other counties are not going to get the kind of deal Loudoun got and still is getting, because it remains the epicenter and data center builders want to build next to other data centers. But they are going to get a project that really doesn’t cost much of anything, still throws off at least some money, and doesn’t really burden local communities as long as it’s placed ever so slightly out of the way.

Susan Pendergrass (24:16): That brings me to another point. I’ve read that there are a lot of very smart engineers working on the problem of AI inference and how much energy and space it requires, and how to make it more productive. Eventually I think they’re going to solve this. We used to have server rooms that every business kept cool, and then everyone ended up with a laptop or even a phone. Eventually I think people are going to address this problem of requiring so much physical space to do what we need to do. I wonder if in a decade we’re just going to have empty white blocks sitting around because it’ll be too expensive to demo. What do you think?

Judge Glock (25:08): It could happen. You mean the data centers will be depopulated of their servers because they’ll be so miniaturized. That’s true, and it could be. To some extent, counties like Loudoun that have benefited massively from these data centers can and have set up rainy day funds, similar to counties that get a sudden oil influx, to say that if this ever starts to peter out, they’ll still have a long-term benefit they can continue placing into their budget and at the service of their residents. Right now I think we’re so far away from a potential data center bust that it really shouldn’t be a concern. As I’ve also pointed out, right now about one and a half percent of our whole economy is spent building data centers. This is just from basically zero just a few years back. This is a wild building boom, absolutely wild. We’re talking hundreds of billions of dollars a year. We need, if anything, to make sure that people can build out those data centers to do the other things that the AI revolution is going to require and demand, no matter what local opposition one county or another expresses. When you talk to people in the industry, the consensus is that we just can’t even build them fast enough. If very smart companies and very smart people are willing to invest hundreds of billions of dollars a year in data centers, and when I say data centers I mean mainly the servers and computers in them, I think they know it’s going to be a good return.

Susan Pendergrass (27:09): Well, it’s going to be interesting to see it play out in Missouri, because there’s definitely been backlash coming through the local town councils and the voters have been pretty loud in some areas. Have any Virginia counties banned them that you know of?

Judge Glock (27:29): Virginia has not only been the epicenter of the growth of data centers, it has been the epicenter of the opposition to data center movement as well. There is a group, something like Data Center Reform Watch, that has been monitoring local opposition. You’ve seen a bunch of counties take pretty strong steps against new data center construction. I forget if they’ve gone all the way to a formal and complete ban, but you definitely have votes in major counties either to block individual sites or to ban them from large swaths of the county. My take is that some other county is going to want and find ways to get those data centers, and when some of these counties realize they may have gone a little too far, they’re going to look at ways to pare it back and focus more on where to place the data centers rather than banning them outright and everywhere. I really struggle to find the logic in a local community banning a data center that’s going to be two and a half miles from anybody else. Frankly, as weird and big as they are, are they that different from, say, a local warehouse? A warehouse has trucks coming in and out all day, spewing pollution. One of these fulfillment centers is a big concrete box just like a data center, but with all that traffic on top of it. Data centers just seem much less problematic in that regard. In some sense they’re like a warehouse without all the trucks. If not for this huge generalized concern with AI, which is a separate debate, there doesn’t seem to be a lot of logic to just banning them completely.

Susan Pendergrass (29:42): Well, it is early days. I would love to have you come back again to talk to us when the dust settles a little bit, especially in Missouri. One of the first places I remember reading about a ban was Festus, Missouri, and now there are more. I’m also hearing about some of the biggest data centers going in there. So we’d love to have you back.

Judge Glock (30:02): That’d be great. I look forward to it.

Produced by Show-Me Opportunity

The post Are Data Centers Good for Communities? with Judge Glock appeared first on Show-Me Institute.

Avery Frank, Elias Tsapelas, and David Stokes join Zach Lawhorn to break down the final week of the 2026 Missouri legislative session. They discuss the constitutional amendment heading to voters that would begin the process of eliminating Missouri’s state income tax, where property tax reform efforts stand heading into the final days, the early literacy bill’s uncertain path through the Senate, the legislature’s approach to A through F school report cards, what the state budget does and does not get right, the Ferguson city council’s rejection of a major data center tax subsidy, and more.

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Episode Transcript

Zach Lawhorn (00:00): Welcome to the Show-Me Institute podcast. I’m Zach Lawhorn from Show-Me Opportunity. Today I’m joined by Avery Frank, Elias Tsapelas, and David Stokes from the Show-Me Institute. It is the last week of the 2026 Missouri legislative session. Today we’re going to go through what has crossed the finish line, mostly what has not crossed the finish line, and see what these guys think about the possibility of that happening here in the home stretch. Elias, we’ll begin with something that has crossed the finish line, and that is the start of a discussion about phasing out Missouri’s state income tax. Legislation did pass. It goes to the governor, and he gets to decide when it goes on the ballot. So what do we know right now, what passed, and what are Missouri voters going to be asked sometime in the fall?

Elias Tsapelas (00:50): By May 22nd, the governor needs to decide whether this constitutional amendment will go on the August or November ballot. What it says, essentially, is to Missouri voters: do you want to start the process of getting rid of Missouri’s income tax? It comes with three main components. The first piece is the legislature will be required to enact legislation that would get rid of the state’s income tax based on revenue growth. Once that income tax is gone, it cannot be reinstituted. Previous versions of this bill had some details lined out about how the income tax rate would be cut based on revenue growth, but in later versions this was stripped back to just the legislature will decide this later. The other two pieces say you will also be authorizing the legislature to expand the state sales tax base, meaning the things the state sales tax applies to. This could also involve changing the rate, because right now Missouri’s constitution does not allow the state legislature to expand the sales tax to anything that was not taxed in 2015. But this does come with a guardrail: if the legislature does change the state sales tax, it has to be done in a revenue neutral fashion. So expanding the sales tax base or raising the rate to bring in additional tax revenues has to go towards lowering the state income tax. That gives the legislature the authority to change how much revenue comes in, which would speed up the process for getting rid of the income tax. The last piece is a component for local governments. If the state changes the number of things that the sales tax applies to, this would also increase revenues to local governments. Those additional revenues would have to go towards a list of other taxes that would be lowered. In places like St. Louis and Kansas City, that would go towards lowering the earnings tax. For other local governments, they get to choose whether it goes towards lowering the sales tax, property tax, personal property taxes, or real property taxes. The key piece being revenue neutral. This is not going to be a windfall for anyone. It is basically the start of a discussion, because they don’t say what the rate might need to go to, what the sales tax could be expanded to, or what revenues would trigger income tax elimination or cuts. This is just the start of the discussion, giving the legislature the authority to keep moving in the direction we started around 2014.

Zach Lawhorn (03:57): Taking those a piece at a time: the first one, if it passes and the income tax is eliminated at some point, it cannot come back. That seems pretty straightforward. The next two seem like responses to opposition that we hear on a regular basis. The first being the revenue triggers, which seem designed to prevent what we often hear about with Kansas, where they cut the income tax without cutting spending, leading to revenue shortfalls. And the expansion of the sales tax base seems like protection against having to raise the sales tax rate on goods. Do I have that right?

Elias Tsapelas (04:40): Yes. The revenue trigger piece is basically what Missouri has been doing for a while, waiting to see how much revenue we have before lowering the income tax by that amount. We’ve been doing that for over a decade now and have lowered the top individual income tax rate from 6% to 4.7%. We’re just continuing down that path to be sure we don’t create some enormous budget hole. Now, when you look at the sales tax, Missouri has a very complicated, out-of-date sales tax system. The state sales tax rate is 4.225%, but when you go to the store you’re paying something significantly higher, largely due to local governments and a lot of special taxing districts. Missouri also has a lot of sales tax exemptions. Missouri really needs a full look at its entire sales tax system. But economically, when thinking about switching a state from being primarily funded by income taxes to something closer to sales taxes, the best way to fund a state is to tax as broad a base as possible so you can have the lowest rate possible. You want to be taxing final consumption, not business inputs. As we start the idea of transferring to more of a consumption tax in Missouri, the goal is to make sure it doesn’t become a tax increase for some people while things change elsewhere. It’s trying to keep it level the whole way, and at least right now it seems like a pretty neutral proposal going forward.

Zach Lawhorn (06:24): David, for people who don’t think about taxes as a corresponding tax system, can you explain the idea of local governments rolling back certain taxes and how people might experience that on their property tax bills or personal property tax bills?

David Stokes (06:44): It’s trickier than you might think, but it’s vital that it be done right. If you expand the sales tax base at the state level, as Elias discussed, you don’t want local governments to start collecting significantly more sales tax revenue for no reason. At the state level we’ll do something good with that and phase out the income tax, but at the local government level we don’t want just more revenue with nothing to spend it on. You need tax relief for citizens, which is why they’re going to require rollbacks. They’ve given local governments some options in how you roll that rate back, which is a good thing, but they need to give them a few more options. For example, they said you could roll back property taxes, real property taxes, personal property taxes, or sales taxes. A few things that need to be considered: many municipalities don’t have a property tax, so they won’t be able to roll back the property tax. And it’s trickier to roll back sales taxes than you might think. Unlike property taxes and income taxes, which can be reduced in small increments, sales taxes have to be done in set increments. You can’t go from a 1% sales tax to a 0.92% sales tax. It’s just not allowed and would be incredibly difficult for retailers to implement. So local governments need even more flexibility in how they roll back taxes. I would say the utility tax, which just about every county imposes, is a great option to add to the choice mix for rollbacks. These are the sales taxes that can be placed on utilities, which unlike other sales taxes can be rolled back in small increments. That’s a very good option. The biggest challenge of all, though, is the special taxing districts that Elias mentioned earlier, such as transportation development districts and community improvement districts. These usually only have sales taxes and nothing else. You have to address what they do if their sales tax collections go up 30% and they have no legal way to roll it back by that same amount. So we need to adjust that. I would also hope that part of this whole deal would be a substantial cap on how these special taxing districts like TDDs and CIDs operate in the first place, to really restrict their continued expansion in Missouri, which has been very harmful. Those are just a few ideas out of many in how local governments are going to have to address this.

Zach Lawhorn (09:59): Finally, Elias, as you said, it’ll be on the ballot sometime in the fall. But between now and either August or November, people interested in this topic are going to see a lot of data, modeling, estimates, and projections. We want to be honest about what we can know and what we cannot know. With the legislation that has passed now, what should people keep in mind when they see some of these estimates or models or projections this summer?

Elias Tsapelas (10:39): The first thing is, if you see anything claiming this is going to generate a tremendous budget shortfall or major harm to local governments, this thing is set up to be revenue neutral. This is not something that is going to create enormous holes. Most of the time, estimates that reach that conclusion assume this would work in an entirely different way than what is allowed. So that is something you don’t necessarily need to worry about. What people are more reasonably worried about is: if you empower the legislature to expand or raise the sales tax, how is that going to impact everyone? Missouri’s state and local combined sales tax rates are relatively high already. The state’s portion is pretty low, but combined it’s relatively high. So what the state decides to do in terms of how much it expands the sales tax base, whether that involves more services versus goods, will impact different people differently, in different parts of the state and at different income levels. Anything right now that says this is definitely going to be bad for X person, we just can’t know that, because there’s not enough information out there. Everyone should keep an open mind and also recognize that the reason for this amendment and this proposal is that Missouri’s economy is falling behind. We are falling behind our neighbors in terms of tax competitiveness, and the only way to change that is to improve Missouri’s tax standing. Our sales tax system is incredibly broken, so this is something that is going to need to be fixed. At least right now we are at the point of asking: do we want to go down this path? Let’s hope the legislature does a good job. We’ll be shining a light on whatever they do, but we can’t know some of the things that people are warning about right now.

Zach Lawhorn (12:50): David, after the legislature got the income tax bills out the door, they shifted to talking about property taxes, which is something we hear a lot about. People want property tax reform. With only a few days left in the session, where do those efforts stand and what are your thoughts?

David Stokes (13:11): Unlike a lot of the property tax changes of the past few years, I actually like the property tax changes being proposed this year. At least one property tax bill is in conference committee being debated between the House and Senate right now. Another major bill has passed out of the Senate but hasn’t made it through the House yet. I’m told there are going to have to be some compromises on both sides to get a bill across the finish line, and there’s nothing wrong with that. The biggest change this year, which seems very much in the weeds but is significant, would take the way property taxes are imposed in St. Louis County and apply it to the rest of the state. St. Louis County has different tax rates for all the different types of property: residential, agricultural, commercial, and personal property, which includes your car, boat, farm equipment, livestock, and the like. Those rates adjust differently as assessments go up and down each year. This approach was originally intended to be extended to the rest of the state about 20 years ago when they did it in St. Louis County, but the following year they came back and said the rest of the state didn’t have to do it. It’s a good idea. It might sound strange to some people, but a good example of why it would be beneficial came from stories in the St. Louis Business Journal about the real decline in commercial property values in the city of St. Louis over the past year. Because they set one tax rate measured under one unified property value, residential homeowners in St. Louis end up making up with their taxes for the decline in commercial property. In St. Louis County, with the siloed tax rates, if commercial property goes down, the commercial property tax rate will go up to offset that instead of passing it on to homeowners. In rural Missouri, which has so much agricultural property, this would allow agricultural property tax rates to increase to fund goods in rural areas without as dramatically impacting commercial and residential property. I think this is a good idea and I hope it passes. There are also some good amendments that would put taxpayer protections in place to avoid the temptation of local officials to target commercial property with these new different tax rates. It’s in the weeds, but I think these are good changes this year.

Zach Lawhorn (16:24): That sounds like the other side of the coin from what’s happened in Jackson County, where over the last few years people have been very upset that their assessments have gone up by more than 20% and residential homeowners have seen gigantic leaps in their property taxes. Is this kind of like having to turn one knob one way and another knob the other way?

David Stokes (16:55): Sort of. The tricky part is that the situation in Jackson County for the past 10 years has been so bad, it’s hard to compare it to other counties. It’s been uniquely horrible for the people of Jackson County. But it does start with one basic truth: 15 to 20 years ago, Jackson County was under-assessed. The assessor was ordered to increase the valuations because they were improperly low, and probably artificially and intentionally low. The right approach would have been to raise those assessed valuations to more accurate totals while lowering the rates at the same time to avoid crushing people with higher taxes. But Jackson County’s taxing entities have not really done that, starting with the Kansas City 33 school district, a very large school district in Kansas City, which is the only taxing body in Missouri exempt from rolling back rates as values increase. So you’ve seen these giant increases within that school district and they don’t even have to roll back rates. They just get to keep their same rates, as they have frequently over the past 10 years. So people are getting walloped. And then you throw in the fact that the Kansas City Assessor’s Office has done a terrible job managing the process year after year, not hitting deadlines for notifying people about changes and not properly running the appeals process. It’s just been a terrible system in Jackson County, and almost uniquely so.

Zach Lawhorn (18:30): All right. Before we have Elias read the budget line by line, Avery, I want to get an update on the education items here in the last week of the session. Early literacy, the reading bill, we’ve been talking about it all session long. How’s it looking?

Avery Frank (18:47): When it first passed out of the House before spring break, 131 to 10, I was genuinely excited. It wasn’t necessarily that it passed so early; it was that it passed with such little resistance and such bipartisan support on both sides of the aisle. Teaching our students how to read, giving every student the best chance to become a confident, capable reader, that seems like common sense and a goal that everyone wants to work toward to help our state improve and perhaps become the next Mississippi. It looked that way before spring break, but the Senate version of the early literacy bill got filibustered and set aside. The House bill has made it through the process and is on the informal calendar for third reading, so it could be taken up at any time. If it does pass the Senate, I anticipate it would easily pass the House again. But that is the problem with a lot of education legislation: can it pass the Senate? There have been different concerns about the early literacy bills. Some people are concerned that the MAP test, or the Missouri Assessment Program, which we use to test all of our students, is not a good measure and we shouldn’t be basing anything on it. Some are concerned with third-grade retention and whether it actually helps, looking at states like Mississippi and noting that while fourth-grade scores are great, eighth-grade scores have only improved a little. Those are the main pushbacks we’re seeing. I would still say this is something we really need to do. The early literacy bill is built on two different pillars. The first is a mandatory third-grade retention policy. Missouri already tests all K through third-grade students with a reading screener to see how they’re doing with reading. What this bill would do is set a passing score for those screeners. If students don’t meet that score, they would be retained in third grade, because reading is such a foundational skill. If you don’t know how to read, that’s something worth holding back for, to make sure students get it down before moving on for the rest of their educational career. Students would still have the opportunity to retake the screener, and there would be good-cause exemptions for students with disabilities, for students who have been held back previously, and for English language learners. The second main pillar is reforming our teacher preparation programs. In 2023, the National Council on Teacher Quality conducted a survey of all of our universities and teacher preparation programs and found that half of them received an F in teaching the science of reading, which is the best evidence-based way to teach students to read. The early literacy bill would align our teacher prep programs with those best practices. If they don’t do it, they can’t certify teachers. You can see how there could be pushback and reason why people would filibuster or not want it to come to the floor. That’s where it stands right now. I’m hoping people set aside their objections and recognize that this is a great first step to get Missouri back on track. Our reading scores have been really poor, especially after the pandemic. They continue to decrease and have not bounced back at all. They’re lower now than they were the first year after the pandemic, and we have to turn things around. These early literacy bills, I hope people see the common sense in them.

Zach Lawhorn (22:30): It’s not even the perfect being the enemy of the good. It’s just people being afraid to push back against the status quo. Missouri has fallen back in reading test scores, and other states, most notably Mississippi, have found ways to improve. I don’t think it’s helpful to frame this as some kind of radical moonshot. In the final days of the session, the urgency cannot be overstated. The other thing we’ve talked about a lot this session is A through F report cards, a transparency measure. Governor Kehoe issued an executive order before the session started. What’s the status of the legislature trying to adhere to the governor’s executive order?

Avery Frank (23:19): The legislature has tried to legislate its own way into how the executive order gets implemented, because DESE, the Department of Elementary and Secondary Education, could implement it in their own way. The legislature wants to determine how things are going to be scored instead of letting DESE make that decision. There’s been a lot of back and forth, and a lot of different interested parties. Not to get too in the weeds, but some districts really want academic achievement, their base score on the Missouri Assessment Program, to be weighed the most heavily because that would give them the highest score. Some want growth to be weighed the most heavily for the same reason. Some want basically no grades and a lot more qualitative information. There are a lot of different factors. The best vehicle for A through F report cards right now looks like Senate Bill 1351, which continues the long legacy of education omnibus bills used in recent years in Missouri. It combines the report card, limits on screen time for young students, and a couple of other things. I’m not sure if that’s going to make it past, to be honest. People are still concerned about whether the Missouri Assessment Program is something they want to base all of this on. Personally, I think the executive order is better than the legislation as it currently stands. They got rid of one aspect I liked as a researcher: in Governor Kehoe’s executive order, there was a penalty if districts didn’t report their data properly. In the current legislation, Senate Bill 1351, if districts don’t report sufficient data, it’s just written as an aside, basically saying they have to note on their report card that there is not sufficient data, and then they’re not included in the ranking as much. I don’t like that. It gives districts, especially poorly performing ones, an incentive not to report their data so they can have this qualifier on all of their report cards. I also don’t like it because, from all the education research I’ve been doing, we really do have a data reporting problem and we need to be a lot better about transparency. I hope we get some good report cards, because right now at the Show-Me Institute we do our best with the data we have, but we have to work with unsuppressed data, meaning we don’t have data that could potentially identify certain students. So there are some districts we have no data on because they’re so small. But DESE and the state have the best data possible. They could make a really good report card even better than we could, because they have better data than we do. That’s why I’m really hoping we get a good report card, because it would be very helpful for all the parents, legislators, and researchers across the state to see which districts are doing well and learn from them, and which ones are doing poorly and need more support.

