Brody Corners Decision Good for Springfield

Posted on by Corianna Baier

Springfield has temporarily abandoned an incentive package plan for the Brody Corners multi-use project. The plan would have resulted in $3.2 million returned to the developer through tax-increment financing (TIF). Regardless of how it came about (there were accusations of the process being rushed and lawmakers who felt uninformed), the demise of this package is good for the city of Springfield.

This TIF incentive package was previously touted as imposing “no financial risk” on the city, but there’s simply no way to guarantee that a TIF agreement will not have negative financial effects on a city. Along with the numerous other problems posed by TIF (as outlined in my new paper), TIF can pose a financial risk to cities, and it has in Missouri on several occasions across several decades.

In the 1990s, the St. Louis Marketplace TIF bonds were backed by the city, meaning that the city was on the hook for the bond payments if the project did not generate enough revenue. Spoiler alert: it didn’t. A similar situation took place in Independence, Missouri, when a TIF project anchored by a Bass Pro shop failed to meet sales-tax revenue projections, so lawmakers used $3.5 million from the general fund to cover the shortfall in the bond payment.

While these situations aren’t a normal occurrence, there’s clearly no guarantee that TIF won’t present a huge financial burden to the city. Apparently, this is a lesson that Missouri municipalities cannot learn. Local lawmakers should be wary of TIF and bold statements like those made about the Brody Corners project. Its good news for Springfield that this plan was dismissed, and hopefully it won’t return in the new year.

New Year, Same Problems with the Loop Trolley

Posted on by Jakob Puckett

The Loop Trolley is causing trouble for Saint Louis area officials again. The problem this time is possibly having to repay the federal government for all the federal money it took to build the trolley.

The Federal Transit Administration (FTA) is threatening to claw back the $37 million in grant money it gave to get the Loop Trolley up and (briefly) running. According to the FTA, trolley officials must submit a plan by February 1 to restart the trolley by June 1, and the plan must include at least three cars running four days per week.

According to the FTA’s regional director, any potential litigation over the money the FTA wants back would involve the Loop Trolley Transportation Development District (LTTDD) and the East West Gateway Council of Governments. This is because while most federal money the LTTDD received from the federal government came directly from the FTA, some also came via grants distributed by the East West Gateway.

Saint Louis area officials are concerned that failing to get the Loop Trolley running again would make it harder for the Saint Louis region to receive future federal transportation grants.

So what should be done about the trolley?

At this point, the most sensible decision seems to be whichever would cost taxpayers less—either running the trolley to satisfy the FTA’s conditions or paying back the $37 million.

However, it’s not clear how many years the trolley would have to operate to satisfy the FTA’s terms. According to a letter from the FTA’s regional director to the Saint Louis City mayor, grant recipients must operate the project throughout the useful life of the property, which the regional director specified as between 12 and 40 years in the trolley’s case. But with the Loop Trolley’s operating budget of slightly over $1 million to run only two vehicles (and add in any additional costs from maintenance and indirect costs to Loop businesses), there are a number of variables that make it difficult to accurately calculate  whether operating the trolley will cost less than paying back the grant.

Assuming the variables can be nailed down, it is possible to do the math and see which option is better for taxpayers. The problem is that even if, by the numbers, running the trolley is the less expensive option, that does not mean it actually will be. Any effort to restart the trolley would need to avoid the blunders that dogged the construction and past operation of the trolley in the first place.

If only the federal government guarded its (our) money this closely all the time.

Optimism Remains for 2022, Despite Anti-Transparency Forces

Posted on by Patrick Ishmael

Last month, the Show-Me Institute introduced our latest blueprint for Missouri—an annually produced short list of high-priority, high-impact reforms that would make Missouri better. As our call introducing 2022’s blueprint made clear, we were generally optimistic about the prospects of improvements in most policy areas, ranging from taxation to schools. Our initial assessment of the legislature suggested that the 2022 legislative year could be as good as 2021’s.

We continue to have optimism that, among other things, greater transparency will come to education,  unnecessary occupational licensing burdens will continue to lose favor, and health care reform in Missouri will continue to hew in a free-market direction.

But warning signs are starting to show up now that we’ve entered the new year. Stories like this one from The Missouri Independent suggest that rather than promoting transparency, Governor Mike Parson may instead be using state resources to protect state and local governments from the Sunshine Law:

Amending Missouri’s open records law to permit government agencies to withhold more information from the public — and charge more for any records that are turned over — is among Gov. Mike Parson’s priorities for the 2022 legislative session.

The changes, which were outlined in a presentation to Parson’s cabinet that was obtained by The Independent through an open records request, include a proposal to allow government agencies to charge fees for the time attorneys spend reviewing records requested by the public….

