The Kansas-Missouri Border War Isn’t Over

Posted on by David Stokes

A version of this op-ed was published in the Columbia Missourian.

Missouri and Kansas are no strangers to border conflict. No, we’re not talking about the chaos that inspired ‘The Outlaw Josey Wales.’ The fear today is over cross-border job poachers. However, that doesn’t justify giving Fidelity Security Life Insurance $12.7 million just to stay in Kansas City. No one gets a gold medal in a race to the bottom — but politicians will waste endless taxpayer dollars trying to tell you that they’re ‘winning.’

Fidelity’s new headquarters — less than a mile from its current home — will be luxurious. The real estate is the most desirable in metro area, overlooking greenspaces in Penn Valley Park and Union Cemetery and sitting on a “transit node” of the expanded streetcar route. One-third of the office space will be rented out at the highest price in the area — more than double the average rate for Class A office space. The building will use less than half of the site, allowing for another high-rise in the future.

But should the public fund a project that overwhelmingly benefits one company? What if the company would likely be successful without subsidies? And why do local leaders even consider subsidizing these kinds of projects?

The answer won’t surprise you: it’s just a sad symptom of the larger problem exemplified by border-hopping businesses. Kansas City politicians might have worried that if they didn’t offer subsidies, Fidelity could be stolen by a suburb, much like how they nearly poached Waddel & Reed from Overland Park, Kansas.

There have been hopeful signs that everyone is tiring of these border wars. In 2019 and 2020, city and state leaders took the first steps to limit the misuse of subsidies. The two state governors agreed to end subsidies that lure businesses across the state line, and then Kansas City reduced its own subsidy program to mirror that offered by Kansas suburbs. More, however, remains to be done.

Denver offers a good example of how to escape metropolitan economic warfare. Since 1987, the mayors of municipalities around the city have met every month to ensure they are cooperating on shared economic growth, rather than undercutting each other.

Moving forward with similar ideas along the Missouri-Kansas border is important for multiple reasons.

First, subsidies generally harm the local economy. Every dollar spent on a subsidy is one that can’t be spent on social services or broad-based tax cuts for all businesses. This creates a negative economic impact that rarely outweighs the projected benefits of the subsidized project. Worse, only one-in-eight subsidies is material in changing a company’s decision of where to locate or expand, as Kansas City recently discovered with BlueScope Construction’s vacuous threat to relocate to Kansas. That means most subsidy spending is a waste.

Second, Missouri’s and Kansas’ existing subsidy reforms are tenuous and temporary. Kansas’ participation in the truce relies on an executive order, meaning it’s only as durable as the next governor’s goodwill. Missouri’s olive branch is a bit sturdier, since it was implemented through statute, but the law expires in 2025. Plus, while the agreement has limited the subsidies local governments can offer, it does not eliminate them entirely.

Third, this is a national problem. State and local governments waste $100 billion every year in an anti-growth competition over jobs. However, a growing coalition of policymakers is working to develop an interstate compact — a more sophisticated and durable version of Missouri’s and Kansas’ “gentlemen’s agreement” — that would provide a sustainable solution.

Both states have a good reason to join in, because without a more holistic and permanent agreement, the border war is almost certain to restart.

Special Taxing District Don’t Stop Coming

Posted on by David Stokes

Thanks to the Walt Disney Company and the State of Florida, special taxing districts are in the news. Florida is set to repeal the Reedy Creek Improvement District, which is the special taxing district that underpins local government—for lack of a better term—at Disney World. (I can envision various anthropomorphic cartoon characters sitting around a dais arguing about quorum calls and motions being properly seconded, but I digress.)

Special taxing districts are generally defined as public entities that are created to do one thing only, such as a street light district, as opposed to general districts such as cities or counties. Obviously, the latter get much more attention than the former. We discuss Kansas City far more than we discuss the Cape Girardeau–Bollinger County Joint Recreational Lake Authority.

What does this debate in Florida have to do with Missouri? Well, we actually have an enormous number of special taxing districts in Missouri, although none as large and all-encompassing as Reedy Creek in Orlando. Special taxing districts fall into two broad categories in Missouri: ones that perform a single public service, such as fire, ambulance, street light, and road districts, and ones that essentially funnel corporate welfare to various private entities under the guise of public improvements. The latter are primarily Community Improvement Districts (CIDs) and Transportation Development Districts (TDDs).

The latter two are also the ones expanding most rapidly in Missouri. Right now, there is a debate in Jefferson County about the Bear Ridge Community Improvement District, which is essentially a taxing district that, according to my sources in Jefferson County, will fund infrastructure improvements for a new subdivision. What’s wrong with that? Well, until very recently developers would fund these improvements themselves and recoup their investment and profit upon sales of the homes, rental of the office buildings, etc. Now, developers have figured out that they can transfer many of these costs to taxing entities, based on either property or sales taxes, and use these public tax dollars for what are essentially private services.