Zach Lawhorn (26:42): Let’s talk about the budget. Elias, the legislature passed the budget a little early this year. They beat the deadline by a couple of days, right?

Elias Tsapelas (26:53): They finished early, which is a little bit different than the last few years.

Zach Lawhorn (26:56): Are we spending more or less money than last year?

Elias Tsapelas (27:01): Spending less, but I’m not throwing them a party. There’s just a lot less federal money going around. There was a lot of COVID money in recent years, and Missouri hasn’t spent all of it. The current budget this year is about $54 billion. What the legislature passed is a little bit less than $50 billion, depending on whether you count different construction items. But there was a lot of federal money in that total. At the end of the day, what we’re looking at is a budget that is still going to spend more general revenue, where our income and sales tax dollars go. It’s still going to spend more than we expect to bring in. So we’re still going to exhaust all of our surplus that we built up over those years. There were some positive things that happened this year, but ultimately part of how they got the budget done early was by spending just a little bit more, so they left some of the good on the table.

Zach Lawhorn (28:20): So we’re spending the surplus, as you’ve been warning about for several years, the federal money is drying up, and to circle back to the opening segment, I think part of the trust the legislature is going to have to build this summer is demonstrating we’re getting spending under control. You said you’re not throwing them a party. But is this reduction, whatever the reason, directionally good enough for the legislature to say they’re working on the spending side of things, or is it just not good enough?

Elias Tsapelas (29:00): I think I’ll know a lot more going into next year, because there were a lot better discussions this year, especially looking at spending incentives. As was mentioned, DESE is going to have a new funding formula, or at least the governor has a task force working on one. The way education is funded for K through 12 is going to change. There was also a big fight this year about how to fund higher education. What seemed to me like a common sense idea, essentially having the legislature fund colleges based on how many students are enrolled, turned out to be considered too radical and was pushed off for the future. But there’s talk of coming back with a performance funding measure going forward. There’s also some movement on changing how the state does its IT work. There are a lot of IT changes coming, including things affecting Medicaid and the Supplemental Nutrition Assistance Program. Missouri has a very bad track record with IT. Part of this budget moves some IT resources over to the Department of Social Services to support getting things going there, because most IT for the state of Missouri is currently consolidated in the Office of Administration. While that can seem efficient because every state department doesn’t need its own IT department, it also makes it a lot harder to hold people accountable. There has been a big issue recently with the state’s accounting software, where a contract is millions of dollars behind schedule and not working. The budget tries to get at that too, and it raises this major incentive question: are the people in charge of implementing new IT going to do their best at something that will ultimately try to eliminate their job? I think the legislature is finally starting to deal with that. Ultimately, if we go down the path of a more efficient government and a better tax system, that may mean fewer state employees, and that is something that hasn’t come up much but I think the legislature is finally starting to look at. Pushing toward better funding models, a better state workforce, all those type of things, is moving in the right direction as opposed to how it has been, where the budget just grows larger every year. They’re looking in the right direction. I would have liked to see more, but I think we’ll know a lot more in the next year, especially because the federal COVID funding will essentially be gone.

Zach Lawhorn (32:12): Our final topic, partly so we can put it in the title of the episode for clicks, but also because it seems like every week there’s a story from across the country or across the state about data centers and communities pushing back for a lot of reasons. The most recent one was Ferguson in the St. Louis area. David, can you catch us up on what was on the table for this data center in Ferguson and what happened?

David Stokes (32:40): The vote that the Ferguson city council took last week was strictly on a tax subsidy, I believe about $1.8 billion in tax abatements and various subsidies for the project. It was not a vote on approving the data center itself. This was a commercially zoned area, so it didn’t need any permission to put a data center there, and that’s a good thing. But the city nonetheless rejected the tax subsidy, which I thought was the right call. These data centers are very profitable and important, and I’m certainly not anti-data center. But the demand that they get enormous subsidies everywhere they seem to be going is improper. Festus was right to approve the data center operation there, but I think very much wrong to approve the enormous tax subsidy the city granted, which I believe was about a half a billion dollars. Avery can correct me if I’m wrong on that exact number. I like what Ferguson did, and I hope the data center moves into the old Emerson complex there nonetheless. We need data centers. Data centers produce so much tax revenue that they can generate their own tax cuts, and I don’t mean a special subsidy for the data center itself. I mean they go into a city or a small area, generate so much revenue, and you can cut taxes for everybody in that community, including the data center itself. I think that’s the road to follow, and hopefully that’s what we’ll have in Missouri. I also think we need to change the way data centers are taxed in an upcoming legislative session, taxing them a little more like utilities to reduce the incentive for one city or county to hand out a big subsidy and instead spread those tax benefits around a little more.

Zach Lawhorn (34:46): Avery, are you heartened by this rejection? Because as David said, we need the data centers, but we really want to avoid this new layer of corporate welfare that could pop up everywhere. So how do you feel about it?

Avery Frank (35:00): I’m actually very excited by the rejection in Ferguson. I’ve talked to a lot of people on both sides of the data center debate, those who have gone to the meetings and stayed up until 3 a.m. and protested, and those who want them. When I look at this Ferguson project specifically, the numbers David was talking about involved granting up to 15 years of tax abatements on real estate, personal property, and sales tax for a data center project. When I see something like that, it gets at what David was talking about. The only true significant benefit of a data center is the tax revenue it could bring. It doesn’t bring a lot of jobs. It takes a lot of electricity and a lot of water. It generates noise. It already makes a lot of people upset, and there are concerns about housing values and everything else. So if you’re not getting any tax revenue, there really is no strong incentive to have a data center project. That Emerson complex in Ferguson had thousands of employees. A data center does not take very many employees at all. So when you have people coming up and saying this data center project won’t succeed unless we get all these tax subsidies, I say that’s fine and I hope you don’t build a data center there, because the tax revenue is really the only benefit you’re getting from it. One of the bigger things is just something about Missouri in general. I’m from Tennessee and there are a lot of concerns there about having too much growth. Missouri sometimes feels like the opposite of Tennessee. We’re so desperate for growth that we’re willing to hand out a bunch of money. We don’t have enough pride. This Emerson complex is a good building and a good place. Ferguson has a STEM high school that produces very high test scores and graduates people who can work in the tech industry or an engineering industry. We shouldn’t waste a good building and a good workforce on a project that’s going to get all these tax subsidies and not bring a lot of jobs. The same thing happened over in Independence, where they gave out billions in subsidies for a data center project. Whenever I see that, I think we have to have a little bit of pride in Missouri. We can’t just be giving out all this money to get anyone to come. We have a good parcel of land, a good workforce, a lot of water, and a central location in the country. We can attract good projects, data centers or not, without giving out a bunch of subsidies. We need to understand what the benefits and costs of a data center are and what data center developers are actually looking for. They have a lot of money already. If you give them a good workforce, a place to build, and community support, I think they’ll come, even without a bunch of money.

Elias Tsapelas (38:28): I was really hoping this was the discussion we were going to have this year in Missouri’s legislature, because it started off so well with the discussion of how to get rid of the income tax and everything that goes with that. Talking about the income tax is really about how you make your state more desirable and how you grow faster. But Missouri for so long has just said: we want this industry or this type of business, so let’s give it an economic development tax credit. Let’s give out a billion dollars worth of those. Let’s give out sales tax exemptions. As far as I know, data centers in Missouri already get state and local sales tax exemptions. We just give those out. If we’re really going to start thinking about how to make the state the most desirable place, how to grow the fastest and be the most desirable for families and businesses, that’s really more about making the tax climate the best for everyone, not constantly picking winners and losers. Unfortunately, the budget didn’t see as many cuts as I had hoped. As we go into the last few days of the legislature, there are plenty of tax credit bills waiting to pass. The film tax credit is back and there’s talk of extending the sunset on it. There are other tax credits. We’re still going down that path. There are still more sales tax exemptions being considered. Missouri just needs to decide what direction we want to go, because ultimately if we do get rid of the income tax, a lot of these economic development incentives don’t even really work anymore. You have to look at different things. You have to look at what is really the criteria for families and businesses. States across the country are dealing with these issues, changing their economic conditions, their tax policy, and people are moving there. We know people are leaving Missouri. We know income is leaving Missouri. We need to change things. The status quo is not going to work going forward, and I was hoping that would have sunk in a little bit more this year than it did.

Zach Lawhorn (40:37): We will leave it there this week. We’ll talk to everyone again after the session ends over the next few days and see how everything turned out. As always, plenty more at showmeinstitute.org. David, Avery, and Elias, thank you very much.

The post Missouri’s 2026 Legislative Session Final Week appeared first on Show-Me Institute.

Susan Pendergrass speaks with Aaron Renn, author and consultant, and David Stokes, Director of Municipal Policy at the Show-Me Institute, about the recurring debate over whether the city of St. Louis should rejoin St. Louis County. They explore what city county mergers have actually accomplished in places like Indianapolis, Louisville, Nashville, and Lexington, why a full merger in St. Louis would be extraordinarily difficult to pull off, and whether the benefits would even outweigh the costs. They also discuss St. Louis’s demographic challenges, what the Pittsburgh model might offer as a path forward, the cultural barriers that make it hard to attract and retain people from outside the region, and more.

You can find Aaron’s work here.

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Episode Transcript

Susan Pendergrass (00:05): Welcome back, Aaron Renn, to the podcast. So happy to have you and David Stokes, our own expert on cities and counties and all things municipal. I appreciate you coming on, Aaron. There have been murmurings around St. Louis again on a topic that we have revisited for probably a hundred years: should the city of St. Louis be a separate county from St. Louis County?

Before we get to that, I want to ask you something because I was reading the news this morning, and I know that you’ve written about city county mergers before, like cities that are kind of dying and then either pulling in parts of their closest suburbs to sort of make everything look better, broaden their tax base, make their crime numbers look better. I was reading something you wrote a year or two ago about that, and you said that Louisville is a failed example of that. Is that right, basically?

Aaron Renn (01:01): Yeah, I’m a little skeptical of how these things have worked out in practice.

Susan Pendergrass (01:05): Yeah, in terms of losing the flavor and the coolness of the city. Literally this morning I saw an article about how Louisville is having a renaissance and these young professionals are all moving there because they didn’t tear down all their beautiful old Victorian homes, so you can still get one for close to a million dollars. They’ve got a cool art scene and a bourbon scene. So it sounds like maybe Louisville did not lose its personal flavor in the merger. I would be curious to know what you think of that.

Aaron Renn (01:33): Well, I like to put St. Louis in context. I’m glad you mentioned Louisville because many of these river cities have similar characteristics. I like to look at St. Louis as well as three cities in the Ohio Valley: Louisville, Cincinnati, and Pittsburgh. All of them heavily German Catholic in their demographics. All of them are very geopolitically fragmented with many small tiny suburbs throughout. They all have very fragmented neighborhood systems as well, where everybody has a strong sense of neighborhood identity. Where you go to high school is a big social marker. They all have phenomenal collections of urban assets and great historic buildings. They all still have their own unique character in a country where that has sort of bled away.

Aaron Renn (02:31): And they also have curiously underperformed demographically and economically in terms of growth. They’re slow growth places. So one thing I always encourage people is to pan back the lens and don’t just look at St. Louis in isolation. Look at it in comparison or dialogue with some of these other places and see what you can learn from them.

Louisville is actually a quite troubled city in important ways. From a white collar employment perspective it’s doing well, from a blue collar perspective less so. It’s one of the 10 least educated major metros in the country. I don’t want to spend too much time on Louisville, but I want to talk about the city county merger, which is distinct from recombining the city and the county. This has been considered urban planning best practice for 30 or 40 years. There was a book written by David Rusk called Cities Without Suburbs. The idea is that cities that were able to expand their boundaries through either annexation or city county mergers were prospering, whilst cities that did not, like the Clevelands, the Cincinnatis, and the St. Louises, were struggling. So the idea is we need big box government.

Indianapolis, where I live now, had a city county merger in 1970. Louisville did a city county merger, I grew up near Louisville. Jacksonville, Florida, Lexington, Kentucky, and Nashville, Tennessee did as well. What I would say is a few things. Merger is not necessarily bad. For Indianapolis, merger did prevent the city from essentially going down the tubes in important ways. So it really was a win in important ways.

But it did not prevent the historic city from going into the exact same demographic decline as St. Louis. The historic city of Indianapolis has lost almost exactly the same share of its population since 1970 as St. Louis has. Secondly, these are very politically difficult to pull off. They take enormous effort. They often fail multiple times. Louisville had multiple failures.

The most precious resource is always management time and attention. Is this where you want to put all your political chips? And in order to get it passed politically, what happens invariably is that most entities are actually not consolidated. In Louisville, none of the existing incorporated suburban governments were in fact merged. In Indianapolis, the school districts weren’t merged.

This means you don’t necessarily get all of the benefits you think from consolidation, because many things are excluded. And then unlike a corporate merger, where there’s typically a lot of downsizing and cost rationalization, in city county mergers nobody ever loses their job and salaries and benefits might even be harmonized upward to the high watermark. So don’t expect it to save any money. Personally, city county merger might have some benefits for St. Louis. I’m not saying it would have no benefits, but in my opinion it’s not going to be a needle mover and most likely it would be extraordinarily politically difficult and uncertain to pull off.

Susan Pendergrass (06:00): Yeah, no question. It’s been very politically difficult. People don’t want to do it. However, we do have these little tiny school districts and police districts. We have, I don’t know, 28 911 systems. We have a lot of what looks like bureaucratic waste and red tape. To the extent that doesn’t get resolved in a merger, then what’s the point? But I do think, you know, we’ve been talking about the demographics of St. Louis. There were over 800,000 people in the city once. Now there are maybe 280,000 and declining, and we’re in the death spiral of more people dying than being born. We’ve been in that for a while. And I guess it brings up the question of what is St. Louis to do if we are in this death spiral? We’re not having the babies. We’re having fewer babies than we did 15 years ago. So school enrollment is only declining. What is the prescription in that situation?

I’ve been to Cincinnati quite a bit. They’re trying to get people downtown with sports stadiums. It doesn’t really work. Louisville has sports stadiums downtown. I don’t know if people really want to move down there. I don’t see it working in St. Louis. So what is a city in that situation to do?

Aaron Renn (07:18): It’s going to be challenging in a sense because your problems are a little over determined. St. Louis was once a regional capital city, much like a Dallas or an Atlanta or a Denver or a Minneapolis. And it lost a lot of those functions. Many of its headquarters have left. It used to have a lot of professional services firms like ad agencies that did business all over the country, not just for the local market. Now St. Louis, although it’s still bigger than Indianapolis, looks a lot more like an Indianapolis or a Columbus, Ohio, where you have fewer corporate headquarters and most of the service firms are just there to serve the local market. St. Louis has essentially shrunk a little bit in relative importance, and it’s hard to get that back.

The demographics are also quite difficult and create a situation where it’s hard to attract business when you have a shrinking labor force, weak demographic growth, and a weak ability to bring people in from the outside. So it’s a very complicated situation and I don’t think there’s any silver bullet for St. Louis.

Susan Pendergrass (08:39): That’s what I’m asking you for. You have the answers. What’s the silver bullet?

Aaron Renn (08:43): So here are the things I would look at if I were in St. Louis. One of the clear issues that affects all of these river cities is that their wonderful, unique local cultures come with a downside, which is an extreme parochialism that has two negative effects. One, it makes it difficult for the communities to cohesively work together, which I’m not telling you anything you don’t already know. City-suburb divides tend to be bigger. In Indianapolis, regional leadership is mostly all on the same page about the big issues. Same with Columbus, Ohio. Secondly, it makes it very difficult to attract people from out of town because they come there and they can’t make friends, they can’t penetrate the social networks.

Susan Pendergrass (09:15): 100%, yes.

Aaron Renn (09:40): You hear it over and over again in places like St. Louis, Cleveland, even Minneapolis, Minnesota. There are some sayings there. If you want to make friends in Minnesota, go to kindergarten, because that’s when everybody makes their friends. Or Minnesotans will give you directions anywhere but their house. They’re never going to invite you over. St. Louis has that reputation. I don’t think it’s just a reputation. And I know you just had Ness Sandoval on.

Susan Pendergrass (09:53): Yeah.

Aaron Renn (10:08): He’s talking about you need to get better on migration. Migration isn’t going to improve if migrants are not going to be able to join the social networks here. And that’s not even just international migration, that’s domestic migrants. So I think that’s a huge issue for the city. Cultural issues are hard to solve, but maybe less intractable than infrastructure.

The other thing is looking at Pittsburgh as a sort of model. Pittsburgh hasn’t solved really most of its problems by any means, but it has been able to regenerate in the city a sort of high value economy around Carnegie Mellon and the University of Pittsburgh Medical Center. It’s done quite well. Many Silicon Valley firms have set up shop there. What’s happened in Pittsburgh, although it’s still a demographic decline story, is there’s been a demographic transition in the city. Pittsburgh went from one of the least educated cities in America to now one of the youngest and most educated. Part of it is old people moved and died off and young educated people replaced them. So the total number of people in the city was declining, but there was a churn happening underneath. And the same thing is already happening in St. Louis.

Susan Pendergrass (11:13): How did they do that?

Aaron Renn (11:33): College degree attainment in the city is now well north of 40%. So the people who live in the city of St. Louis are very educated. That demographic churn has raised educational attainment and thus incomes in the city a lot. Now Pittsburgh was different because it was an almost entirely white city. There’s a racial divide in St. Louis and gentrification concerns become more salient. But St. Louis is now an educated city. This is not an old post-industrial blue collar city. The city of St. Louis itself is very educated. And also being very small, it doesn’t necessarily need a massive change to move the needle. In Indianapolis we have a population of over 900,000. Moving that behemoth takes a lot. St. Louis now being smaller has a situation where there could be a big impact from lower numbers of things. So I think a knowledge economy built around Washington University and your medical centers has some possibilities, somewhat similar to Pittsburgh.

Susan Pendergrass (12:45): So much medical.

Aaron Renn (12:58): Carnegie Mellon’s engineering and computer science areas will be a little different. I might also look at Vanderbilt, what’s going on there? What are some peer schools you could watch to see what’s going on? But I think there are actually some reasons to think that the city of St. Louis, believe it or not, could be sort of turning a corner. It has now demographically renewed itself to a higher educational attainment state. Being small, it probably doesn’t have that much further to fall, and you can start building from there. Obviously there are governance challenges, but looking at the Pittsburgh model, studying similar complexes around peer schools, and addressing the culture issues is where I’d look.