The slide on proposed Sunshine Law changes dubbed the proposals as “Good Government” reforms and described the changes as ones that would “benefit political subdivisions, the legislature and state government.”

You know who these changes would not benefit? Taxpayers. And that’s the point.

We talked just last year about how attorney fees are used to boost the cost of Sunshine Law fees, pricing people out of records they’re owed. Reintroducing such a barrier indicates the governor is misreading the times. Springfield officials—Springfield is one of the worst regions in the state for transparency—have also called for Sunshine Law limitations, and that tells you just about all you need to know about the sort of quarters this initiative may be coming from and why it’s being pushed.

In fact, if a solution is “needed” for state and local government to avoid attorney fees, that solution would be radical transparency: ensure practically everything that taxpayers are asking for is already public and online as a matter of government practice. This should include spending, curricula, and administrative correspondence. What’s not a solution is passing on extravagant fees to taxpayers—the people who pay to have these records created and who are owed access to them.

The Missouri House and Senate should not go along with this anti-transparency initiative. That at least one legislator has already put the governor’s anti-transparency priorities into his own legislation is enormously disappointing. Legislators should not let themselves be used simply because the governor asked to use them.

I continue to have high hopes for 2022, but I have concerns now that I didn’t have last year. State representatives and senators need to remind themselves that they represent their taxpayers—not the governor, not their superintendent, not their mayor. And anti-transparency initiatives like the one articulated by the governor’s office are antithetical to the interests of those taxpayers.

State Business Tax Climate Ranking

Posted on by Corianna Baier

Missouri ranks 13th in the Tax Foundation’s “2022 State Business Tax Climate Index,” down two spots from last year. This publication grades how well states structure their tax systems and provides an overall rank along with individual ranks for five tax types. State indexes such as these are useful tools for comparison, and they help us think about what can be done to move us up in the rankings.

Per the Tax Foundation, states with the best tax systems “will be the most competitive at attracting new businesses and most effective at generating economic and employment growth.” A state should aim for a tax system that does not negatively affect business decisions; you don’t want businesses to relocate or decide not to expand because of tax concerns. Research has found that taxes that are low and broad based are least likely to affect business decisions in this way, and therefore make the best tax systems.

Missouri ranked relatively well for state corporate income tax, unemployment insurance tax, and property tax. Areas for improvement are the individual income tax and sales tax, as Missouri ranked 21st and 25th respectively. (It’s important to note that local taxes are factored into the index, but the main focus is state taxes, so this may not be a full picture of the taxes that affect Missouri’s businesses.) As explained in the index, Missouri has a good definition of taxable income, but a lot of income tax brackets, standard deductions, and exemptions, which complicate the tax system. Missouri’s highest income tax rate, 5.4 percent, is higher than the highest tax rate of 20 other states. The sales tax index is affected by sales tax rates, including the high local sales tax rates from numerous special taxing districts across Missouri.

Lawmakers should act to improve our ranking in this index—not just for bragging rights, but to attract businesses to our state. Lowering tax rates is one way to move Missouri in the right direction. Lawmakers should continue to lower income tax rates and work to rein in special taxing districts to improve the business tax climate in our state.

Event: Missouri School Rankings (Jefferson City)

Posted on by Claire Andrews

Missouri schools are failing to teach the core subjects of reading and math, and the most recent test scores show that students are falling further behind. In response to the Missouri Department of Elementary and Secondary Education’s (DESE) failure to perform one of its most basic functions, the Show-Me Institute, in conjunction with Show-Me Opportunity, launched The Missouri School Rankings Project and MoSchoolRankings.org.

On February 23, Susan Pendergrass, director of research and education policy, will present her findings from the Missouri School Rankings Project and give an overview of how to use the website.

Register

This event is sponsored by Show-Me Institute and Show-Me Opportunity.

Event: Election Security Panel with Kinder Institute (Columbia)

Posted on by Claire Andrews

You are invited to join the Show-Me Institute and the Kinder Institute on Constitutional Democracy for an expert panel discussion on election security on February 17. Four election officials will explain how they currently keep Missouri’s elections secure, offer suggestions for how to improve election security, and answer questions from the audience. We hope to see you there.

Panelists:

  • Eric Fey, St. Louis County Democratic Director of Elections
  • Brianna Lennon, Boone County Clerk
  • Kurt Bahr, St. Charles County Director of Elections
  • Shane Shoeller, Green County Clerk

Register

This event is sponsored by Show-Me Institute, Show-Me Opportunity, and Kinder Institute on Constitutional Democracy.