Missouri Auditors from both parties have documented the abuses and mismanagement that inevitably come with so many tiny taxing districts with hardly any oversight. Show-Me Institute analysts have covered this issue for years. There is at least one bill before the legislature this session that has needed changes to many special taxing districts. Hopefully, the dispute at Disney World can help shine some light on special taxing districts in Missouri.

Why? Because we need reform, too.

To Make an Omelette in Branson, You Have to Break a Few Eggs

Posted on by David Stokes

Last year, voters in Branson voted in a new mayor. Last month, they went further by voting into office a new city council majority aligned with that mayor. Clearly, the people of Branson want change.

In the past few weeks, the newly elected Branson leadership team has dramatically altered city management in Branson. The city administrator, assistant city administrator, city attorney, finance director, and the head of planning & zoning (and several other city employees) have either resigned or been fired.

There is, not surprisingly, opposition to this in Branson. A former city official stated:

“Branson does not need this, gentlemen. You three were not elected to conduct business like this. . . . We’re not supposed to be tearing the city apart.”

According to Skains [a former alderman who just lost an election], remaining city staff are “terrified” of being fired at any moment.

I am not unsympathetic to people losing their jobs, but the reality is that if voters want real change in their cities and towns, replacing the part-time elected officials over time usually won’t get it done. Most Missouri cities are run by full-time bureaucrats who have significant power advantages over the part-time elected officials.

Leaders dealing with powerful and recalcitrant bureaucrats is a fight as old as history, but the dynamic at play in Missouri towns is heightened by the fact that the full-time employees simply have much more information at their disposal. It is hard for a part-time councilmember to stand up to a city attorney with years of experience and a law degree, no matter how right the councilmember may be.

I remember over a decade ago when the people of Ellisville were opposed to a tax-increment financing (TIF) plan and elected a new mayor who was opposed to the TIF. The new mayor did all he could, but the pro-TIF city administrator, city attorney, and other city staff answered to the pre-existing council majority that hired them, not the new mayor. They did all they could to frustrate the new mayor, up to and including impeaching him and removing him from office. (The new mayor was returned to office by a county judge who found the entire impeachment process invalid.) Eventually, after another election cycle, the anti-TIF forces won and ultimately stopped the TIF, but the fight was brutal.

But back to Branson. If the people of Branson want to see change and have voted for change, then change is what they should get. Perhaps they will get more change than they realized. In that case, Mencken’s line that “Democracy is the theory that the common people know what they want, and deserve to get it good and hard,” may be proven true in Southwest Missouri. But when the citizens of a city or county want change, the interests of the voters should be the priority, not the employment status of city workers.

Change is hard, but when people see what their communities are doing—be it mask mandates, tax subsidies, or hospital privatizations—and demand accountability and new leadership, they deserve to have it.

Podcast: Disney, $500 for Missourians, and an Education Super Bill

Posted on by Susan Pendergrass

David Stokes, Susan Pendergrass and Elias Tsapelas join Zach Lawhorn to discuss Disney bringing special taxing districts into the headlines, the latest on a tax credit bill, and everything education legislation.

Listen on Apple Podcasts 

Listen on Sticher 

Listen on SoundCloud

 

Boxes Are Finally Getting Checked

Posted on by Susan Pendergrass

The Missouri Empowerment Scholarship Account program was passed into law in the 2021 session and went into effect last fall. This law creates scholarships that will help some Missouri families pay for things such as tuition, tutoring, online classes, educational therapies, and other education expenses. However, the necessary rulemaking and appropriations for administering the law have only just been completed. In the interest of getting eligible students signed up and scholarship accounts opened for them, the state treasurer’s office has issued emergency rules that went into effect at the end of April.

These rules govern the types of scholarship organizations that can be created, the types of programs that are eligible to receive scholarship funds, including certified homeschool, and the final eligibility requirements for students who can apply for the scholarships. The only remaining hurdle is getting taxpayers to donate to the program.

The wheels of government don’t always move quickly, but at least in this case they have moved. Hopefully, by the fall, nearly 5,000 Missouri students will have Empowerment Scholarships Accounts. Missouri parents are finally getting more options for directing the education of their children without having to move.

 

 

 

 

 

 

Privacy Is for People, Not Government

Posted on by Patrick Ishmael

Earlier this year, I excoriated a concerning initiative out of the governor’s office that would have brought new barriers to government transparency, including reinstating attorneys’ fees in the document production process for Sunshine Law requests and limiting the kinds of documents otherwise available to the public. The governor’s plan appears to be mostly dead, but pieces remain in legislation that has now passed the Senate—and that should concern the public.

And as often happens with the Missouri Legislature, there is some irony with how the bill in question has “evolved.” Senate Bill (SB) 741 originally only established a “Personal Privacy Protection Act”—new provisions that would protect citizens’ private records from the government and, if the government had such private records, protected them from disclosure to the public. After it was amended in the Senate, SB 741 became a wide-ranging bill that now primarily protects government and government records from citizens.

