“It cost what?” —KC Streetcar Announces Opening of New Extension

A friend called me the other night. Fox4KC had just aired a story about the opening date of the latest Kansas City streetcar extension. They put the cost of the 3.5-mile route at $352 million. “Is that right,” they asked?

That certainly is the number Fox4KC reported. And that number does come from the Streetcar Authority itself.

At over $100 million per mile, Kansas City may have just built the most expensive streetcar system in the country. A quick search online seems to support this (see table below). While this places the KC streetcar extension as the most expensive of 2025, we will only hold that title for a short while. California’s Orange Country streetcar—dubbed the Trolley to Nowhere by our friends at the California Policy Center)—will blow past our cost-per-mile when it opens in 2026.

Randal O’Toole, who authored a Show-Me Institute policy study on various streetcar proposals in Kansas City, told me “the average for streetcars is about $91 million a mile.” Although he added, “Seattle wants to connect two streetcar lines together at a cost of $220 million a mile.” So maybe Orange County’s record will itself be short-lived.

Recall that the streetcar system has done nothing to drive up assessed market value of the properties along the route above that of the county as a whole. It has had no measurable economic impact—despite the continuing and unsubstantiated claims made by streetcar supporters.

At best, we in Kansas City can—for a short while—lay claim to the most expensive system in the country. Yay!

Streetcar cost table

 

 

Sun Fresh Failed Because of Subsidies, not Despite Them

On August 12, KCUR ran a story with the headline A troubled Kansas City grocery store has closed, despite $18 million in city investments.” I take a different view: the evidence suggests that Sun Fresh may have failed because of city investment—not despite it.

For more than a decade, Kansas City leaders treated Sun Fresh at 31st and Prospect as both a grocery store and a public policy tool to address food access and economic development. According to KCUR, the city has invested  $17 to $21 million since 2015, plus a $750,000 operating and security appropriation in May 2025. Yet customer traffic reportedly fell from about 14,000 a week to roughly 2,000–4,000 by mid-2025 (sources differ by date and estimate). According to The Washington Post, the store’s insurance costs rose 45% year-over-year, thefts mounted, and by this summer the store’s shelves were bare. Less than three months after the latest infusion of taxpayer money, the store closed.

This should not have been a surprise. I wrote as early as 2015 that the effort would fail. I saw this not because I’m imbued with a mystical power of prediction, but because I’m roughly familiar with some basic economic principles.

Friedrich Hayek described the price system as “a mechanism for communicating information” that enables millions of separate decisions to coordinate without central control. Prices, sales, and profit margins signal what customers want and whether a business can supply it sustainably. Subsidies blur those signals. Falling sales normally push owners to change their product mix, improve service, or close. If government funds fill the gap, a business may avoid—or delay—those choices until the underlying problems are too great to fix. This is exactly what happened with Sun Fresh.

Ludwig von Mises argued that without real market prices, decision-makers cannot allocate resources rationally. A subsidized store like Sun Fresh is insulated from these tests. Are prices too high? Is the product selection wrong? Are operating costs out of line? In a subsidy environment, these questions may go unanswered because survival depends more on political approval than on customer satisfaction.

And what do politicians want?  Ribbon cuttings and pretty pictures. Sound economics doesn’t photograph so well.

Adam Smith, in The Wealth of Nations, warned that the interests of producers and the public often diverge. A subsidized grocery may fulfill a political need to “do something” about food access, but it may not deliver what shoppers actually want at prices they will pay. If a store cannot sustain itself even with taxpayer support, the model—not the market—is the likely problem.

Supporters of the subsidies might argue that they were necessary to correct a market failure, and that the store’s closure proves even more support was needed. But the record suggests the opposite: prolonged subsidies masked underlying weaknesses, delayed inevitable closure, and diverted resources from other food-access efforts such as mobile markets, independent co-ops, or smaller-scale grants. Subsidies likely harmed other grocery stores as well, such as an ALDI on Prospect within about 1.5 miles.

Markets provide important information that no city hall central plan can replicate. Public funds cannot replace this information; they can only distort it. It’s true of sports stadia, entertainment districts, and the hotel industry. When those signals are ignored, the cost falls not only on taxpayers but also on the communities policymakers aim to help.

Lastly, and perhaps more importantly, this debacle is an example not only of the city doing what it shouldn’t, but also failing to do what it should. Many of the challenges the shopping center endured—theft, prostitution, open drug use, and violence—were the result of the city failing to do something we (should) all agree is a basic function of government: public safety.

Even if one believes subsidized stores could work, nothing can succeed amid the bedlam surrounding this store.

I wrote of this project in 2015: “When [the grocery store] fails, the city and its residents will be no better off than before, just poorer. And the infrastructure, crime, and education issues that really need to be addressed will be that much worse.” This is exactly where we are now.

What the New Federal K-12 Tax Credit Program Could Mean for Missouri

One of the most notable policies in the One Big Beautiful Bill (OBBB) is the establishment of the first-ever federal K-12 tax credit program, which could strengthen educational choice in Missouri and states across the nation. This new program allows taxpayers to donate to a scholarship-granting organization (SGO) that will distribute funds to families, who in turn can use them for private school tuition, special needs services, textbooks, tutoring, and more.

This is not a new concept for Missourians familiar with our similar state-level program, MOScholars.