David Stokes (13:33): Hopeful.

Susan Pendergrass (13:47): So as a spokesperson for St. Louis, what do you see for the future?

David Stokes (13:52): Well, I would be curious to get Aaron’s thoughts on that size question, about how the city of St. Louis has in fact gotten so small. It’s about 10% of the metro area. How does that affect the pros or cons of any type of a merger? These would not be a merger of equals. St. Louis County would almost subsume St. Louis City into it. How do you think that would affect things for better or worse?

Aaron Renn (14:28): Well, that was the critique of the Louisville merger by two academics at the University of Louisville. I mentioned the book Cities Without Suburbs. They wrote an academic paper called Suburbs Without a City, which basically said if the merger passed in Louisville, it would essentially mean the suburbs take over the city, not the city taking over the suburbs, because the old city of Louisville only had about 260,000 people and the suburbs would numerically dominate. The same thing would certainly happen in St. Louis. If there were a merger, suburban St. Louis County would control the city in essence.

Another consideration, and this is a Cincinnati issue, I interviewed about 15 years ago the mayor of Cincinnati, John Cranley. Here’s what he said, and I think this is an important point. He said, 30 years ago, city county merger was the thing because cities were in decline and you wanted to tap that suburban tax base to fund the city. But now it’s reversed. Now the cities are coming back and it’s the inner suburbs that are actually going down the tubes. And so in Cincinnati today, we have all the corporate headquarters, we have the universities and the medical centers, and we don’t have to share our tax revenue with anybody. If we were merged with the county government, we’d have to prop up all these failing suburbs. And so I think you’re in a similar situation in St. Louis, where the high value activity, not all of it is in the city of St. Louis because of Clayton and so on, but the St. Louis County suburbs are mostly places that are themselves on negative trajectories. Merging the city, which may be on the cusp of being able to bottom out and turn around, with all of these still declining inner suburban areas, might actually be an albatross around the city’s neck.

Susan Pendergrass (15:16): What would that mean?

David Stokes (16:37): I just think one of the differences between St. Louis and Cincinnati, and I don’t know the property tax base of Cincinnati, is that so much of the city of St. Louis is tax exempt right now. Between Washington University, Saint Louis University, and all the government entities, there’s just so much of it. I say that as somebody who supports property tax changes to make them pay something towards it. But I just don’t think the Cincinnati argument applies to the city of St. Louis right now. That property tax exemption part is a huge factor because the most growing, thriving part of it is the entire giant Barnes-WashU-Cortex complex, and the amount of property taxes they pay is miniscule.

Susan Pendergrass (16:38): Hmm.

Aaron Renn (17:26): Well, some of that is a planning issue. And I think the reality is, when you have a complex like that, are all these people going to move to St. Charles? Maybe not. I’ll tell you, I live in the suburb of Indianapolis named Carmel, and a lot of the hospitals and things have been opening facilities here. When these nonprofit hospitals come up here, we will not approve zoning changes for those hospitals unless they agree to make payments in lieu of taxes. You want to come up here and you want a zoning change, you’re going to have to pay. We were actually quite prescient in that one of the local hospital chains opened a for-profit hospital. As part of the approval deal, we said, if you ever convert to nonprofit status, you will continue paying property taxes. And we did that.

So I think there probably is leverage from the city over some of these entities. You don’t have a lot of leverage over a corporation deciding where to put their office, but that’s not a tax exempt situation. The stuff at Cortex is probably not going to leave if you make them pay a little money the next time they come to you for a zoning approval. I think you need to start looking at how to get more money out of these entities that are nonprofits in name only. These universities and hospitals are effectively gigantic hedge funds. Their executives are extremely well compensated and billions of dollars are flowing through there. Undoubtedly the better solution there is to figure out how to tax them rather than figure out how to tax the soon-to-be-dead mall in the suburb over the border.

David Stokes (19:24): Well, yeah, and that’s sort of the trade off, unfortunately, is that they do pay earnings tax. The employees, many of them very highly compensated, pay the earnings tax. And that’s what makes the city more dependent on local income taxes, not less, because they’re either tax exempt or in the case of Cortex, have tax abatements that make them essentially tax exempt.

Susan Pendergrass (19:25): We do have earnings taxes, right? So the folks who work there have to pay an earnings tax.

Aaron Renn (19:53): Yeah. Again, I don’t know exactly the fiscal architecture there. But I would say you don’t want to do a merger simply to do a tax dollar grab. The lesson of Indianapolis is we did that. We grabbed suburban tax dollars and we used it to rebuild our downtown successfully. But here we are 50 years later, and now we have enormous tracts of decayed suburbia that are an enormous problem. Our entire core county is now in a sense the inner city. We have big challenges because we were not able to invest in ways that allow those suburban areas to retain their allure over the long term.

And I’m not saying that’s impossible, but any short term juice you get, cities always rise and fall. Core cities have proven more resilient and more able to regenerate themselves than suburbs. Part of it is because state governments cannot afford to let their state’s largest city or major urban center go down the tubes.

Susan Pendergrass (21:06): Yeah.

Aaron Renn (21:16): Missouri cannot let St. Louis and Kansas City implode. Michigan cannot just write off Detroit and say who cares. But these suburban areas have proven a lot tougher to save. We don’t have a good model. We’ve spent decades thinking about how to rebuild cities and build districts. There are certain things you can pull off in a city around conventions, civic events, gathering spaces, museums, and government that are very hard to translate to suburban settings. So there’s not a great playbook, especially in declining markets, for renewing suburbs. The playbook for suburban renewal, if you want to call it that, is places like Carmel, Indiana, which are growing and affluent, and therefore can build large mixed use centers, new urbanist developments, trails, and parks. The suburbs of St. Louis County are probably tremendously deficient in infrastructure as we would understand it today.

So again, there may actually be some benefits in having St. Louis City rejoin the county in a sense, because then the county functions are spread and amortized across a larger population.

Susan Pendergrass (22:45): It would immediately improve our murder rate because we would be mixing it in.

Aaron Renn (22:48): Yeah, there is some of that. The murder rate is an artifact of the size of the city more than anything. There are places in Chicago with higher murder rates. A former colleague of mine at the Manhattan Institute, Rafael Mangual, did an analysis of Chicago. He said there are areas on the South Side of Chicago that are larger and have more people than St. Louis with far higher murder rates than St. Louis.

Susan Pendergrass (22:56): We get called out because of the small denominator.

Aaron Renn (23:17): And so there is that. The other thing is Chicago is a good example. New York City was essentially a city county merger. In 1898, the five counties that are the five boroughs of New York were consolidated into one city. Philadelphia was also a city county consolidation from the 19th century. But what happens when you create a very large city of say a million people or more is you really have to scale up your government. You have to have a government that operates at that scale.

What happened with Indianapolis was we merged city and county government, but we didn’t really have a government that could effectively manage this new larger territory. It never built out the infrastructure in the suburbs. In New York, the Bronx has subways, great parks, everything built out with proper infrastructure, because it was part of New York and New York had to expand governance to become a city of eight million. Chicago got big in the 19th century and built a city government that could run a city of three million people. And some of the stuff that gets critiqued there, for example, is a lot of city services were organized by ward or city council district. There are 50 city council districts and every city councilor is sort of a little mini mayor of their district. The alderman essentially has veto power over any zoning changes. It’s called aldermanic privilege. So there are a lot of constraints there.

But if it’s just one mayor and one city council trying to think about a huge city of 77 neighborhoods and three million people, they can’t keep that much in their head. All they can think about is downtown. And that’s what happened in Indianapolis. The mayor and city council can really only think about downtown. We should have built out structures in townships throughout the city so that you had leadership focused on that area and money focused on that area. That’s what made the suburbs work really well. A suburb like Carmel is basically township sized. We have 100,000 people, big enough to do things, but not so big that our mayor and council can’t keep the whole city in their head and plan and manage the whole city.

So if you merge with the county government, you’re going to have to create an entirely new government structure that allows you to essentially manage every sub area of the whole thing and bring it all up to a standard of services. That’s the other thing they often did in Louisville and Nashville. They merge, but they have a two tier service system where there’s an urban services district for the old city which gets more services, and then the others get less. They didn’t do that in New York. There’s one standard of service in New York, one in Philadelphia, one in Chicago. So if you can’t commit to a single standard of service, you’re basically creating a bogus merger in my opinion. If you’re going to do a merger, you need to obliterate every government and entity in St. Louis County and city, merge them all into one with one standard. That’s not going to happen.

Susan Pendergrass (26:35): That’s not going to happen. What do you think, David?

David Stokes (26:37): Yeah, that’s not going to happen.

Aaron Renn (26:43): So you end up with a lot of problems. Louisville didn’t merge any fire departments. Imagine a city that doesn’t have a consolidated fire department. Imagine a city without a single police department. That was actually Indianapolis. When we merged, the Indianapolis Police Department still patrolled the old city, but the new parts of the city that were consolidated in from the county were still controlled by the sheriff.

Susan Pendergrass (27:13): That is 100% what would happen in St. Louis. Everyone would retain their school system and their police department and their fire department. I lived for a long time in Fairfax County, Virginia, which is a single county government. It’s massive, 150,000 students in their school system. It seems to function with a single police department and fire department. But I don’t think you can backwards engineer that into a place that for hundreds of years has been operating as it has been operating.

Aaron Renn (27:43): Lexington, Kentucky worked pretty well because one, the schools were already consolidated, as in the South it’s typically county school districts. Secondly, there were no other government entities, no township governments, no other incorporated municipalities. So it merged everything. And they were sort of able to solve the urban services district issue because the outer areas of Fayette County were horse farms. They actually put in a kind of green belt rule, you can’t develop out there, because they wanted to protect these scenic landscapes. So there was actually a good reason to treat that differently, because it was a very unique American landscape. Lexington, I think, was pretty successful.

Susan Pendergrass (28:15): They are. I appreciate it when I drive across Route 64.

Aaron Renn (28:39): Lexington was pretty successful and wasn’t especially controversial when they did it, in part because there weren’t all these entrenched interests like there are in other places. If you look at places that did the mergers, they weren’t the Cincinnatis and Pittsburghs. They’ve been talking about consolidation in Pittsburgh forever. It was very hard. And Louisville did it, but it was one of the least consolidated so-called consolidated governments. What the Louisville merger functionally did was dissolve the city of Louisville and reorganize county government. The county government now has a mayor and a council instead of the old fiscal court with the judge executive and all that.

Susan Pendergrass (29:21): That’s kind of what would happen in St. Louis, right?

Aaron Renn (29:36): That’s essentially what they did. They basically dissolved the city and the county government was reorganized, but nothing was merged.

Susan Pendergrass (29:43): Did you have a question?

David Stokes (29:45): I want to get back to the fire district point. We’re talking about why this would be so hard. There’s actually a law in St. Louis that only applies in St. Louis County that makes it impossible to consolidate fire districts. Even if a modest mid-sized suburb annexes an unincorporated part of town, they’re not allowed to provide fire services to that new annexed area, or they can, but they have to pay so much to the old unincorporated fire district that it makes it impossible to do so. That’s just one example of how even if you wanted a full scale merger, it would just be impossible to actually carry through.

Susan Pendergrass (30:34): Why do you think people float this idea, David? Why does it come back every couple of years?

David Stokes (30:38): You know, it’s the old line. I remember a study I read about Pittsburgh and St. Louis many years ago. The question was, are the St. Louis and Pittsburgh areas really inefficient with all the fragmented government? And the conclusion was, well, you would never design a metro area like this, but they’ve both made it work over the last century better than you would think. The conclusion was that St. Louis and Pittsburgh aren’t actually as inefficient as you might assume when you run the numbers.

I think people have trouble accepting that. People look at so many small municipalities, many of them dysfunctional, many of them until recent times funded themselves primarily with traffic tickets, which is a terrible way to fund local government, and that’s not even an exaggeration. And there’s just this fundamental belief that if you can just plan it better you’ll create a better place. I just think it fails.

One of the reasons it would fail, going back to what Aaron led this conversation off with, is that if St. Louis County and St. Louis City joined together, they’re not actually going to lay any government employees off to save any money. St. Louis City government is not going to fire city employees. It’s never going to happen. So you’re not going to save any money and it’s all just going to collapse.

Aaron Renn (32:12): Yeah, New York City and large governments are not more efficient.

I look at it and say, look, I think merger is a solution for failed states, if you want to call them that, in the St. Louis suburbs. Take some micro-suburb that’s a complete scam or is bankrupt and merge it in with its neighbor. Do some consolidation like that, that probably needs to be led by state government, almost like a receivership sort of thing. That’s just kind of good government as you work through it. But I just don’t think the benefits you would gain from trying to do a complete governmental merger of St. Louis City with St. Louis County would outweigh the opportunity cost of how much time and effort you spend on it, when you could be spending that on other things that I think will actually move the needle more.

The downsides are arguably as high as the upsides. There’s no guarantee it’s even net positive in this environment. The time to have merged was when Indianapolis did it in 1970, not in 2026. Nashville did it in the 60s. Jacksonville did it a long time ago.

And then I think it doesn’t fix the fundamental issues around the culture. You’ve got to take a hard look at that and say, it’s maybe very difficult to change. The idea that people who aren’t from here have to be able to move here and get connected and feel like they belong in the city. There’s a couple we know who lived in St. Louis. The wife taught in St. Louis public schools. They’re big urban people. The husband was from St. Louis, and they moved here to Carmel, Indiana.

Susan Pendergrass (33:47): Tell me more about that.

Aaron Renn (34:10): Basically they said, man, people are just so much friendlier here. They make better eye contact, they engage more. It’s just so much more welcoming than it was in St. Louis, even though they were actually in a sense connected because the husband was from there.

So when even people who lived in St. Louis and liked it notice a difference when they leave, that is a killer when you’re already struggling demographically. I had a guy who owned a business in Cleveland who said to me one time, I learned the hard way never to recruit anyone from out of town to work for my company unless that person or their spouse is from Cleveland, because otherwise they will never stay. When that’s where you are as a place, that is just rough. I think that is one of the killers for these river cities.

Susan Pendergrass (35:16): Yeah, what’s the fix for that? I don’t know what the fix is.

Aaron Renn (35:38): I think the optimistic case for St. Louis, and I actually tweeted this a year or two ago, is that St. Louis City educational attainment is really high now. In a sense, it’s a small, highly educated city that is probably going to continue growing more educated. So I think the Pittsburgh option looks viable in St. Louis.

Susan Pendergrass (36:00): And certainly great medical care. I know that the average age is getting older in St. Louis. I think within 10 years, one in four people will be over the age of 65. But we also have an Alzheimer’s research center and access to medical care, which as you get older gets more important. I do think there’s an opportunity to lean in to the medical services that are available, as the country as a whole gets older. I think St. Louis looks more attractive for that reason. So I think you’re right that with universities and medical centers, there’s an opportunity.

Aaron Renn (36:35): Yeah, I think if America’s demographics keep on this trend, a lot of other places are going to get to where St. Louis is. And the thing to be careful of is that when you’re in a declining market, that often prompts centralization of activity and population. What happened with Japan is that once Japan’s population started falling, everybody started moving to Tokyo. It’s Tokyo and a handful of other cities where everything is concentrated, and they literally have ghost towns there.

I don’t think it’s any accident that Indianapolis’ growth really took off once the Rust Belt era and deindustrialization hit the state. Indianapolis and Columbus, Ohio have grown in large measure through drawing people out of the rest of the state as those states declined. Huge numbers of people move from Cleveland to Columbus every year.

Missouri is a little different than that. One of your challenges is that St. Louis does not draw people from rural Missouri. When I looked at the data, it’s not like there’s a massive flow into St. Louis from the rest of the state. So you don’t have that siphon bringing people in.

Susan Pendergrass (37:55): There are public safety issues around that, but yes.

Aaron Renn (38:00): And the issue we have is that we’ve now eaten our seed corn. There’s not going to be next generations of children in the towns I grew up in in rural Indiana to move to Indianapolis anymore. The cohort sizes are going to be smaller. So that pump, even Tokyo is declining now in population. That siphon is draining the water table. We can only rely on that so long.

But I think this is the risk for St. Louis in that kind of environment. People with opportunity might avoid or flee St. Louis and go to Austin, Texas or Nashville. They go to the handful of places in America that are really still growing. That’s a threat even for Indianapolis and Columbus, Ohio. In a declining market, it’s very hard to get people to want to come to a shrinking city because the opportunity space is shrinking. St. Louis’s opportunity space has been shrinking because you’re losing corporate headquarters and your working age population is declining. That dynamic is really going to be a challenge. But within that, the city of St. Louis might end up doing okay. Again, being small actually helps it here.

Susan Pendergrass (39:25): Any closing thoughts on that, David?

David Stokes (39:27): Just that the part of Missouri that is definitely still growing, and that probably is attracting those young rural people who are moving to a city, is going into southwest Missouri, the Springfield-Branson area. That’s absolutely the growing part of the state. And even Kansas City is growing certainly more than St. Louis is.

Aaron Renn (39:48): Yeah, it’s not a culturally cohesive state. Springfield and that area are definitely growing, and growing despite the fact that they have nowhere close to the urban assets of a St. Louis. It’s interesting to watch, and we’ll just have to see what happens.

Susan Pendergrass (40:05): It is. I think about it a lot. I’ve been talking about this in terms of school enrollment for years and years, where you could see the biggest kindergarten cohort was after the Great Recession of 2009. You know that that’s the biggest kindergarten cohort for the last 15, 16, 17 years. We do nothing but build schools and hire teachers. We are slow to catch on to these things happening. But I think your perspective is certainly very interesting. On the question of the merger, it’s not worth the cost for whatever benefits there might be. But it still gets talked about, so I appreciate you coming and giving us your thoughts on it. Maybe we’ll have to have you back to talk about it again.

David Stokes (41:02): And Aaron, I want you to come back. I want to find out how we get more roundabouts in Missouri. I love roundabouts. I go to Carmel it seems like once a year for these gigantic youth sports tournaments up at Westfield, just a little bit north of you. My kids’ sports take me there. And I love the roundabouts. You cannot get enough of them.

Aaron Renn (41:09): I’d love to talk about that. My favorite topic.

Aaron Renn (41:24): Yeah, it’s great. We hardly ever have to stop. There are barely any stoplights or stop signs left in our city. It’s amazing. We’re one of the few growing places in America where traffic is better today than it was 20 years ago.

Susan Pendergrass (41:32): They’re awesome.

David Stokes (41:45): People don’t realize how good that is for air quality and everything. You just keep moving along, not stop and start. We need 100 times more roundabouts in this area.

Susan Pendergrass (41:55): Are you pretending that people stop at stop signs in St. Louis? Because let’s be honest, people don’t stop at stop signs.

David Stokes (42:00): Well, they roll them, but it’s still wrong when they roll them. Maybe all the people blowing red lights on Kings Highway at 50 miles an hour are just being environmentally conscious. I need to give them more of the benefit of the doubt, I guess.