How so? The revised bill now has a bevy of transparency-denying provisions, among them:

  • The bill excludes many so-called “transitory records” drafted in the process of government policy development but not finalized government policies
  • The bill grows the list of excuses to close public records and meetings to the public
  • The bill removes many records relating to the “legislative process” from the purview of the Sunshine Law
  • The bill extends the time allowed to respond to a records request

Suffice to say, if the House even bothers to take the bill up (time in the session is ticking down), it should amend this legislation dramatically, stripping out any language that protects the government from its people rather than vice versa. The “personal privacy” of constituents is an important priority, to be sure, but government doesn’t have “privacy,” and the legislature shouldn’t act like it does.

Lower Taxes, More Revenue?

Posted on by Corianna Baier

When a tax cut is proposed, critics often question how the government can function with the loss of revenue. But lowering taxes doesn’t necessarily mean the government will get less revenue, especially in the long run.

While taxes create a lot of adverse incentives, those in favor of tax cuts often predict that a tax cut will create incentives that have a positive effect on the economy. Companies and individuals certainly consider the tax climate when making major decisions (like where to locate or what to invest in). States and cities with lower tax rates may find that many of those decisions work out in their favor.

A recent Wall Street Journal opinion piece gives a few examples of how a cut to the federal corporate income tax changed behavior and seems to have increased corporate income tax revenue. The article notes that corporate income tax revenue is up 22 percent from the previous year for the first six months of 2022. Though there are other variables, the piece concludes, “Lowering the rates while broadening the base by eliminating loopholes created incentives for more efficient investment decisions that paid off for shareholders, workers, and the government.”

States and cities may see similar effects if they cut taxes—like the earnings tax in St. Louis City, as one example. The 1 percent income tax and 0.5 percent payroll tax in St. Louis City only apply to those who live or work within the city limits. This tax incentivizes businesses to locate outside the city, taking their money and their workers with them. It’s understandable why businesses react this way, but it doesn’t help a city that seems to be shrinking every day.

While a reduction or elimination of the earnings tax would be a blow to St. Louis City’s tax revenue, it’s likely that this tax cut would sway business decisions in the city’s favor. Businesses would be more willing to locate in the city now that they wouldn’t be effectively cutting their workers’ pay by 1 percent. After a while, revenue collected from new businesses and workers through other taxes could offset losses from the earnings tax.

Now, does a tax cut guarantee that a government will have more revenue? Of course not; there are many other factors that affect business decisions and tax revenue generation. But this is just some food for thought: lower taxes don’t necessarily mean less revenue.

Parents’ Bill of Rights Heads to Senate Vote, But Obstacles Remain

Posted on by Patrick Ishmael

Yesterday I testified before the Senate Education Committee on House Bill (HB) 1858, a parents’ bill of rights that we’ve written about in the past. The bill addresses a number of education and parents’ rights issues, but in my view the biggest reform is the implementation of the mandatory posting of school curricula and instructional materials online. In a twist, the committee voted the bill through to the full Senate immediately after it received testimony. The speed of the committee’s action was somewhat surprising—a committee vote usually doesn’t happen until days or even weeks after testimony—but the committee’s action was by no means unprecedented.

Because HB 1858 was not amended in committee, the bill could technically be sent to the governor if the Senate passed it as is, since the bill’s language is currently identical to what the House passed. Given comments made by some senators at the hearing, however, it sounds like a handful of changes will be forthcoming, and those changes will then need to be approved by or negotiated with the House. The hearing also reaffirmed that a final vote in the Senate could be close, with one of the six committee Republicans voting against the bill.

On the heels of the Missouri Senate purportedly voting through “one of the most progressive budgets” it’s ever passed, the prospect of the parents’ bill of rights being gutted on the Senate floor or even failing is a more real possibility to me than at any time this legislative session. To be clear, I’m still generally optimistic about the current text, or something close to it, becoming law this year, but I hope the Senate leadership is prepared to use its political capital to get this important legislation across the finish line. Stay tuned.

Podcast: Charter Schools in America with Ron Rice

Posted on by Susan Pendergrass

Susan speaks with Senior Director of Government Relations at the National Alliance for Public Charter Schools Ron Rice.

Ron C. Rice has over 15 years of public policy experience in the fields of education, urban development, and community empowerment initiatives as an executive state government appointee and two-term local elected official.

Prior to joining the National Alliance, Ron served as the Special Assistant/Chief Policy Analyst for the Chief of Staff to the Commissioner of the New Jersey Department of Education, and as a city councilman for two terms in Newark under Mayor Cory Booker where he created his ward’s Education Support Committee and consistently supported charter school facility needs and their growth and advancement throughout the city, specifically working with KIPP (TEAM Rise and SPARK Academies), Uncommon Schools (North Star Academy), and community charters such as Marion P. Thomas Charter School, Lady Liberty Academy, and Adelaide Sanford Charter School.

Listen on Apple Podcasts 

Listen on Sticher 

Listen on SoundCloud

Support Us

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.

Donate
Man on Horse Charging