When It Comes to The Land Bank, St. Joseph Should Get Out While It Still Can

Posted on by David Stokes

A version of this commentary appeared in the St. Joseph News-Press.

You are probably familiar with various versions of the phrase, “Time to get out while the getting is good.” While that suggestion does not often apply to government, it most certainly does to the St. Joseph Land Bank.

In 1971, the state created the nation’s first “land bank” in St. Louis to help get control of vacant properties and return them to private use. Since that time, the St. Louis land bank has proven better at acquiring properties than at returning them to the private sector. In a struggling city like St. Louis, that alone should not be a surprise. More troubling is that the hesitancy in getting rid of the properties it had has been no accident. Research by Show-Me Institute staff and others documented the alarming frequency with which legitimate offers for property in the land bank have been rejected. Most commonly, the land bank has been rejecting offers in order to hold the land for future — often more politically connected — development. That development has seldom come to fruition, so thousands of land bank parcels have just sat there for decades.

In 2012, Kansas City followed St. Louis with its own land bank. At the time, the Show-Me Institute published research documenting the failures of the St. Louis land bank as a warning to Kansas City about what was ahead. But, proving once again in government that nothing succeeds like failure, the state approved a Kansas City land bank, which was started up later that year.

Fast forward to December 2021, and the Kansas City Star has just published a series of stories on development failures in parts of Kansas City, including a major article on problems at the Kansas City land bank. Needless to say, the Kansas City land bank has not lived up to its promises. Its executive director was removed in 2018 after accusations of political favoritism and other problems. The family of the Jackson County executive received a special deal on certain properties, which raised plenty of eyebrows. As in St. Louis, the Kansas City land bank has been plagued by conflicts of interest and poor management.

Land banks have fundamental problems. Ideally, they would work quickly and efficiently to place properties they own back into private hands. But that very speed is what will inevitably make them subject to abuse by those with political connections. In order to guard against such problems, they can become a typical bureaucracy—slow and ponderous to deal with. But if they do that, few in the private sector will want to work with them. So, the choices are to operate quickly and accept some level of malfeasance or to operate bureaucratically and drive away some of the people who approach you. Finally, land bank employees have little incentive to do their jobs so well that they find themselves out of one. Idealists may wonder why St. Joseph’s land bank can’t have the best of all worlds and be nimble, honest, and focused—but if the experiences in St. Louis and Kansas City are any guide that is not going to happen.

The St. Joseph land bank has, according to reports, chosen to err on the side of ponderous bureaucracy since it began operating in 2019, and that was before it even held any properties. Now it has five properties to try to return to the private sector as taxable, productive land and buildings. I remember in 2012 when Kansas City opened its land bank and promised it would be operated more effectively than St. Louis’s. That didn’t happen. I am sure the same promises would be made now at the St. Joseph land bank in reference to Kansas City. I don’t dispute the sincerity of the promises—just the likelihood of their fulfilment.

Traditional county land trusts have worked fine as a way to deal with abandoned properties. The City of St. Joseph should take heed of the recent stories in Kansas City and transfer those five land bank properties to Buchanan County for inclusion in the annual county tax sale process. Get out while the getting is good, or else I will expect in about five years to read a News-Press exposé on the failures of the St. Joseph land bank.

Think We Can’t Handle the Truth? Think Again

Posted on by Susan Pendergrass

A recent survey conducted by ALG Research and Public Opinion Strategies of 2,500 registered voters has some interesting items for legislators and the Missouri Department of Elementary and Secondary Education (DESE). Here’s a summary of the “Bottom Line”:

There is high, and deep, support for student testing in K-12 public education. As a result, elected officials across the country should ignore the noise and instead focus on what the lion’s share of voters are saying – test students each year to assess progress in reading, writing, and math, and look for opportunities to improve the way states can measure student progress in the future. Voters want testing to be fixed, not ended.

Overall, things are not looking good. Almost half (44 percent) of all voters in this survey say that the public schools in their state are on the wrong track and more than two thirds (68 percent) of parents believe that their children started the school year behind. But people don’t want to gloss over what is happening. In fact, nine in ten respondents said that testing students every year in reading, writing, and math is important.

Even when presented with arguments against testing, respondents overwhelmingly believe it is necessary:

DESE is preparing to launch the sixth version of the Missouri School Improvement Program (MSIP), which is used to hold schools and districts accountable for their performance. MSIP 6 is likely to be even less grounded in assessments than MSIP 5, given that just one half on one page in the accompanying 22-page document deals with academics.

Legislators would be wise to remember that parents and voters want real accountability. We can handle the truth, even in times of dismal performance. In fact, we welcome it.

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