Susan Pendergrass (42:12): That’s exactly right. All right, thanks so much. I really appreciate it.

Aaron Renn (42:19): Thank you.

Produced by Show-Me Opportunity

The post The St. Louis City-County Merger with Aaron Renn and David Stokes appeared first on Show-Me Institute.

Susan Pendergrass speaks with J.S. Onésimo “Ness” Sandoval, demographer and professor in the Department of Sociology and Anthropology at Saint Louis University, about what the data says about the future of the St. Louis region. They discuss record low birth rates and what they mean for school enrollment, why St. Louis is among the top regions in the country for deaths outnumbering births, how the region compares to Pittsburgh and Cleveland, and why suburbs like Chesterfield and St. Charles are aging faster than most people realize. They also discuss the role of housing supply, school choice, crime, and domestic migration in whether St. Louis can attract and retain young families, and more.

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Episode Transcript

Susan Pendergrass (00:00): Well, certainly not the first time we’ve spoken, Dr. Sandoval. At St. Louis University, you are such a fascinating demographer of the region, and I’ve been following your work as new census data has been released. You’ve been writing about it and creating what I think are really cool mapping tools that folks can look at to see how the St. Louis region is impacted. Thanks for coming on to talk about that. But first I want to sort of expand our view, because pretty sure that I read within the last week that the number of babies born in the United States was at an all-time low. Is that right?

Ness Sandoval (00:35): Yeah, so every year the United States will probably be breaking records. The data coming out for 2025 is a record low, and the data coming out for 2026 is even lower. The first few months of 2026, the provisional data that’s out shows even fewer. And this is what we expected. We call this a demographic shock, because in 2026, whenever you create an atmosphere of uncertainty and fear, rational people do not have children until they understand that their job is safe, there’s not a recession coming, and we’re not at war. When you create this sense of fear, young people do the rational thing and don’t have children. We saw this in 2020 with COVID. We saw this in 2008 with the Great Recession. Anytime there is uncertainty, young people will postpone births. And that’s what we’re seeing. This started in November. We started to see the decline in births, and it’s continued from November, December, January, February. And so this is what we’re going to see.

Susan Pendergrass (01:51): So next year is going to be lower. And when you look at the state of Missouri, I’ve been saying this ad nauseum for years that our K-12 school enrollment is declining and will decline because of that sort of peak in 2008, just before the Great Recession. So our biggest kindergarten class was around 2012, and our kindergarten classes have by and large declined ever since. And so those kids are moving through the system. You can project that we will just have fewer and fewer kids enrolled in our K-12 system in the state of Missouri.

Ness Sandoval (02:06): No, we peaked in 2008.

Susan Pendergrass (02:11): By and large declined ever since 2012. And so those kids are moving through the system. So you can project that we will just have fewer and fewer kids enrolled in our K-12 system in the state of Missouri.

Ness Sandoval (02:24): Yeah, this is true, and we have a pretty good chart. We make these for every city. We’re replacing very large cohorts of children who were born. I have a son who was born in 2007, just before the recession. That cohort that graduated in St. Louis was 40,000 students. The baby birth cohort is now 27,000 students. So that’s just in that one year a 13,000 decline. And it’s going to decline every year for the next 15 to 18 years, because we don’t know what the bottom is yet. It has not reached the bottom.

Susan Pendergrass (03:01): Right. People say where are the kids going? I’m like, they’re not going anywhere. They weren’t born. The St. Louis region, like Clayton is declining, Ladue was, I mean, all of these school districts, I think almost everyone in the county has fewer kids today than they had 10 years ago.

Ness Sandoval (03:07): They weren’t born. Yes, and it’s not just St. Louis County. St. Charles County is experiencing this. There are some parts that are growing, in the Wentzville area, O’Fallon, but if you look at the old St. Charles areas, they’re experiencing decline. Families with children are declining in those areas. We had made an interactive map that I think shocked a lot of people, of seniors outnumbering youth. People could not comprehend this. Like, my gosh, this is not 2000 where youth were dominating these neighborhoods. I live out here in Chesterfield. The entire Route 64 corridor is senior citizens dominating the youth in Chesterfield. People are shocked. More seniors lived in Chesterfield than youth in 2010, and that’s only grown since. This is happening throughout West County.

Susan Pendergrass (04:14): Wow. And your maps actually go down to the zip code, right? You have very granular data.

Ness Sandoval (04:27): Across into Illinois, yes. The only way you can turn this around is young people from across the United States deciding that they want to make St. Louis their home, have a family there, create a business there. This is what I promote. We have to get younger. We really should have a preferential option for families with children. And that’s a hard message for a lot of people because they’re like, wait a minute, we grew from 1970 to 2020. And I’m like, but all of that growth was driven by babies born. Over 1.8 million babies were born. And I tell people, just do the math. 27,000 babies per year times 50. That’s the back of the envelope for what’s coming over the next 50 years. Unfortunately, that’s not what’s going to come. It’s going to be a lot lower than that. People are starting to get it. We’re not going to have 1.8 million babies born over the next 50 years.

Susan Pendergrass (05:33): Yeah, and I think about things like individual school systems building new elementary schools when there have got to be a lot of buildings that are empty. And also, won’t there be more competition for public resources between children and older people?

Ness Sandoval (05:49): Yeah. At my previous job at Northwestern, we did a project on this in one of the suburbs because we were studying seniors. There was a debate about how to spend public money. Was it for transit for seniors or transit for children? This was 2006, and this was the debate happening in Chicago. How do you provide paratransit for senior citizens when that number is increasing? We’re just having this discussion because St. Louis is leading. We’re in the top three of regions. Pittsburgh leads the country, Cleveland is second, and St. Louis is third, tied with Tampa. More people dying than babies born. We simply don’t have the number of babies born for the size of our population. And it’s because we’re a very old region. We’re the ninth oldest region in the country.

Susan Pendergrass (06:58): Yeah, I mean, we used to have 800,000 people in the city of St. Louis, right? And now we’re 280,000 or something.

Ness Sandoval (07:05): Yeah, and I was just looking at the numbers. It is very possible within two years that Kansas City will have more babies born in absolute numbers than the St. Louis metro region. That’s how few babies. I’m talking about the region. Indianapolis is about 700 babies behind St. Louis. Nashville is about 800 babies behind. All of these smaller regions are having lots of babies, and young people are moving there. Your future depends on the number of children born. And when you look at population projections, I kind of know what this looks like. When you fall below Kansas City in number of births, at some point Kansas City will be larger than St. Louis. We can project this out. We’re talking absolute births, not birth rates. We had lots of babies born 10 years ago. We were fine 10 years ago.

Susan Pendergrass (08:09): Yeah, wow.

Ness Sandoval (08:29): We can go back and talk about what happened since 2010.

Susan Pendergrass (08:35): Yeah, please. I’m curious what did happen. I know you call it the death spiral when there’s more deaths than births, but how did we get into this?

Ness Sandoval (08:41): So I moved here for the Great Recession. I moved in 2008 to start my job at SLU. And there was hope when I got here. There was some positive momentum happening. I think the region took it for granted that it didn’t have to do anything. We just have to be St. Louis. We don’t have to do anything. Unfortunately, Nashville came on the scene. Then you started to see regions change. Regions thinking we need to get young. And St. Louis absolutely did nothing. Since I’ve lived here, there’s been a lot of resistance to economic development in the region. Nashville, I think it was the popularity of being young, being pro-development. I went to Nashville to actually look at it, like why are young people there? And I went to Vanderbilt. And I saw this really interesting integration between the city and Vanderbilt University. That does not exist here in St. Louis. Making it a vibrant, cohesive, urban experience.

Susan Pendergrass (09:47): Yeah. Right. Now you step off campus at SLU and you’re in an area you don’t want to walk at night.

Ness Sandoval (10:00): Yeah, and even if it was WashU, right. And then you can talk about the Loop. It never recovered from COVID, traffic is down. I think the region has really struggled to attract young people to stay here and live here.

Susan Pendergrass (10:13): Well, we’ve been looking into the issue of crime in St. Louis quite a bit, and I know it’s down and everyone’s celebrating that fact, but I’m not sure when you survey people and ask how they feel walking alone at night, that it’s changed all that much. Even if the number of murders are down, I don’t know that people feel safer walking alone at night, and that’s got to have an impact on whether you want to stay in St. Louis after you have kids.

Ness Sandoval (10:47): Yeah. I think in the city you move out to the suburbs. The challenge is they work and you live for affordability. So many suburbs are against new development, even though they can develop. We see these debates in Chesterfield, that debate in Creve Coeur, several debates out in St. Charles. They don’t even talk about Jefferson County, because they’re celebrating voting down housing. My point is if you don’t want to build housing, Indianapolis is going to build it. Columbus is going to build it. Nashville is building it. We are no longer in the top 50 in new housing permits in the country. We’re 58th.

Susan Pendergrass (11:34): Why though? Is it because there’s not demand, or is supply being constrained?

Ness Sandoval (11:42): Supply is being constrained. Part of it is, when I speak to people, they say it’s going to hurt my home values. People want supply down. But you understand there’s a consequence to this. And home values are always good in St. Louis. But again, we always say there’s a city that we can look to that’s our future, and that’s Pittsburgh. If you really study Pittsburgh and look at it, you’re like, wow, there’s a lot of things we can learn as a city, and say this is not what we want to be. Pittsburgh leads the country in discounted rates on home sales. When people offer their price, most people do not get the price that they want. It’s a significant discount because the demand’s not there. We are about 20 years behind Pittsburgh.

Susan Pendergrass (12:25): Wow. I think a lot, in what I do, about the educational offerings in the region. Before we were recording we were talking about Texas. Texas, number one, doesn’t have an income tax, and also you can pick your child’s school from the get-go. They have hundreds, if not thousands of charter schools. And now they have a private school choice program that I think 250,000 families apply to. And Missouri has an extremely limited private school choice program, maybe 6,000 or 7,000 kids in the state, and not even the ability within St. Louis County to go outside of these tiny little districts. You can’t even go from Clayton to Brentwood. People really feel strongly about this and fight the idea of opening up the county and letting kids go within the county to any school district, and then the legislature fights it every year. And I’m like, we are just becoming less and less competitive.

Ness Sandoval (13:36): I don’t think people understand. I do a lot of work with schools now. We’re going to lose at a minimum 100,000 children under 15 by 2045. This loss is built into the system based on 27,000 births right now. The numbers are starting to show up in kindergarten. We have a smaller kindergarten class, a smaller first grade class coming in. And so a lot of schools are like, wait a minute, what’s going on? This is just starting. You have another 20 years, because we have these large cohorts that were still born after the Great Recession that are going to be replaced by smaller cohorts coming in. And there is no significant migration of children coming into the region.

Susan Pendergrass (14:28): So there are going to be difficult staffing decisions, and people don’t want to hear it. Like, we cannot continue to hire more teachers.

Ness Sandoval (14:32): You have to close schools. You have to close schools, have to merge schools. I’m doing some work in Parkway. People should not be surprised. Parkway is having meetings this month about what Parkway looks like going forward, and people are discussing consolidation. Rockwood is talking about a 15% decline in 10 years. Go out another 10 years, Rockwood will be talking about school consolidation. St. Charles will be talking about school consolidation in the old St. Charles area, the city of St. Charles. This is coming. Everybody focuses on the city and says the city needs to close schools. But you will see a discussion, I think, between Clayton and Brentwood.

Susan Pendergrass (15:06): For sure. Clayton had 2,500 kids. Now they’ve got closer to 2,000. I mean, that’s teachers, that’s buildings. And I know in Indianapolis, I’ve talked to a superintendent in that area. All parents can pick a public school. And he was like, I had some under-enrolled elementary schools and it was great for me because I put a language immersion program in one to bring parents in. I think the resistance to this idea is all about not wanting kids who aren’t paying property taxes, but I think it’s going to flip. Then you’ll be like, we’ve got to fill these seats. We’re paying the same teacher for 18 seats that we could pay for 22 kids. At some point they’re going to have to start laying off teachers. So I think there are some very difficult decisions ahead that you can see now, and there are things that could be done now, like at least not filling open positions.

Ness Sandoval (16:16): I think universities are seeing this, because many of them are relying on tuition and those dollars are not coming in. A smart university has to make cuts because it doesn’t get any better next year or the following year. There will be fewer students coming in. So universities that want to survive are making necessary cuts to survive.

Ness Sandoval (16:45): Again, we don’t know what the bottom of the birth decline looks like. We just happen to live in a state and a region that has seen a significant decline in children. I keep saying we’re modeling the future for people, either as a good or bad thing. They’re like, we want to be like St. Louis, or we don’t want to do what they did.

Ness Sandoval (17:13): I think a lot of people are starting to understand this. It’s like, we’re letting our children go, and we’re not doing a very good job of trying to keep them here. When you had 1.8 million births, you had enough to let children leave your region, leave the state. You don’t have that luxury anymore. Our models show the region should have anywhere between 1.3 million to a million births coming in over the next 50 years. We hope it’s not a million births, because that means you have an 800,000 decline in your population under 50. Or it’s 1.3 million births, which is only a 500,000 decline. But that’s coming.

Susan Pendergrass (17:43): How does immigration factor into it? Because I remember the last time we talked, you said that St. Louis is not very immigration friendly. And of course, the current national environment is not very immigration friendly.

Ness Sandoval (18:03): Missouri and St. Louis cannot rely on immigration to save it. It’s not a state that immigrants are going to come to in large numbers. They’re going to go to Florida. Miami leads the country. Even though domestic migration has people leaving, international migrants are going there as their top destination. They’re going to Philadelphia, they’re going to New York. We get immigrants who come here, but it’s a very small number, like 6,000 a year. We’re not even in the top tier as a top 25 metropolitan region. And Missouri is not either. So Missouri has to rely on domestic migration.

The data will show that probably for the decade, there will be more people dying than babies born in Missouri. Missouri will start to have from a natural perspective more people dying than babies born. And 91 counties across the whole state will have more people dying than babies born. So Missouri will become dependent for growth on domestic migration.

Susan Pendergrass (19:29): Or do we just accept that we’re not going to grow anymore? What’s the impact of that?

Ness Sandoval (19:33): Again, it’s going to be specific. I do think the Springfield area is going to grow, the Branson area, there’s growth. Part of this is retirement, I think. Kansas City is growing.

Susan Pendergrass (19:42): Why Kansas City more than St. Louis? What’s attracting younger people to Kansas City that is not happening here?

Ness Sandoval (19:49): Kansas City is a younger region. St. Louis is a fairly old region. Kansas City is a lot younger and it has a large Latino population, and that’s the largest growing population in the country, birth-rate wise. Latinos are now the second largest population in Kansas City. They surpassed the Black population, which I think even shocked me, because we thought we knew this was coming, but we thought this was going to be post-2030. The fact that it already happened shows just how many Latinos are moving there. And then you have an exodus of Black residents leaving Kansas City as well as St. Louis. I always tell people, when you have young Black families leave or young Black adults leave, those children ultimately leave too. And so that’s part of the story.

Ness Sandoval (20:48): When young people leave, the children that traditionally were born to those young people are now being born in Charlotte, Atlanta, Houston. The number one challenge for St. Louis and the state is the decline in births. If that doesn’t change, then you’re going to see that decline start to show up in five to ten years in our schools.

Ness Sandoval (21:17): And the private schools will simply go out of business because that’s dictated by the private market. Or they’ll do what many of the Catholic schools are doing. They think, we’re going to have middle school now, or we’re going to be K through 12. But then what about the parochial schools? There’s no growth. They’re just taking children out of other schools and putting them in their school system.

Ness Sandoval (21:45): And so again, I go back to Pittsburgh. Pittsburgh is about how do we manage population decline? The city is growing a little bit, but 100% of the growth in terms of the losses is in the suburbs. And that’s going to happen in St. Louis. When this loss starts to show up in the demographic accounting, most of the loss is going to be outside of the city of St. Louis. It’s going to be in the Chesterfield areas. It’s going to be in St. Charles.

Susan Pendergrass (22:18): So what could be done from a policy perspective? Chesterfield is trying to have this arts and entertainment district. They put in Topgolf and the concert venues. They’re trying to attract younger people there. Is it working?

Ness Sandoval (22:34): It’s not working. I mean, they have the same slight increase. I just posted this yesterday. People are shocked. The growth is in non-family households in Chesterfield. If you look at the new development, I call it downtown West Chesterfield. These are million-dollar homes, very expensive. Very few families with kids are there. These are empty nesters or dual-income, no-kids households. It’s very expensive for young families to get into Chesterfield today, when your entry-level home that was $170,000 in 1980 is $600,000 today. These are the challenges.

Susan Pendergrass (23:23): So build more starter homes?

Ness Sandoval (23:32): You need more entry-level homes. I’m not even going to use the word affordable. You need attainable homes for two incomes. And they can be built. But what I’ve heard is that a lot of cities do not want these homes. They want the $600,000 to $700,000 homes because of taxes. And so there is this tension there.

Ness Sandoval (23:56): Parkway and Rockwood are going to look very different in 30 years. They were very attractive amenities for young families with children. But I look at the data, and my kids are in Parkway. These schools are under-enrolled. You go and objectively look at the classrooms, you’re like, there should be 30 kids in these rooms and there’s 15. It’s great for me as a parent. I’m glad there’s only 15 kids for my fourth grader. One of the classes in Parkway Central, in the middle school, in his math class, there are eight students. I love it as a parent, but as someone who looks at the data, this is not sustainable.

Susan Pendergrass (24:45): Yeah, lots of one-on-one. Yeah. I’m just trying to figure out what would cause a renaissance in St. Louis. It doesn’t feel super safe. It has some great amenities and a great food scene and now MLS soccer. What would it take? Well, number one, you do have the school system problem where the St. Louis public school system is kind of a dumpster fire. So people want to move out if they have small children.

Ness Sandoval (25:32): Yeah, the decision to move out is made within the first three years once the baby’s born. We can see that in the data. When we moved from Chicago, because we lived in the city of Chicago, we wanted to live in the city of St. Louis. I think most people who move from Philadelphia or Boston are living in the city. We thought the city of St. Louis would be offering the same amenities. Because of the Great Recession, I came a year before my family, and we soon realized the city of St. Louis was not the city of Chicago in terms of amenities. And so we ended up in St. Charles. And I think most people make that same decision.

Susan Pendergrass (26:25): Yeah, my husband and I moved right into the city.

Ness Sandoval (26:27): We see it in the data. People are moving into the city from Philadelphia, from Boston, from Houston. But then, like me, if you have children and you’re not going to pay for private school, because that’s a tax in many ways, they’re going to exit out. And then with the Catholic schools closing in the city, there are going to be fewer options.

Susan Pendergrass (26:50): Yeah. But the public transportation is no good. I mean, there are things.

Ness Sandoval (26:57): And it’s interesting. We did see a kind of experiment during COVID. When COVID happened, the Catholic schools in the county opened up. A lot of families wanted their children in face-to-face instruction. So they left the city. They did not stay. So we had kind of a quasi-experimental design there. Education was very important.

Ness Sandoval (27:26): A lot of people left the city because of that and never came back. And that started before COVID. But I think this idea of school choice is something where parents want it. We have enough anecdotal evidence. When Normandy closed, the school system closed, families moved to Normandy to get their kids into Francis Howell. There’s enough evidence to show that families want to make these decisions. The question would be, would Parkway accept all of the students that would want to be in Parkway?

Susan Pendergrass (27:56): Yeah, the law would have to say that they would have to. You couldn’t let them pick and choose.

Ness Sandoval (28:15): Yeah. And so the question is, you have a lot of people who would love to be in Parkway. I gave a talk at Marquette and I was shocked because a good percentage of the students there were saying those public school students, but the parents had left to get out to West County for their children. So the question is, do you just let the private market dictate this? Those who can leave the city will ultimately leave the city and get out to West County.

Susan Pendergrass (28:50): There’s movement out. And I think in terms of domestic migration, to get parents to move in, you can go to our northern border, Iowa. The state pays for private school tuition. Oklahoma to the south, the state pays for private school tuition. Kansas, you can go to any public school in the state. It’s 100% open enrollment. Arkansas is one of the strongest for school choice, both public and private. I think we’re going to be surrounded by it and just have our arms folded across our chest. Because Parkway doesn’t want all those kids coming, or Rockwood doesn’t want all those kids coming. Parents are simply going to move across the border to a state where they can pick any public or private school. I’ve talked to some parents who have reached out to say, I’m thinking about moving to the region, is it true I can’t pick a school? And I’m like, it is true. You cannot pick a school. And I think they’re like, forget it. I’m not going to make this big decision on where to buy a house. I think if we don’t do things that are family friendly, and if we don’t get crime under control in some way, or have a 911 system where when you call somebody responds, I think it’s interesting that St. Louis will become this example for the nation of what a dying city looks like.

Ness Sandoval (30:08): We have three examples today: Pittsburgh, Cleveland, and St. Louis. Tampa is kind of unique because it is a destination for retirees. The Wall Street Journal has an article today on Cleveland, the renaissance of downtown Cleveland. And Detroit too, it’s a renaissance.

Susan Pendergrass (30:29): Wow. What about Detroit now? So St. Louis hasn’t figured out our renaissance yet.

Ness Sandoval (30:49): And to be honest with you, I think it will be hard. I’m not pro anything, but I find this whole debate about the city and county interesting. I’m not from here, so I don’t have this history of growing up here. But I think objectively, when I look at the budget of the city of St. Louis and compare it to Pittsburgh, Pittsburgh is a little bit bigger. It’s got 25,000 more people. But their budget is significantly smaller than St. Louis City’s budget. Part of me wonders, because the city is both a city and a county, it doesn’t have enough people or revenue to operate as both. And this is what’s helping Pittsburgh out. This is what’s helping Cleveland out, because that county revenue is spread among more taxpayers. In St. Louis City, the county functions are spread among a dwindling number of taxpayers. The city probably cannot be a county anymore. There’s just too few taxpayers to provide both city services and county services.

Ness Sandoval (32:08): I looked at these budgets and I’m like, my gosh, why is St. Louis’s budget so much more? I’m talking not a little bit more, a lot more than Pittsburgh’s budget. Pittsburgh is having trouble. And I don’t see the long-term fiscal situation turning around for the city because it’s got to provide all of these services. The tax base is going to decline. The next three years are probably going to see population loss in the city. The numbers just came out in March, but we’ll get the numbers in May. It’ll probably lead the country again in population decline for large cities.

Susan Pendergrass (32:58): Are we still a top 20 city? We’re number one in population decline, but what about in population size?

Ness Sandoval (33:01): We’re number one in decline. Last year, St. Louis City was number one. We’re declining. We’re not in the top 20 yet, but we’re very close. If we go back to 2020, we’re smaller than we were in 2020. The only reason we’re not number one in decline is because we had so many immigrants that offset our domestic migration loss. But this will be an interesting 2030 census, because it’ll be the first time the region will go into a census with more people dying than babies born. In the last census, we had about 75,000 natural growth. We’re looking at about 25,000 to 30,000 natural decline going into this census without any domestic migration. I tell people that this story is just starting. We have 74 years of the century left.

Ness Sandoval (34:18): I’m just trying to get people to move from the mindset that this is 2010 St. Louis. You don’t have 36,000 births anymore. You have 27,000 and it’s declining, one of the fastest declines in the country. Because of it, we’re aging very fast, and so we have to shift. The region has to make a choice that we start to organize our economy around senior citizens. There’s lots of money to be made from senior citizens, but we will never be viewed as Nashville or Austin as a place for young people.

Susan Pendergrass (34:52): Absolutely. That Route 64 corridor is just going to be all retirement homes.

Ness Sandoval (35:04): We won’t be talking about single family homes anymore. We’ll be talking about senior housing. We’ll be talking about a workforce that’s going to work with seniors instead of a workforce for children. And there is money to be made in that economy. I’m not saying that this is a bad thing. But again, we can look at other parts of the country where this transition has happened. Local government spending is being consumed by senior citizens, the healthcare of senior citizens, the paratransit of seniors. Seniors will lose their ability to drive. That cost typically gets covered by local governments. And so you will not be providing buses for children. You’ll be providing paratransit to get seniors to their doctors. Churches will have to think about being accessible to seniors. I go to Church of the Ascension and they are not prepared. At Easter, one of the Masses, one-third of this section was senior citizens in wheelchairs. The churches are simply not prepared for a parish that’s going to be 50% of the population at 70 years old and older. Restaurants have to think about this.

Susan Pendergrass (36:30): Wow, that’s crazy. Well, interesting stuff. I hope you’ll come back and talk about this more. And certainly I’m very interested in reading everything that you write about what St. Louis can do. We need to figure out a renaissance.

Ness Sandoval (36:51): We’ve got to get younger. The kids are giving us a try. They’re coming to school, they’re coming here because they have hopes. We just have not responded the way we need to. A lot of companies are starting to recognize this. I talked to the mayor and said, you need to be a more proactive voice on this. But the region, this is not a city of St. Louis issue. This is a St. Charles issue, a Jefferson County issue, a Chesterfield issue. Most of the people live outside of St. Louis city. The loss we’re projecting is going to come from the suburbs. And that’s what’s happening in Pittsburgh, that’s what’s happening in Cleveland. 100% of the demographic loss is in the suburbs.

Susan Pendergrass (37:21): Yeah. Wow, that’s crazy. Well, fascinating. Thank you so much for explaining it. I don’t want to be depressed about it, but it’s not super optimistic. We’ll find a silver lining. Thanks, Dr. Sandoval.

Ness Sandoval (37:59): All right, thank you very much.

Produced by Show-Me Opportunity

The post St. Louis Demographics and the Future of the Region with Ness Sandoval appeared first on Show-Me Institute.

Susan Pendergrass speaks with Todd Davidson, Vice President of Programs at the State Policy Network, about how artificial intelligence is reshaping the think tank world. They explore what AI is good at and where it falls short, how organizations like the Show-Me Institute can use it to become more productive without losing their edge, why face-to-face relationships will only become more valuable as AI-generated content floods the internet, how a Hawaii think tank used an AI agent to help fire victims submit legislative testimony, what good policy looks like in an AI-driven energy landscape, and more.

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Episode Transcript

Susan Pendergrass (00:00) Great, well, thanks so much for joining us this morning. Todd Davidson of the State Policy Network, to talk about the topic du jour: artificial intelligence. Thanks so much for coming on to talk about it. I’m afraid to even say anything out loud about AI because by next week it’ll be…

Todd Davidson (00:11) Yeah, happy to be here. Thanks for having me.

Susan Pendergrass (00:18) Nothing really ages — it changes so fast. But I did just read that Mark Zuckerberg has an AI agent who is performing his CEO duties for him. Did you see that? Why not, right?

Todd Davidson (00:28) I saw that, yeah. And then he can just kick back, go down to his Hawaii bunker and just let Facebook run itself.

Susan Pendergrass (00:37) Yeah, I mean, I still haven’t really dabbled in agentic AI, but I know it’s right there and I’m going to want to do it soon. We’re going to talk about AI in the think tank world, but I have to check legislation and hearings and see how those things are going every day. I can well imagine an AI agent doing that for me.

Todd Davidson (01:01) Yeah, if it’s properly trained. So ShowMe Institute, to give the audience broader context, is a member of State Policy Network, and we have sister organizations like ShowMe in states across the country. The Libertas Institute, which is based out of Utah, did exactly what you’re talking about. Connor Boyack, the CEO, built a legislative tracking system that then feeds into their scorecard where they keep track of legislation. He said it took him about eight hours of work to code the agentic AI, but now it does the work automatically. Of course it needs fine-tuning and always has a final human observer that verifies everything, but it’s being used for those purposes right now across the country.

Susan Pendergrass (01:59) So we’re in the think tank world, and it’s probably more of an art than a science at the state level. Tracking the policies — first of all, thinking about the policies that we think would be best for Missouri, then doing a bunch of research on those policies, then creating content on those policies, then trying to talk to legislators and hope that they see our point of view, and that they enact actual laws that reflect those policies. That’s a really labor-intensive job. Which parts of that could you see being picked up by AI?

Todd Davidson (02:33) I’m by no means an expert on AI, but I work with someone who is. What has been explained to me is that AI is very good at synthesizing information. It’s very good at predicting — it essentially predicts the next word. It takes all these inputs and predicts the next set of words, which comes out to us as sentences. So if you are able to give it certain inputs — say, I want you to look at these bills, I want you to look at these things — and give it a sort of walled garden, it can then be prompted to produce any type of analysis that you want. The reason you want that walled garden is because AI can still hallucinate. It can make stuff up. Actually, this just went viral last week: a lawyer down in Georgia went before the Georgia Supreme Court and had AI produce her entire argument. It cited five fictitious cases, and the judges called that out. So you have to give it constraints and say, here are the data inputs, now summarize this for me. And it can get you a pretty solid first draft of that summary. Of course, you’re still going to need a human to go through and edit it and add voice and texture to it. But summarizing that data, saying tell me which of these align with our principles or does not align with our principles — it would be very good at that kind of thing. What it’s not going to be able to do is the creative part. When you think about what is the policy that we want to design for Missouri, what does Missouri need — it’s not at the stage where it could do that. That’s where you would still want Show-Me Institute experts to be crafting those kinds of things. But if something’s already out there and existing, you can summarize it and score it based on criteria pretty easily.

Susan Pendergrass (04:35) So given how quickly firms are moving towards AI — and in fact mandating AI because it’s such a time saver and productivity increase — how does a think tank position itself in that world? There’s so much talk about AI just replacing all of our jobs. Maybe it does replace my job — I don’t know. I’ve heard podcasts generated by AI in my voice, so it could be doing this job right now. I would like to think it wouldn’t be as great, but how does a think tank position itself? What’s our value add in that scenario?

Todd Davidson (05:12) Start by going back to what your mission and objective is. ShowMe Institute — and by the way, I am a resident of Missouri and a big fan of the Show-Me Institute, both from my SPN perspective and from my Missouri resident perspective — we have principles: free markets, a robust civil society, a thriving economy. We want the feds to get out of the way in a lot of cases. We want the government to get out of the way. And then how we execute that mission is through policy change, mostly at the state level, though I know you also work at the local level. So state and local policy change is the objective. How do we go about that? We produce research and then we advocate — in some cases talking directly to policymakers, communicating out to the public through op-eds and things so that the public then talks to lawmakers. And ultimately we get policies passed that lower the income tax, reduce barriers to work, and provide more options for kids in schools. So what AI is going to do is make research and content much easier to produce. By research, again, I mean that summarization kind of research — it’s going to make that kind of stuff extremely easy for folks to produce. Everybody’s going to have a research assistant. What AI cannot do is personal relationships. It will never be able to do that. What it also cannot do is tour the entire state of Missouri, know all of the history and relationships and connections of people throughout the state. So I believe Show-Me Institute and all of the affiliates across the country that are state and local based are going to have an advantage because you’re in your community. You know people, you know policymakers, you know community leaders, you know people that are affected by your policies. And that’s something AI is not going to be able to do. AI can look at the statistics and arguments and academic literature, and it could put together a brief, and that could be useful. It would make your job more efficient — you’d be able to produce those things in a fraction of the time you do right now. But then with that extra time, I would use it to go out and build stronger relationships in the communities, and then use those relationships towards policy change.

Susan Pendergrass (07:51) What about grassroots? More grassroots-type stuff?

Todd Davidson (07:55) Grassroots very much. AI is going to have an interesting relationship with grassroots. In one way, it actually makes it easier for grassroots individuals to engage their legislature. On the other hand, it’s going to create a flood of grassroots engagement digitally. So face-to-face grassroots engagement is going to have more impact. I’ll tell you a story: Hawaii had the terrible fire that destroyed Lahaina a few years back. Hawaii has terrible building codes — it’s incredibly hard to build homes there. That town was completely destroyed, so the state needed to relax its building codes in order for homes to be rebuilt. Well, they weren’t making this change. Show-Me’s sister think tank, called the Grassroots Institute of Hawaii, built an AI platform that allowed individuals to submit testimony to the legislature. Testimony has a higher bar, right? You can email your lawmakers pretty easily, but testimony goes into the legislative record and has to follow a certain format and be structured in a certain way. That’s not something that grassroots individuals were very equipped to provide. So a think tank would typically provide the testimony and then get grassroots supporters to send emails to lawmakers. What Grassroots Institute of Hawaii did was build an AI agent so that an individual could say, “Hey, my house was burnt down, I need these things,” and the AI agent would turn that into testimony and submit it directly to the legislature. It resulted in a skyrocketing number of testimonies being filed. Because of that, the legislature said, “Wow, we’ve heard from 500 constituents — we’ve never heard from that many constituents before.” So they relaxed their regulatory regime, and now homes are being built in Lahaina much faster.

Susan Pendergrass (09:48) Did they know that AI was doing it? Were legislators thinking, okay, this is AI?

Todd Davidson (10:12) That is why they went through testimony. Legislators’ email inboxes — they’re not reading their emails anymore, right? They get thousands of them. But through testimony, the AI was not making up the stories. The people had to fill out the content and explain their story. The AI was just structuring it in a way to make sure that it got submitted as testimony. I do think that is a bit of an arms race. At some point the same thing that has happened with email will happen — there will just be thousands of pieces of testimony and you won’t be able to read all of them. So there was a bit of a first-mover advantage. And once that becomes ubiquitous, I do think what you predicted is going to happen, where legislators just say, well, this is AI-facilitated. And that’s where it’s going to have to go back to face-to-face, bringing those people in.

Susan Pendergrass (11:08) I think you’re absolutely right. As more video content comes out and we all realize it’s AI — I just don’t really believe that any videos are real anymore. I don’t really believe pictures are real. I don’t really believe music is real. And it doesn’t necessarily bother me that much, but I think because of that skepticism and unwillingness to believe in digital content, things happening in real life right in front of us are going to take on higher and higher value, so that we know for sure that if I’m speaking to a legislator, it is me saying it and what’s coming out of my head. That’s about the only way we’re going to know if something is real — or the default is just going to become AI-generated.

Todd Davidson (12:01) 100%, I absolutely agree. And that’s where I think organizations like ShowMe are well positioned. Because you’re in the state of Missouri, you can be in Jefferson City or you can be in St. Louis or Kansas City in those face-to-face relationships. It’s going to make your government affairs personnel far more valuable, your fundraisers who can be face-to-face with donors far more valuable, grassroots activists that are face-to-face. It’s going to put a premium on face-to-face interactions for sure. I agree — there’s going to be so much content out there. You’re still going to need content because that gives you credibility, it gives you what you’re going to talk about. But then you’ve got to pair that with the face-to-face interaction, otherwise it’ll just get ignored.

Susan Pendergrass (12:47) And you can definitely see the gap when people are generating stuff through AI and they don’t know the subject matter enough — like you said about the attorney. But there is definitely a role for humans to say, I mean, I do this all the time with AI: I’ll say give me five of these things, give me five infographics or something like that. But the human has to know which one is the best or which one makes the most compelling argument. AI simply really can’t do that. So while some people would love to believe that AI is going to run the world, I do believe there is an emerging role for human discernment to know which AI products are better than other AI products. Would you agree with that?

Todd Davidson (13:32) Yeah, 100%. I think the sweet spot is utilizing AI to make yourself more efficient or do things that you don’t like doing. But then that raises you up into that discernment phase where you’re the one making the call. I do this all the time — I’m having conversations with AI to increase the outputs. I should not spend any time making infographics. I’m not good at it. But I can have a conversation with AI where it produces that infographic much more effectively than I could. I’ve also found that, if you put the prompting on it, it can help you find those particular sources that you’re looking for. Say you want to write a survey on school choice research — it can help you gather all of those materials much faster. But then you have to make sure that it’s of high quality.

Susan Pendergrass (14:35) What do you think about the current pushback on AI-generated pictures? Do you think that is just a learning phase we all need to get through? Some top artists on Spotify have been determined to be AI-generated.

Todd Davidson (14:57) Really?

Susan Pendergrass (14:59) Yeah. The number two Christian artist is just AI, and across all genres there are artists with millions of subscribers who are just AI-generated music based on what AI knows we all like. So we do like it. Does it matter that there’s no real person writing the music? I don’t know.

Todd Davidson (15:12) It’s kind of sad. Yeah.

Susan Pendergrass (15:21) I know the initial reaction is, that’s sad. But then after a while you’re like, I don’t know.

Todd Davidson (15:26) There is going to be intense pushback to all things AI. AI is very unpopular right now. I saw some polling just last week that showed it is the number one concern of voters. There will be a populist pushback against AI. We’re seeing this pushback against the data centers. There’s even polling that showed a plurality of the population believes it’s immoral to use AI. And I think it gets at the core of some of what you’re talking about here — yes, there’s this very popular, satisfying music, but it loses some human element because there’s not a human behind it. I do think we’re going to see a lot of pushback to AI on multiple dimensions. There’s that cultural dimension. There’s the economic anxiety dimension right now: a fear that AI is driving up energy costs, a fear that AI could take my job. There’s going to be pretty significant pushback. Right now we’re mostly seeing that in anti-data center efforts, trying to stop the building up of data centers across the country. I was looking at some Democratic pollsters today who were pitching that Democrats should advocate for a guaranteed job, guaranteed income, guaranteed healthcare, and a guaranteed home if you lose your job to AI. That kind of populist messaging is going to resonate with a lot of the public. What is the response going to be to that? What are the other solutions that we could advocate for that both allow the continued growth and opportunity and also allow continued innovation around AI, because we’re going to need AI to continue to develop?

Susan Pendergrass (17:30) It’s already here. I mean, we’re doing this in reverse order. And I think my opinion is that massive new technologies always get pushback — like the car. People were on their horses, and then we started designing roads for cars. Calculators got a lot of pushback, the internet got a lot of pushback. But ultimately people decided that they liked it better. I think AI is the same — we just have to figure out how to work with it. And I know that it is threatening to take a lot of jobs, but I see it more as a good thing. It gives us an opportunity to become the expert over AI. AI is not going to be the expert — we still need the human component. Like you said, face-to-face interactions. Legislators are still going to know what Missourians want and how to represent their constituents, and those are real-world issues. The data center pushback is because I don’t want to look out my window and hear a buzz and see a data center — I don’t want all that land going to data centers. That’s a real-world, in-person issue. But I just think we’re going to have to learn to work with it. I don’t think robots are going to — maybe this is where I don’t want to say things out loud — but maybe the robots will take over the world, I don’t know. But personally I feel like it is helpful to get a lot more content out, because you don’t know what’s going to resonate with stakeholders. Whether it’s a video or an infographic or a report or a different type of content, the fact that we can generate these things much more quickly I think is a benefit to us, and it makes the in-person time more meaningful to me.

Todd Davidson (19:11) You’re absolutely right. When a new technology comes out there’s going to be pushback, and organizations like ours have to figure out what’s the policy framework that allows that innovation to thrive without getting in the way. And fortunately we have a lot of those policies already. Like Avery, your colleague at Show-Me Institute, talks a lot about energy. One of the biggest pushbacks on AI is that it’s driving up energy costs. There’s some research that shows that’s not quite what’s happening. What’s happening is a lot of green policies that got passed in the 2010s are coming to roost — the renewable portfolio standards and those things are really what’s driving up energy costs. But even still, what can we do to make energy more affordable and reliable, even with a bunch of data centers added to the grid? And Avery’s got good policy on this: expanding nuclear power, expanding the use of reliable energy sources.

Susan Pendergrass (20:23) It’s separating out consumer electricity from data center electricity. You can carve these things differently.

Todd Davidson (20:29) Yeah, that’s another one — where the data center has its own power source. So there are policies out there that can mitigate it. And on the job question, unfortunately AI is happening at the same time that we’re having a continued cost of living and inflation issue. It’s one more thing that is driving anxiety. It’s not the root cause of what’s going on — we’ve got other factors that we need to address to get inflation under control, particularly on the energy side.

Susan Pendergrass (21:08) Yeah, but I do think it’s great that we have so many opportunities to expand or improve how we do things. In our little corner of the world, which is think tanks, we’ve been doing things kind of the same way for a long time. So I think a new approach to how we do business is a welcome change, and I think we could be a lot more effective.

Todd Davidson (21:38) Yeah, I think we’re going to see far more productive think tanks on the research side. On the litigation side, I was talking to Wisconsin Institute for Law and Liberty. They litigate a lot of cases. With the advent of AI, every lawyer essentially got a legal clerk right away. They went from nine lawyers and a handful of legal clerks to nine lawyers who each now have their own AI legal clerk. It’s dramatically expanded the number of cases they can take on. And the same thing on the research side. On the marketing side, production of content is going to be quite a bit easier and more cost effective as well.

Susan Pendergrass (22:26) Well, I appreciate having a chance to talk to somebody who has a positive perspective on it, because I do hear a lot of doom and gloom when it comes to AI. I was reminded by somebody that many of the scenarios in movies and books about AI are very dystopian, but perhaps it’ll be utopian. We don’t know. It’s all in how we approach it, right?

Todd Davidson (22:48) Yeah, it is. It’s going to be an exciting new world that we live in and we’re right on the frontier.

Susan Pendergrass (22:54) Anyone with little kids, like you — who knows what the world’s going to look like when they’re going to college. So you’ve got to stay flexible, right? Well, thanks so much, Todd. I appreciate you coming and talking to us about it. We’ll have to talk about it again sometime soon when the whole thing has changed.

Todd Davidson (23:02) Yep, stay flexible and always be learning. Yeah, sounds good. Thanks, Susan.

Produced by Show-Me Opportunity

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Susan Pendergrass and Patrick Tuohey join Zach Lawhorn to discuss their new report, The Public Safety Climate in the City of St. Louis. They explore what the data actually show about crime trends over the past two decades, how St. Louis compares to similar cities like Cincinnati and Memphis, why crime perception lags so far behind the data, the challenges facing the 911 system and police staffing, why public disorder in high-traffic neighborhoods may be doing as much damage to the city’s reputation as violent crime itself, what it would take to make residents actually feel safer, and more.

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Episode Transcript

Zach Lawhorn (00:00) Welcome to the Show Me Institute podcast. I’m Zach Lawhorn from Show Me Opportunity, and today I’m joined by Susan Pendergrass and Patrick Tuohey from the Show Me Institute. Today we’re going to be talking about some work that the two of you have done on public safety and crime, specifically in the city of St. Louis. But before we get into the project, I want to talk to you both about your perception of crime as people who have both lived in and frequently visit the city of St. Louis. So Susan, I want to start with you. Before you started this project, before you started looking at the data, when someone said “Is the city of St. Louis dangerous?” what was your perception before you started this project?

Susan Pendergrass (00:38) I only moved to the city of St. Louis in 2015, so there’s a long period of time before I lived there. I was in D.C. for part of that, and my perception before I moved there was that it was dangerous. The Ferguson incident had just happened and I knew that there was a lot of crime. But then when I moved to St. Louis, my husband and I decided to live in the city itself and we loved our neighborhood. It was the coolest with this super cool house built around the time of the World’s Fair. It was amazing. But I never felt really safe. We started leaving our car doors unlocked because our cars would get rifled through. We had a smash-and-grab right within two weeks. I called to report the smash-and-grab and was told that they don’t take reports on them. That was new for me. We had to keep a lot of lights on outside. We didn’t really walk our dogs after dark. I felt like lots of times I would go by police cars sitting on corners idling, but it didn’t necessarily make me feel safer because I wasn’t sure how much they were doing. I also realized people run stoplights, run stop signs, use the right parking lane to pass, and that was all new for me. So I got this feeling that the rule of law wasn’t enforced very well in the city, and that just doesn’t feel good as somebody who has bought a house there and lives there.

Zach Lawhorn (02:06) Patrick, as someone who lives in Kansas City across the state, two questions. What do you think the perception is over there on the western half of the state? And then as someone who comes into St. Louis regularly, what was your perception of the safety situation in the city?

Patrick Tuohey (02:22) A lot of the issues that Susan and I explored in this paper bore out here in Kansas City. I’ve lived in cities my whole life. I understand that every city is going to have the parts you don’t want to go to, the parts that are rougher than others. Kansas City certainly has that. I’ve had my car broken into here in my driveway a number of times, no real damage, and it’s not something I reported to the police. As far as traveling to St. Louis, I’ve been going to St. Louis since the late nineties. Before I lived in Kansas City, I was in Washington, D.C. And I loved St. Louis. I still do. I would visit Creve Coeur, the Central West End, sometimes stay at the Westin downtown. But living in D.C. and growing up in D.C., I understood that every city is going to have the places that you don’t want to go. I understood that St. Louis often gets ranked higher than it should because the city’s footprint is so small. But it never felt to me that what was going on in St. Louis was way outside the normal limits of what we see in U.S. cities. There are those dangerous parts and you generally know not to go there. There is kind of an urban decline, which can be seen in a lack of services, graffiti, uncut grass. But I didn’t navigate St. Louis or think of St. Louis any differently than I thought of Kansas City, Washington D.C., Boston, or any other place I had been.

Zach Lawhorn (04:03) Yeah, and I’m glad you brought up the population of the city, the MSA. It seems like when there are national or even local news stories written on crime statistics in St. Louis, people will point out that if you’re not talking about the larger metropolitan area, you get down to actually a pretty small population number for U.S. cities. So for this work that we’re going to be talking about, can you define what area you guys looked at? When we say murders are a certain number, what area are we specifically talking about?

Patrick Tuohey (04:38) We looked at the city of St. Louis specifically, just those few square miles. We did not look at the metropolitan area and we did not look at the county. It is fair to want to combine all that data into one region, but oftentimes I think people want to do that to mask the seriousness of homicide and violent crime and property crime in the city. And that’s what we wanted to talk about. What is true in St. Louis is not unique to St. Louis. Kansas City has a crime problem that is not reflected in our metropolitan area. That’s true in Washington D.C., Atlanta, Los Angeles, everywhere. So I understand why people who live in St. Louis feel that you can cook the numbers by just looking at the city, but that’s true in every urban environment.

Susan Pendergrass (05:30) We also compared St. Louis to four other cities, and one of them in particular, Cincinnati, ended up being very similar. We wrote a paper and at the back of the paper there’s a table with variables on which we compared them. Similar size, similar poverty, similar median income, very similar. So to say that St. Louis is this very unique outlier and is the only city in the United States that has this situation where, essentially 100-plus years ago, St. Louis was so much better and more metropolitan and forward-thinking than the rest of the state of Missouri, and safer and wealthier, that they drew a line around the city of St. Louis and said we are going to be our own thing and we’re going to have our own police. It was called the Great Divorce. Now that line, the arrows are sort of pointing different ways, where St. Louis County isn’t necessarily excited to absorb the city of St. Louis and its services, systems, police departments, and 911 systems, because it is a uniquely crime-ridden area in parts. So while it would be nice to, as Patrick mentioned, just water down all the numbers by mixing them into a safer pot, it would really mask what’s going on.

Zach Lawhorn (06:47) Susan, you used the word “unique” there to describe the setup. Patrick, does that genuinely make it harder to talk about this topic? In the last few months you’ve had some public events, and we’re going to talk about those in a minute. But as you’ve gone through this process, do you think the unique setup has made it harder? Is there more throat-clearing and definitional work that goes into it?

Patrick Tuohey (07:12) I don’t know that what St. Louis is dealing with is unique. Yes, the city has a particularly small footprint. It is as if you drew a line around just the bad neighborhood in your community and tried to use that small footprint to describe the whole area. I get that argument. But if it’s true by a matter of degree, it’s not uniquely true of St. Louis. And it’s something that the city needs to deal with and understand rather than try to paper over. As Susan said, there are real problems in the city. Their population decline is only exacerbating those problems because there’s less revenue. And frankly, the history of the city going back decades has been that the image of the city is dysfunctional, and not just on public safety, on lots of issues. So although I understand that people say they don’t just want to talk about the city when it comes to crime, St. Louis, while it’s got lots of opportunities and strengths, doesn’t do itself any favors by combining all this stuff and whistling past the graveyard. People in this country know that St. Louis has a crime problem. You don’t solve it by redirecting people.

Zach Lawhorn (08:30) Okay, and let’s talk about that crime problem. Susan, when we use the word “crime” in this context, what are we talking about? Murders? Car break-ins? Lay it out for us.

Susan Pendergrass (08:42) We have violent crime and property crime. Violent crime is murders, aggravated assault, and robbery. Property crimes are larceny and motor vehicle thefts. In our report, we break them all out separately. Murders are the one crime area that the media likes to focus on: how many murders, which city is the murder capital, did we have 150, did we have 200, are they down? They are certainly down in the last two years, to be clear. Murder rates are down. Aggravated assault rates are not down by as much. And sometimes the difference between aggravated assault and murder is how fast the ambulance drives. We still have a lot of violent crimes against people happening. We certainly have a lot of motor vehicle thefts. That’s an area of crime that spiked during COVID, particularly for Kias and Hyundais, and it’s come down, but it’s still a very high number. While it is wonderful that crime has come down across these areas in many cases, the numbers are still pretty high, particularly on a per capita basis, which is how we translate all the crime rates so we can compare them with other cities.

Zach Lawhorn (10:00) So you said crime is down. Is it fair to classify it as it was really bad and now it’s just bad? It was terrible, now it’s just bad. How would you summarize what you found with the drop in crime?

Susan Pendergrass (10:13) Crime’s been dropping since the 80s, so we had much worse crime decades ago. It’s been dropping, it spiked during the pandemic, and it is continuing basically down. Now, when you look at the murder rate per capita in the city of St. Louis, it is still on a slightly upward trend, the number of murders per people, and that could be driven by the fact that Missouri is losing population at a pretty good clip. We have more deaths than births. So on a per capita basis maybe not quite the same, but in terms of actual numbers, crime has been coming down for some time. Crime overall peaked in the late 80s and 90s.

Zach Lawhorn (10:58) Patrick, we talked about your perception and the relevance of many other cities. Did that surprise you, the finding that crime is down? Or was that kind of what you expected?

Patrick Tuohey (11:09) No, the data showing that crime in St. Louis was down wasn’t a surprise. It’s certainly been nice to see that it’s been down year after year. This doesn’t appear to be just a one-off good year. And I’ve known that the mayor and the police chief have been talking about these positive numbers for a while. What I was really interested in with this paper was perception of crime. That’s what I’ve really wrestled with, both at events in the city and in the county. It is a difficult problem to overcome because you can have good numbers like St. Louis has and yet people still rely on that decades-old impression. That’s not something you can address just by waving away the numbers downtown. You have to wrestle with it. You have to admit it, and you have to figure out how do you get people to accept good news, and then how do you make them confident that that good news is going to continue? It’s so easy these days, especially with cities, to just be a pessimist and to say that things are down and won’t ever continue to go down. It is a problem that St. Louis has, but St. Louis isn’t alone in having it. The news on crime is good all over the country, yet perceptions about crime all over the country are still very much with us.

Susan Pendergrass (12:43) There’s a survey question that’s often asked: do you feel safe walking outside alone at night? And those numbers aren’t down. As Patrick mentioned, you have graffiti and trash not being picked up and panhandling and homelessness. Those numbers aren’t necessarily down. But we did look at St. Louis on a neighborhood-by-neighborhood basis, and it is true that out of 16 neighborhoods, four or five have basically no crime, they’re crime-free. But then there are some other pockets that have most of the murders concentrated in one neighborhood. So it isn’t equal across all the neighborhoods. There are some that have very little crime, but it’s hard to convince folks of that when they drive through the ones that have public disorder and still don’t feel safe.

Zach Lawhorn (13:29) Susan, as a researcher trying to ultimately figure out why things happen, you mentioned that crime is down across the country. Would it be easier if it was just a few select cities, so you could actually go and say what is Boston doing different, what is Memphis doing? Does it make it harder to find the “why” since it seems like it’s kind of across the board?

Susan Pendergrass (13:45) Yeah. There have been other periods of time when crime has gone down and then gone back up again. I personally believe, and this is not based on any research I’ve done, that cameras being absolutely everywhere makes it harder to commit crimes. You cannot basically travel through the world anymore without being on a camera somewhere. Police body cams probably make it harder to commit crimes too. I feel like we’re getting into more of a surveillance state, and maybe that’s what’s bringing crime down. I’ve heard that Detroit has brought crime down faster than other cities, that Pittsburgh is feeling safer, Chattanooga is feeling safer, Memphis feeling less safe. So it would be worthwhile to look into some of these differences. But I don’t think our research has yet pointed to a clear reason why it’s happening.

Patrick Tuohey (14:41) Let me follow up on that because Susan’s exactly right, and I think your question gets to that point. Crime is down nationwide, down in all cities if I remember correctly, and we don’t really know why. And it’s not just Susan and I that don’t know why. Susan has spoken with public safety and crime experts from all over the country, and that’s really frustrating from a public policy research point of view, because you would love to have that outlier, that one city, maybe Boston or Omaha, that tried something novel and got results unlike everybody else. But crime is so difficult because there are so many contributors. Some people want to point to the availability of guns. Some people want to talk about root causes. Some people want to talk about the number of police, the severity of crime, the clearance rate, population growth, new development, basic services like picking up the trash and making sure the streetlights work. And all of those things are right, all those things contribute. So it’s really difficult to figure out which one is driving the change. And sometimes, as Susan pointed out, you may just get a dip and there’s no explaining it. In 2014, in Kansas City, our mayor and police chief at the time came out and had a press conference because they were so proud of the homicide drop the previous year. There was a lot of back-slapping and self-congratulation. Then when the homicide rate went back up the next year, you couldn’t get those guys to answer a basic question. Policymakers are, and maybe rightly so, really shy about claiming credit, because they don’t want to be called to task a year later when the numbers reverse. The good news is that the numbers are trending down, and that’s always good. The frustration is it’s very difficult to figure out why and then make recommendations. We’re all kind of scratching our heads. Although again, this is a good problem to have. The numbers are heading in the right direction and we ought to be happy about that.

Zach Lawhorn (16:58) Patrick, to get a better idea of the perception side, you did the hard work of going to the people. In January and February you moderated events. We had one in the city of St. Louis and one in St. Louis County. There are full recordings of the events available at showmeinstitute.org. You had a panel of experts and spent a lot of time getting feedback from attendees who lived in the city and the county. What were your takeaways? Are they buying that crime is getting better?

Patrick Tuohey (17:33) No, in a word, they don’t. We gave them a short survey before the event. A lot of them believed that crime was important, certainly, but they didn’t necessarily believe that crime was getting better. They weren’t necessarily optimistic that crime was going to be better in St. Louis City in the next five years, and that was certainly true in the county. I wanted to press these audience members: what would it take for you to believe this good news? And I think sometimes they just didn’t want to believe anything. We got the frustrating line: “there are lies, damn lies, and statistics.” That’s a cute thing to say, but it really doesn’t help you explain your own view. If you’re just going to say you believe it’s bad and always going to be bad, that doesn’t get us anywhere. We were happy to have representatives from the Circuit Attorney’s office at both events, and they struggle with this too. They can do a better job. They can prosecute more and different cases, they can do it faster. The police can certainly improve their clearance rate. But public policymakers in those cities, in every city, are going to have to realize that they may have to continue that grind, doing the hard work of lowering crime, and they’re not going to get the attaboys from the people in their city or the communities around them. That’s just a reality. One of the panelists talked about how perception of crime is often a lagging indicator. When crime goes up, people feel it immediately. But when crime goes down, it may take a few years. The tough news for the people who lead St. Louis City is you may have to keep doing this for another 10 years before you get any credit for being successful. And that’s really tough in politics because people want that immediate payoff, that immediate

Susan Pendergrass (19:15) You

Patrick Tuohey (19:31) applause, that immediate press conference and support.

Susan Pendergrass (19:34) Patrick and I have been thinking about the things that could happen that could make a difference, that could maybe make people feel safer. Number one: when you see a crime happening, you need to be able to have faith that you can report it and somebody will respond. And that is not happening right now in the city of St. Louis. We’ve called several times about crimes and nobody showed up. You need to have faith in the 911 system, and the 911 system needs to function. We have about 28 different systems in the county. They’re building a new 911 center in the city that’s going to consolidate services, but it’s not finished. It’s going to be some time before it’s fully functioning. We also need to know that the police will be able to solve these crimes. They need resources. They need to be able to do DNA testing and rape kits and DNA. They need money to do those things. They need detectives. We need to know that these crimes can get solved, and then we need to know that the crimes are prosecuted. I think if these pieces on the front end, not just the “lock them up” approach, but on the front end, people would feel safer if they felt like they could call somebody and somebody would respond and something would happen. I’m not sure that’s happening right now. And until it does, people, especially when they start having small children, are probably going to move out.

Patrick Tuohey (20:59) What we’ve known since at least 1961, when Jane Jacobs wrote The Death and Life of Great American Cities, is that you sometimes just need eyes on the street. Shop owners, pedestrians, people walking around. Cameras can reduce crime, but they’re kind of abstract and tucked in corners. When a street is vibrant, when it’s got people living there, when you’ve got kids playing in the street and families on the porch, there’s that sense of being watched, being seen. But because St. Louis has been in this population spiral, how do you bring people back into the city? The city talks about economic development subsidies all the time, but that’s about bringing in amenities and employers. Maybe what the city needs to do is figure out how to bring in people. And oftentimes it’s the non-crime-related policies, the housing policies, the regulations, the tax structure, that keep people out. Crime is one of those, but the city could open itself up to urban homesteaders who want to come in and rehab these old houses. What has struck me about St. Louis for the decades I’ve been going there is just the absolutely beautiful old neighborhoods, the incredible housing stock. Susan talked about living in a house that was built for the World’s Fair. There are gorgeous neighborhoods in St. Louis, and it’s the barriers to entry, red tape and government regulation, that are keeping people out, I have to believe. Crime is one of them, to be sure. But I am confident there are people who would love to move into those old houses and revitalize those old neighborhoods, because they’re just so gorgeous and so walkable. And it’s been done in other cities. DuPont Circle in Washington D.C. was a slow process of rehabbing neighborhoods block by block, and now 30 years later it is a vibrant community.

Zach Lawhorn (23:03) Susan, you mentioned the 911 system. I know in the report you don’t get into specific solutions, and I know we’re still kind of in the measuring-the-problem stage and trying to figure out next steps, but beyond the 911 system, are there any areas you’d consider low-hanging fruit worth considering moving forward?

Susan Pendergrass (23:25) The legislature passed and the governor signed a violent crime clearance grant program last year that cities like St. Louis could apply for, funding to hire detectives, do DNA testing, collect data, and other activities directly focused on solving crimes. The legislature has not appropriated any money for that program. If they did, St. Louis could apply for those funds. We also have, and I don’t know the exact number as I say this, but at least 100 open police positions in the department. Those are hard to fill. The policies that have been tried, like no longer requiring officers to live within the city and across-the-board raises, none of those have really made a difference. So we need recruitment and retention policies that could actually work. And as I mentioned with the 911 system, triaging calls and making sure the correct agency responds when a crime has been committed. There are community violence intervention programs that have been tried in some places, and using neighborhood-by-neighborhood data to focus in on where crimes are really happening. Those are all things we’d like to explore further: what is the cost of these programs, what is the likelihood that they’ll improve things, and what are some feasible ways to get them done.

Zach Lawhorn (24:54) So there’s the PR part of it. The city’s got a PR problem. There’s the need for more cops. We need people to be able to call 911. We need people to actually be prosecuted for crimes. That all seems doable.

Susan Pendergrass (24:58) Yeah.

Zach Lawhorn (25:06) Where do you think the city of St. Louis is at right now? Are we in a good place? Are we in just an improved place where it could still be a few years? How are you feeling about public safety in the city of St. Louis right now?

Susan Pendergrass (25:21) I don’t want to be a wet blanket. I love the city of St. Louis and I want it to succeed wildly. But I’m concerned that they’re going to say murders are down and these other crimes are down, but people are still running stop signs and stoplights, there are still panhandlers, and trash still isn’t being picked up. They’re not really fixing the small things that make people feel safe. They’re sort of focused on these big numbers. It could be like a school improving ACT scores. You have to be really careful if you’re just focusing on one aspect, because these big crime numbers being down could be hiding a lot of other stuff that really needs to be done and focused on. So I’m cautiously optimistic, I guess.

Patrick Tuohey (26:05) I’m optimistic because crime is going down everywhere, and I think it will probably continue to go down at least for the next few years, for reasons that may have nothing to do with the management of St. Louis. Part of it is because Susan and I have been reviewing the research for the last few months, and there is so much out there, primary research on crime and secondary, that talks about exactly the things Susan hit upon: the environment, picking up trash, cleaning up graffiti, fixing sidewalks, making sure the streetlights are lit. We know so much more about what drives crime, or at least what can ameliorate it, that even if we don’t know the specifics of what’s going on now, city leaders and state leaders are much more aware of what they can do to make communities not just safer but feel safe. And again, it is frustrating because you can say the numbers are down, but until people feel safe and want to go downtown and take advantage of what the city has to offer, we’re not going to see that public perception change. So yes, I think the public perception is accurate in as much as that is what people feel, but I don’t think it reflects what’s actually going on in St. Louis or in the county.

Zach Lawhorn (27:20) And we will leave it there. The report, The Public Safety Climate in the City of St. Louis, is available at showmeinstitute.org. If you want to watch the full recordings of the events that Patrick moderated, those are available right now at showmeinstitute.org. Susan, Patrick, thank you very much.

Susan Pendergrass (27:36) Thank you.

Patrick Tuohey (27:36) Thank you.

Produced by Show-Me Opportunity

The post The Public Safety Climate in the City of St. Louis with Susan Pendergrass and Patrick Tuohey appeared first on Show-Me Institute.

On January 21, 2026, the Show-Me Institute hosted an in-depth discussion on crime and public safety trends in the City of St. Louis at the Knight Center at Washington University. Patrick Tuohey, Senior Fellow at the Show-Me Institute, was joined by local experts Gabe Gore, St. Louis Circuit Attorney; Janet Lauritsen, Curators’ Distinguished Professor Emerita in the Department of Criminology and Criminal Justice at the University of Missouri–St. Louis; and Pernell Witherspoon, Senior Professor of Criminal Justice at Lindenwood University.

Produced by Show-Me Opportunity

The post Watch: The Public Safety Climate in the City of St Louis appeared first on Show-Me Institute.

David Stokes, Elias Tsapelas, and Avery Frank join host Zach Lawhorn to outline what a responsible plan to eliminate Missouri’s income tax should include, from revenue triggers and spending restraint to rethinking other taxes. They also break down St. Louis County’s Bill 182 expanding prevailing wage and DBE mandates, Independence’s proposed TIF package for a new Wally’s gas station and what it says about corporate welfare, Missouri’s early literacy crisis and reforms like a universal third grade reading screener, mandatory retention, and banning three cueing, and what they are watching next on prefiled tax bills, data center policy, and rising property tax bills across the state.

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Timestamps

00:00 Introduction to Missouri’s Income Tax Elimination Plan
02:52 Strategies for Reducing Income Tax Reliance
05:19 Understanding Missouri’s Tax System
08:26 The Importance of Competitive Tax Policies
10:53 St. Louis County’s Prevailing Wage Bill Discussion
13:45 Economic Implications of Tax Subsidies
16:24 Independence’s Wally’s Gas Station Development
19:28 The Flaws in Tax Increment Financing
20:20 Addressing Early Literacy in Missouri
27:54 Looking Ahead: Legislative Priorities

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The post Eliminating Missouri’s Income Tax, Subsidies for Gas Stations, and Early Literacy Reform appeared first on Show-Me Institute.

Prevailing wage laws are harmful because they inflate the cost of projects taxpayers pay for or, in these cases, subsidize. Research on the subject suggests that prevailing wage laws can increase the total cost of public construction projects by as much as 25 percent. For local governments with many projects needing to be built, that could mean lower-priority but beneficial projects will go undone for lack of funding. Repeated year after year, the harm done by leaving these projects uncompleted compounds, leaving the community with fewer and inferior government services compared to what market labor rates would have otherwise allowed.

DBE programs require that a certain amount of work involved in a project go to contractors and subcontractors owned by women or minorities. DBE programs also inflate the cost of projects for taxpayers and have often been vehicles for fraud and abuse. Increasing costs and encouraging criminal activity . . . where do I sign up?

Finally, the proposed law requires that bidders offer apprentice-training programs, which are generally found in union shops. There is nothing wrong with apprenticeship programs, but instituting such a mandate is blatant favoritism for union shops over nonunion competitors. It would be a substantial burden for a typical independent, nonunion company to create an apprentice program before it could bid for a project. Whatever that burden may be, the county council has absolutely no business mandating it. This is a blatant ploy to guarantee that union companies will win all county bids.

Not surprisingly, much of the language in the bill was put in by unions, according to the Post-Dispatch story.

I am a strong opponent of tax incentives and subsidies for businesses, but imposing these types of regulations on all sorts of projects in St. Louis County is a terrible abuse of the political process. St. Louis County has no business making these rules, and, indeed, I question its legal authority to do so in some of these cases. Local government should address the major issue of incentive and subsidy abuse by saying “No” far more often. Saying “Yes, but with a bunch of new regulations and red tape” is the worst policy of all.

The post Two Wrongs Don’t Make a Right appeared first on Show-Me Institute.

The data center discussion is highly nuanced, marked by an interesting mix of not-in-my-backyardism and yes-in-my-backyardism.

This debate has touched down in Platte County in the Kansas City area, where “Project Kestrel” would grant substantial property and sales tax subsidies to support the development of a new, $100 billion data center campus. But is this the right move for Platte County, or for Missouri?

Missouri is in need of investment, and artificial intelligence and associated data centers already play a significant role in our economy.

However, economic development subsidies enrich individual developers at the expense of taxpayers, schools, and other public services. Using tax subsidies to lure data centers, filmmakers, sports teams, and others into Missouri shrinks the tax base of the region without leading to meaningful economic growth. Opportunity costs are largely ignored, with estimates for economic “boosts” not taking into account what the millions given away in subsidies could have achieved if invested in infrastructure, public safety, education, or tax rebates for Missourians.

Looking at electricity, data centers are enormous consumers that are prompting the buildout of new generation facilities. On a regulated grid, such as Evergy’s in the Kansas City area, building new generation and associated transmission is one of the most expensive processes for average ratepayers, because monopoly utilities are allowed to recoup the cost of their capital investments and typically earn a government-approved profit.

Now, it is true that average Missourians use artificial intelligence, indirectly driving the increased demand for data centers. It is also true that we currently cannot predict with certainty the amount of electricity artificial intelligence and data centers will ultimately require.

In April 2024, Goldman Sachs forecast that data centers would rise from 2.5 percent to 8 percent of all U.S. electricity usage by 2030. However, Google recently reported a 33-fold reduction in energy usage for AI queries in a single year.

Some legislation has been passed in an attempt to shield average Missourians from bearing “unjust or unreasonable” costs of powering new data centers. However, this does not mean that none of the burden of new power-plant construction will fall on average ratepayers. Furthermore, if utilities overbuild generation capacity based on overly aggressive demand projections, average ratepayers could find themselves footing the bill for underused assets.

Yet, there is risk in veering too far in the other direction as well: An underbuild of new generation would likely lead to Missouri missing out on significant investment.

To navigate this dilemma, policymakers in Missouri should think outside of the box. Instead of solely considering solutions inside the regulated, ratepayer-supported grid, Missouri should follow New Hampshire’s example and consider consumer regulated electricity (CRE). The idea is simple: huge customers like data centers are driving up electricity demand and putting strain on the grid and ratepayers. CRE would allow off-grid electricity providers to build and operate generation and transmission facilities whose output would be sold exclusively to these new customers. This approach would help shield Missouri ratepayers from both the rate hikes that would otherwise come with new plant construction and the risk of overbuild. CRE would also provide developers with speed, flexibility, and certainty—attractive qualities that are often lost to red tape and lengthy regulatory approval processes.

Adopting CRE could help ease tensions in Platte County and across the state. Of course, the pressure to offer tax subsidies would remain, but this problem is not exclusive to data center development. Corporate handouts are not the way to encourage economic growth. Instead of trying to lure businesses with subsidies, Missouri should have a free market–oriented economic and regulatory environment; for example, one that is conducive to polices like CRE.

The post Data Centers, Subsidies, and Electricity in Platte County and across Missouri appeared first on Show-Me Institute.

David Stokes, Elias Tsapelas, and Avery Frank join Zach Lawhorn to discuss: the cancellation of the St. Louis MetroLink Green Line and what bus rapid transit could mean for the city, major changes to the Supplemental Nutrition Assistance Program (SNAP) under the One Big Beautiful Bill, and Missouri’s worsening reading crisis and how other states have improved with reforms like third grade retention.

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Timestamps

00:00 Cancellation of the Green Line Project
08:12 Changes to the SNAP Program
17:18 Reading Retention and Educational Reforms
26:10 Property Tax Reassessments in Platte County

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The post MetroLink Line Canceled, SNAP Reform, and Missouri’s Reading Crisis | Roundtable appeared first on Show-Me Institute.

Susan Pendergrass speaks with Show-Me Institute Director of Municipal Policy David Stokes about his new paper in the Free-Market Guide to Missouri Municipalities series on planning and zoning. They discuss how fragmentation among local governments can limit overly strict zoning, how zoning rules affect housing affordability, and why “last house syndrome” poses risks for Missouri’s future growth. From accessory dwelling units and minimum parking requirements to the debate over multifamily housing, Stokes explains how smart reforms can protect property rights and keep housing costs down.

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Timestamps

00:00 Introduction to Planning and Zoning in Missouri
02:35 The Impact of Fragmentation on Zoning
05:24 Housing Affordability and Zoning Regulations
08:22 The Role of Municipalities in Housing Development
11:18 Challenges of NIMBYism and YIMBYism
14:21 Accessory Dwelling Units and Short-Term Rentals
17:00 Planning and Infrastructure in Missouri
19:57 Future Papers and Conclusion

Transcript

Susan Pendergrass (00:00)
Thank you, David Stokes, so much for being on the podcast this morning. You have a new paper out with the Show Me Institute. Well, it’s actually part three of an existing series on your free market guide to Missouri municipalities. And this one is on planning and zoning. So thanks for joining us to answer some questions about it. Great. I do have one question that I was just saying before we started recording. I’ve seen this paper a few times.

David Stokes (00:19)
Delighted to be here.

Susan Pendergrass (00:26)
And one thing that I noticed up front is that I complain about the number of school districts in St. Louis County and how fragmented it is. And other folks have also said similar things, too many small municipalities. But it seems to be the case that when we’re talking about things like planning and zoning and permitting and regulations, that can be a good thing. Is that right?

David Stokes (00:46)
Absolutely. Because it’s harder to enact comprehensive planning, zoning, major things like urban growth boundaries—the extreme things like an urban growth boundary that we don’t have in Missouri. But it’s harder to enact that the more governments you have to get in line to agree to it in the first place. So it’s definitely—I don’t want to say it’s a causation. I don’t think the data is there to—

Susan Pendergrass (00:47)
What?

David Stokes (01:14)
But it’s definitely a—I would say it’s a truism—that there’s a strong connection between the metropolitan areas that have less strict zoning around the country. And over the past decade, we’ve really changed a lot in American local public policy to realize the harms of overly strict zoning. Until the past decade or so, it was just sort of assumed that strict zoning was a good thing. So now that we recognize the harms of it, we see that the places like St. Louis—and to a lesser extent, Kansas City—that have more fragmentation. St. Louis by any measure nationally has extreme fragmentation, meaning a whole lot of local governments, be they cities or school districts or fire districts or streetlight districts. I mean, we can really get into the obscure ones here in Missouri, but the more you have of that, the less strict zoning you’re going to have. And then that results in lower housing prices.

Susan Pendergrass (02:00)
You—

David Stokes (02:10)
What is the good that comes from that in the end? I think there’s lots of goods that come from it and some harms too. But the real good—the point of this paper, and the good for somebody who doesn’t care about public policy or libertarian thoughts or anything and just wants to be able to buy a nice house at an affordable price—is: the less strict zoning you have, the more fragmentation you have, the more you see that in lower housing costs.

Susan Pendergrass (02:35)
Yeah, and if you were starting a business too and one municipality, let’s say Clayton, has really high restrictions on what you can build, where you can build a health office and be—I don’t know if they do or don’t—but then you could just simply go next door to the next place and pick a different place that has fewer restrictions.

David Stokes (02:52)
You can, and that does happen. One of the ways they’ve solved that dilemma in St. Louis County especially is they do a lot more code enforcement and permitting at the county level than at the municipal level. Because nobody wants to have to get—if I’m going to be a plumber—nobody wants to have a plumbing license in 88 different cities. So they do that at the county level. You get your county license and it’s good throughout all of St. Louis County. Now, there are good aspects of that—mostly that you have to get one license instead of 88, which is an obvious good—but it’s also subject to abuse as well. It’s sort of the counterargument to the benefits of fragmentation in that it’s easier for special interest groups, like in this case, say the plumbers union, to capture licensing in St. Louis County if they only have to dominate one board as opposed to 88 boards. So there are two different ways to go—there’s the good and then the part of it that might not be quite as good.

Susan Pendergrass (03:59)
Yeah, so you make the point in this paper that while St. Louis does not necessarily have a housing affordability issue—or maybe even Missouri—it’s still worthwhile for folks who are working at the municipal level, like if you’re working as a newly elected Board of Aldermen or newly elected county board official, to educate yourself on what is and isn’t possible to make sure that you avoid what you just described as the pitfalls of over-regulating.

David Stokes (04:28)
Absolutely. A lot of this paper is about—in the not very scientific term—sort of low-hanging fruit. Just because zoning in Missouri may be less strict than in other states… there’s actually, I discovered in researching this paper—I’d always understood and known that zoning in Missouri and in St. Louis and Kansas City was less strict than in many other parts of the country—but then I discovered that there is actually an index out of the Wharton Business School at the University of Pennsylvania that ranks metropolitan areas by zoning strictness. And St. Louis is the least strict for zoning of any metropolitan area in the country in this ranking. And Kansas City is sort of in the middle. But then you see that Kansas City on the Missouri side is closer to St. Louis, and it’s the Kansas side that is more strict and puts them in the middle. So we really do have not-strict zoning.

Susan Pendergrass (05:05)
That’s hilarious.

David Stokes (05:24)
And that’s a wonderful thing, but it doesn’t mean that cities shouldn’t make some of these reforms that are coming nationwide that would still benefit Missouri, such as abolishing minimum parking requirements, allowing smaller lot sizes, allowing people to build accessory dwelling units on their own property. It’s a great reform focus—from the Show Me Institute’s perspective—because these are changes that can be made that enhance people’s own property rights and what they can do with their own property, while at the same time giving people more choice. And in the long run, if you do more of these, you’ll help keep housing prices down even more for people. And in a good way—you’re not doing this through mandates or rules; you’re just saying we’re going to allow people to build even more. And I’m not against every limit on every property thing ever. There are some that are reasonable—particularly in Missouri we have floodplain limits on where you build that are very reasonable in many cases—but there’s still a lot of good stuff we can do.

Susan Pendergrass (06:33)
Yeah, I saw recently last week that in the upcoming election cycle, housing affordability is a top issue for folks. This is really bubbling up the list of priorities because it’s gotten so expensive and, you know, I keep reading about why people can’t afford to move, and they can’t afford to sell their home, or they can’t afford to buy a home. And certainly some markets—like you mentioned in the paper, like Portland—and you mentioned this briefly: Portland’s got a brown zone and a green zone, and you can’t build in the green zone. You have to stay in the brown zone, and it makes it very prohibitively expensive to build new housing stock in Portland, and the prices have gone up dramatically. We do not yet have that problem in St. Louis, but I know that it’s on a lot of people’s minds and certainly, statewide, we still have some concerns about having enough affordable housing for everybody. I do think it’s important to make sure that we don’t let regulation creep happen so that we find ourselves raising our prices artificially.

David Stokes (07:36)
And you see this in disputes in our exurban areas now in, say, St. Charles and Jefferson County—surrounding counties of St. Louis—and on the Kansas City side as well. Last year, for example, in St. Charles County, a big new subdivision was rejected in a wooded part of the county—I think it was near Weldon Spring. They’re also allowing some, but—

Susan Pendergrass (07:56)
Was it Weldon Spring, or what was that?

David Stokes (08:02)
And that’s the dilemma that people face: as places like St. Charles and Jefferson County grow and get more full, there’s going to be inevitable pressure from the people there now to stop new building. It’s called last-house syndrome: “Great, my new home here is great. Now don’t build any more because I got the house and it’s perfect.” You see that everywhere, and you understand the concerns. I try not to completely ignore the concerns of the folks, because they’re not always wrong—of course, we’ll go back to the floodplain issue—but you’ll have people worry. It’s the people there now: concerns about traffic and overbuilding and destruction of wooded areas and too dense and all those things. But you want people to realize that other people probably said the same thing before they built your house, and it was a good thing that people in most instances really said no to that, and it allowed that construction to continue. And I really want people to realize that.

Susan Pendergrass (08:34)
Yeah. That’s right. ⁓

David Stokes (09:00)
If we go—it’s not about any one subdivision, because look, there probably are certain instances in certain places where the new zoning is too dense, whatever it may be—it’s not that every rejection is always completely wrong. But if you start in Missouri making a pattern of this in the outer areas of Kansas City and St. Louis, where you start turning down a lot of these new subdivisions to preserve whatever it is that people moved out there for 20 years ago, then housing prices are going to increase in Missouri. They will increase substantially, and it won’t take that long if you really do stop the building. So that’s one of the takeaways from this paper: to the largest extent possible, we need to keep allowing the building of these new homes or apartments. And obviously a big part of the paper is that apartments should be generally allowed in more places too. That’s how we’re going to continue to have low housing costs, and that’s the benefit of it. It’s not about one subdivision in one space, but if it becomes a trend, it’s really going to be a problem—the trend being protecting it.

Susan Pendergrass (10:15)
Yeah, and the multifamily for sure. What are your findings around that? People don’t seem to want to have to look at apartment buildings. Is that right?

David Stokes (10:25)
They don’t—there’s just some natural rejection against it. And it’s frustrating to see. In some spots—I remember in the City of St. Louis; this is one where, when you lived in St. Louis, you lived near there—at the corner of Skinker and Delmar there was a proposal for a large apartment building right there, and it got a lot of opposition, and it has not moved forward. It was stopped. I hope it comes back because it’s a perfect lot for an apartment building. It’s just an empty lot—it was a chicken restaurant for many, many years and a popular one—but it’s been vacant forever. And it’s right near public transit. So it’s the perfect idea where you should be able to build there, and you shouldn’t have generous or extensive—

Susan Pendergrass (10:59)
An abandoned empty lot, right?

David Stokes (11:18)
—parking requirements for those buildings, because one of the projects—

Susan Pendergrass (11:21)
That’s what people were kind of freaking out about though, was the parking. Like, where are all these cars going to go? And there was one across the street and they had only put in like one parking space for every two units or something, and they figured that people would use public transport. Anyway, I remember the pushback on that. And it’s this NIMBYism–YIMBYism thing, right? It’s so hard to push people to YIMBYism—yes in my backyard—because of things they don’t… I don’t… These same people often talk a lot about housing affordability, so I don’t mean to overgeneralize, but there are some of the very same people who are so concerned about it who don’t want to look at apartment buildings.

David Stokes (11:50)
Right, don’t want to—and you understand. That’s a very liberal area that we’re talking about. If you were to define the politics of that area, you’re right: many of the residents of those communities in both the city and in University City right there would, in theory, in the big picture, probably agree, but then, “Oh, we don’t want this development here.” And it was a perfect place for a new apartment. Again, of all the St. Louis area, it’s one of the best areas served by public transit—

Susan Pendergrass (12:06)
Yes.

David Stokes (12:31)
—with buses and MetroLink and the WashU shuttles, because so many people who would be in those apartments would be WashU students. They’ve got that extensive shuttle system. But it was rejected, and I hope it comes back. And that’s just one of many, many examples of it.

Susan Pendergrass (12:31)
Yeah, yeah. What about the—what part of zoning and planning is this push in the City of St. Louis, anyway, to try to get people to move downtown? Is that something that’s coded in? I feel like they’re trying to get people to go downtown.

David Stokes (13:03)
They are. And thankfully, I don’t think zoning is preventing that. Of all the reasons people may or may not be choosing to move downtown—fear of crime and businesses leaving downtown, the jobs—as somebody who lived downtown in the late 1990s and early 2000s, to move down there when many of the jobs have left—fear—it’s a harder thing to convince. But I don’t think there’s— I don’t think it’s difficult or has ever been difficult for the loft developers of the ’90s to get permission to take an empty commercial building and turn it into lofts. There might have been a lot of issues they had to deal with, but zoning—I don’t believe—was one of them. Thankfully that’s a very good thing. But it’s one of the fun parts about this paper, right? We’re talking in the other papers and in the ones to come about the best ways to do public safety and public works and a lot of things. In most of these instances we all agree somebody has to do this service, and it’s just a question of: does the city provide it themselves? Do they contract with a neighboring municipality to do it—such as a small city contracting with a neighboring city to do police service? Should you let the private sector do it in a regulated manner, like utilities? But we can all agree it has to be done. Whereas I started this paper saying: despite the fact that it may be incredibly common, cities don’t actually need planning or zoning—life can exist without it. And that’s where the current HOA options come into play. And the history of HOAs in St. Louis, in the private place model, is such an interesting part of that. So there’s a little bit of the historic discussion of all of this in the paper too.

Susan Pendergrass (14:53)
So where do Missouri municipalities for the most part right now stand on things like—two questions I’m going to ask you—accessory dwelling units and short-term rentals or Airbnbs? Where do they stand on ADUs?

David Stokes (15:06)
Well, slowly but surely, we’re starting to permit ADUs. We haven’t had any sort of statewide, to my knowledge, overarching legislation. And that’s where the fact that we have low housing costs in Missouri matters. I don’t think we’re going to see the California situation that had to go statewide because none of the municipalities would agree to it. I don’t think we’ll see that here because there’s not the tremendous high-cost-of-housing crisis to push that. But slowly but surely, cities are starting to allow more ADUs, and that’s a very good thing. When you get out into rural areas—and in some places that don’t even have zoning in the first place—you can do any ADU you want to, or the zoning is so loose that of course you can build an apartment above your garage if you’d like to. Why are you even asking? But the cities have the rules against it.

Susan Pendergrass (15:52)
That’s where I live.

David Stokes (16:03)
Slowly but surely moving in the right direction there. And then it’s going in the opposite way with short-term rentals. Slowly but surely most cities are instituting short-term rental limitations. I’m not automatically opposed to that in every case. I get it: if you have a neighborhood and all of a sudden there’s a house where big parties are being thrown every weekend because they’re renting it out to different groups of people to throw parties, you’re going to hate that, and that’s going to impact the quality of your life. So I’ve been saying for a few years now that the short-term rental regulations I support would generally be things that don’t go to a blanket prohibition. I think that’s too far—and most cities aren’t doing that—but rather really focus on punishment of the property owner for repeated rule-breaking. One party is maybe one party, but if there’s a trend where you own the property and the people you’re renting to are consistently out of control, then the fines should be increased. I wouldn’t be opposed to them getting fairly steep up to a point too—that if it happens too often, you would lose your business license to operate that short-term rental. Because I do think that if you’re doing it a lot—if you’re routinely renting it out—you should be treated a little more like a hotel. We don’t want to give short-term rentals an advantage over the hotel-motel industry. You want that playing field to be as level as possible, especially for people who are renting their houses or condos or whatever out a lot. So then pull that license if it’s an abuse that’s happening consistently. But let’s try to—

Susan Pendergrass (17:55)
Well, I had that on my street.

David Stokes (17:56)
—go to a method through crackdown on rule-breaking, not blanket prohibitions.

Susan Pendergrass (18:00)
Yeah, we had that on my street in St. Louis, and it was a street of, I don’t know, three- or four-bedroom houses, and they somehow had eight bedrooms and a pool, which was very rare in my neighborhood. So they mostly just rented it out to college students and got called all the time—the police got brought in all the time for noise complaints. And there wasn’t really a good mechanism in place at the time to prevent it from happening. So I agree that there should be some limitations around them, but not to make it so strict that people can’t use it as intended. I mean, I stay in Airbnbs all the time. I like having them, but—

David Stokes (18:36)
Now, that police dilemma—that’s something in St. Louis and probably Kansas City, a few big cities, where the cops just have better things to do than break up parties. I mean, they’ve got violent crimes to address. That’s an issue: how are they going to take it seriously enough? In the average Missouri suburb or mid-sized cities, the police are going to take that a little more seriously, I would think. And a good comparison I like is in Lake of the Ozarks, where some cities have instituted strict rules against short-term rentals, while others, like Osage Beach—at least as of our research—hadn’t instituted anything and took a much more free-market approach: “We’re a tourist area; we want tourists to come here.” So it’ll be a good natural experiment over time to see how it affects property values, how growth is affected, as different comparable cities in the Lake of the Ozarks region choose different paths to move forward. So I definitely look forward to following that.

Susan Pendergrass (19:37)
Well, then I’ll know—another component to this paper is on planning. I think you just said a city doesn’t have to do planning if they don’t choose to, but are Missouri cities or municipalities planners? I mean, is that a planned thing, or are we more like anything goes?

David Stokes (19:56)
Most Missouri cities have plans. Right?

Susan Pendergrass (19:57)
I’ve been to New Town, by the way. I just want to say I have visited New Town, so—before you start talking.

David Stokes (20:03)
Well, that’s the architectural planning—how do we want to design it? Then there’s the legal, defined planning. And luckily, again, I really don’t think Missouri cities need to do any planning outside of general infrastructure planning. So I shouldn’t say they don’t need to do any planning—there’s the general infrastructure planning that pretty much everybody supports, meaning you should have an idea of how growth is going to go in your city and where you’re going to put sewers and sidewalks and streets. You want a general long-term plan for that, even if that plan is—as it should be—thoroughly adjustable and can be changed as growth happens naturally. But then you get into planning like we mentioned with Portland earlier—urban growth boundaries—where the planners really start to say, “You can live here; you cannot live here; you can build here; you cannot build here,” and it gets to be really extreme. We don’t really have that in Missouri. Thankfully, the plans that cities do adopt can be easily amended by any city council. They can be changed. When I worked at St. Louis County, we dealt with the county planning commission for the parts of the council district I worked in that were unincorporated, where the planning commission had a lot to say on that. So elected officials can and should be able to change that plan as they go. And then the biggest—let’s say you permitted a development that’s against your plan, but the elected officials want to do it anyway—I usually don’t have a problem with that. The fact that it’s inconsistent with your plan would generally be something that, if locals want to sue to stop the development, they would cite in the lawsuit—that it was inconsistent with your process and your plan—and then it would be determined by judges and the whole legal process. But planning in Missouri is something that, outside of basic infrastructure planning, cities shouldn’t really do. And to the extent that they do it, it’s easily amended and changed. And that’s a good thing.

Susan Pendergrass (21:55)
Mm-hmm. So the first two papers in your series were taxation, right?

David Stokes (22:20)
Taxation was number two, and the first one was just sort of the structure of municipal government in Missouri. It had a lot to do with city managers. And then the fragmentation issue was addressed as well in the first one that we discussed here, because that’s a part of that, obviously.

Susan Pendergrass (22:23)
Introductory. Okay. And taxation. And this is zoning and planning. Right. And then what’s on deck? What’s the next one?

David Stokes (22:41)
We don’t actually know yet what number four will be—germinating. Most of them are ready to go pretty quickly, so I think the next one will be released within the next two months—certainly this year. And I think it’s going to be on public works. But we have papers coming on public works, public safety, parks and recreation—which is one I’m really going to enjoy. You go to Forest Park and there’s all the great things in St. Louis’s Forest Park, and then you realize that many of the wonderful things there are actually done under contract with the private sector, either for-profit businesses like the Boathouse and the ice rink that pay the city to operate, or nonprofit businesses like the Muni that have been in the park for a long time. So it’s a great option to talk about all the different ways to provide parks and recreation services.

Susan Pendergrass (23:18)
Yeah.

David Stokes (23:35)
But those are at least three of the upcoming ones. And then there’ll be a concluding, summarize-it-all-up section as well.

Susan Pendergrass (23:41)
I look forward to hearing more about those, and thanks for coming on to talk about planning and zoning. It’s going to be a great series when it all gets put together. Thanks.

David Stokes (23:48)
Thank you very much, Susan.

Produced by Show-Me Opportunity

The post A Free-Market Guide to Zoning with David Stokes appeared first on Show-Me Institute.

The post A Free-Market Guide for Missouri Municipalities, Part Three: Planning and Zoning appeared first on Show-Me Institute.

Susan Pendergrass speaks with Show-Me Institute policy analyst Avery Frank about his new report, Connecting Nuclear Energy’s Past and Present: Guiding Missouri’s Future. They discuss why electricity demand is rising again, why major companies are turning back to nuclear, and how Missouri can position itself to benefit. From data centers and AI to regulatory hurdles and smart policy steps like a state nuclear advisory council, Avery explains how Missouri could play a leading role in America’s nuclear resurgence.

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Timestamps

00:00 The Resurgence of Nuclear Energy
03:37 Challenges and Historical Context
07:30 Missouri’s Nuclear Potential
12:06 Future of Nuclear Energy and Policy
16:09 Conclusion and Future Outlook

Transcript

Susan Pendergrass (00:00)
This morning we’re joined on the podcast by Avery Frank, policy analyst at the Show-Me Institute. You’ve got a paper out, and I’m really looking forward to talking to you about it because I have a lot of questions. You’ve done a lot of research and analysis around nuclear energy, and I see a lot in the media these days about the resurgence of nuclear energy.

Number one, why does nuclear energy seem to be back, bigger and better than ever? And secondly—well, I’ll start with that. Why is nuclear energy back in the news so much?

Avery Frank (00:34)

Nuclear power surged in the United States during the Cold War. Electricity demand was soaring—it kept going up and up. Nuclear energy is clean, reliable, and powerful. Just in Missouri, we have one nuclear power plant and it supplies 14% of the entire state’s electricity. So when you need a lot of electricity, nuclear power is something you can turn to.

Since 2007, electricity demand has pretty much flatlined as we’ve become more efficient. But with data centers, artificial intelligence, and electric manufacturing, electricity demand is back on the rise, looking similar to Cold War–era growth. Just data centers by themselves are supposed to go from 3% of U.S. electricity demand today to 8–12% by 2030. That’s a huge jump.

Susan Pendergrass (01:56)
Well, if it’s so great, why did it go away? I remember Three Mile Island, and I saw the movie about Chernobyl. When it gets bad, it gets really bad. Why did nuclear go away so hard if it’s such a great, clean, reliable source of energy?

Avery Frank (02:26)
I’d say it went away for three key reasons: public fear, regulation, and regulatory attitude. Most of the time, public fear from events like Three Mile Island drove increased regulation.

Two key events stand out. First, the National Environmental Policy Act (NEPA) *correction* in 1970. That was a huge blow for the nuclear industry. Construction costs went up 25% and projects took two years longer. Then came Three Mile Island in 1979. It was mitigated by safeguards, but public fear skyrocketed. Costs afterwards were three times higher and construction took twice as long. That was the big turning point.

Susan Pendergrass (03:54)
Then if it’s that expensive, why is it coming back?

Avery Frank (04:14)
Companies are turning to nuclear out of desperation. They need a lot of power, as I mentioned with data centers, but they also have clean climate pledges. They can’t really do it with solar or wind. They’re kind of backed into a corner.

Susan Pendergrass (04:20)
Why not solar or wind?

Avery Frank (04:39)
Solar and wind are intermittent resources. Nuclear plants run consistently. Data centers can’t have outages—you need steady, reliable power. That’s what nuclear does best.

Susan Pendergrass (05:08)
Does it generate a lot of nuclear waste?

Avery Frank (05:15)
In the U.S. we use a once-through cycle. We refine uranium, put it in a plant, then seal it up forever. Other countries like France and Japan recycle their fuel. About 96% of spent fuel is still reusable, but the U.S. stopped recycling in the 1970s. If we restarted, we could reduce waste significantly, which already isn’t that large to begin with.

Susan Pendergrass (06:09)
So what could Missouri be doing right now to take advantage of this moment?

Avery Frank (06:32)
Timing is key. Missouri already has advantages: intellectual capital, infrastructure, the Missouri University Research Reactor, and Missouri S&T producing top nuclear engineers. We also have retiring coal plants that could be retrofitted into advanced nuclear plants, cutting costs by up to 35%.

Federal reforms like the ADVANCE Act are making things easier, but Missouri could act too. For example, we could form a Nuclear Advisory Council, like Tennessee did, to identify strengths and weaknesses and make recommendations. That’s attracted significant investment there.

Susan Pendergrass (08:14)
What about public-private partnerships?

Avery Frank (08:37)
That’s a great point. We believe the free market can play a big role, just like it did in space travel. One idea is Consumer Regulated Electricity (CRE), where private developers build small modular reactors for large customers like data centers on their own dime, outside the regulated grid. That takes the burden off ratepayers while meeting rising demand.

Susan Pendergrass (10:26)
Because I assume energy demand forecasts keep being revised up, right?

Avery Frank (11:03)
Exactly, and they’re hard to predict. What if AI suddenly uses less power? Then Missouri could be stuck with excess nuclear capacity. Letting the free market take some of that risk makes sense.

Susan Pendergrass (11:39)
What about the last Missouri legislative session?

Avery Frank (12:06)
Senate Bill 4 passed. It was a big utility bill that allowed “construction work in progress,” meaning utilities can charge ratepayers during construction, not just when a plant comes online. It’s unclear if it applies to nuclear, but it could. I’ve suggested treating it more like a bond, so consumers who shoulder the risk also see some reward, like lower rates or refunds.

Susan Pendergrass (13:44)
Any other signs that Missouri welcomes nuclear investment?

Avery Frank (13:47)
Yes. I attended the Missouri Nuclear Energy Summit in Columbia. Governor Kehoe was there and said we need to develop nuclear at business speed, not bureaucratic speed. That shows real resolve. Legislators are supportive too. Missouri has the advantages and infrastructure—we just need the right regulatory environment.

If Missouri created a Nuclear Advisory Council, like Tennessee, it could attract significant investment and expertise. Energy availability is now one of the top factors for companies deciding where to locate. If Missouri can offer abundant, reliable, clean energy, we’ll be far more competitive.

Susan Pendergrass (16:20)
That’s awesome. You have a paper out on this, available at showmeinstitute.org. Thanks for coming on and explaining it to us.

Avery Frank (16:32)
Awesome, thank you for the interview, Susan.

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