How the Program Works

Each taxpayer can direct up to $1,700 of their federal tax liability to an SGO in any state rather than sending it to the IRS. While donor contributions are capped, there is no federal limit on the amount an eligible student may receive, or how many students are funded. SGOs determine funding allocation based on pre-set rules (evenly, tiered by income, etc.).

Participating SGOs must be federally recognized, legitimate nonprofits (not private foundations), and the governor or another state authority must approve the list of eligible SGOs. In Missouri, the State Treasurer’s Office approves organizations for MOScholars, so it may also have this role for the federal program as well.

State Participation

The federal program requires states to opt in to this new program. I expect Missouri will, but we have not declared our intent to participate at this point. The tax credit is slated to become available beginning in 2027.

If Missouri opts out, Missouri SGOs would not be eligible to receive or distribute federal funds. This means no Missouri students could benefit from the program. However, Missouri residents could still claim the federal credit by donating to an SGO in another participating state.

Participating in this program would complement MOScholars and bring even greater choice, flexibility, and opportunity to families around the state.

Let’s Celebrate (and learn from) State Tech, One of the Best Technical Colleges in the Country

State Tech in Linn bills itself as “Missouri’s premier technical college, dedicated to providing hands-on, industry-driven education that prepares students for high-demand careers.” External rankings back up the claim—for example, Wallethub regularly lists State Tech among the best two-year technical colleges in the country.

I was interested, but skeptical. After all, many universities seem to be highly rated somewhere. Is State Tech really that good? In a 2024 article, I worked with two University of Missouri graduate students, Maxx Cook and Michael Reda, to find out. We examined State Tech’s impact on student graduation and earnings.

It quickly became apparent that State Tech students had better outcomes in the data, which is consistent with what they report on their website. However, we weren’t sure whether this was because of State Tech’s superior educational programming, or just because it attracts stronger students in the first place.

We used two strategies to sort this out. First, we used detailed data from the Missouri Department of Higher Education and Workforce Development to compare students who attended State Tech with students who had similar pre-college qualifications but attended other two-year colleges in Missouri. Second, we used econometric tools to isolate a group of students who attended State Tech only because it happened to be near where they lived, rather than for other reasons. We then compared these students to otherwise similar students who happened to live farther away. This strategy helps remove a lot of potential confounding factors that might make State Tech look better than it really is.

Our findings confirm that State Tech is the real deal. It increases associate degree attainment by more than 20 percentage points compared to other two-year colleges in Missouri, and State Tech students graduate faster. It also increases earnings (measured six years after initial enrollment) by over $11,000 annually. Importantly, State Tech students outperform both non-technical and technical students elsewhere in Missouri.

We should celebrate the presence of such an excellent institution in our great state. We should also try to learn from State Tech to replicate its success. If this were any other industry, competitors would be flocking to Linn to figure out the secret sauce. But based on my years of experience studying education, I doubt this is happening. Why not? Because there is no competitive incentive to do so. In business, an exceptional company forces rivals to adapt or close. In public education—K–12 or higher ed—the risk of closure due to poor performance is almost nonexistent.

This means Missouri’s other public two-year colleges have little reason to put in the work required to emulate State Tech. It’s a missed opportunity, but we can still appreciate State Tech’s success and be proud to call it our own.

Crime, Public Safety, and Perception in St. Louis with Braxton Steele

Susan Pendergrass speaks with Braxton Steele, intern at the Show-Me Institute and student at Missouri State University, about his summer research on crime and public safety in St. Louis. They discuss his personal experiences living in the city, how crime in St. Louis compares to other Missouri cities and peer cities across the country, the gap between reported crime data and public perception, and more.

Listen on Spotify

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Timestamps

00:00 Introduction to Public Safety in St. Louis
01:01 Braxton’s Experience Moving to St. Louis
04:06 Crime Statistics and Perceptions
06:08 Comparative Analysis of Crime Rates
08:48 Motor Vehicle Thefts and Clearance Rates
11:10 Unreported Crime and 911 System Issues
13:05 Public Perception vs. Reality of Crime
14:39 Conclusion and Future Directions

Produced by Show-Me Opportunity

More Big Beautiful Medicaid Changes

Missouri’s Medicaid enrollment is up by almost 400,000 recipients since 2019, but how many of those newly on the rolls are legally eligible to be there? As of now it’s hard to say, but before too long we’ll likely have a better answer.

Several weeks ago I started my deep dive into the many healthcare reforms included in the One Big Beautiful Bill (OBBB), specifically focusing on Medicaid. This week, I’ll discuss three of the bill’s provisions that are intended to improve program integrity and reduce waste.

  1. Increasing Redetermination Frequency: Instead of the current practice of checking each recipient’s eligibility once per year after they enroll in Medicaid coverage, the OBBB requires states to start doing so every six months. This provision isn’t solely about cutting costs, though Medicaid’s out of control spending should be reined in. It’s also about making sure that taxpayers are only covering the high cost of healthcare for those that really need it.
  2. Reducing Retroactive Eligibility: In the past, Medicaid would cover medical bills for new recipients up to 90 days prior to their joining the program. The OBBB shortens this window to 30 days in an effort to incentivize those who are truly eligible for the program to maintain their enrollment or enroll while they are healthy. If successful, this provision should improve program integrity and help lower costs by treating recipients earlier, before their ailments become more costly.
  3. Reversing Recent Actions: Toward the end of the Biden administration, several new Medicaid rules and regulations were promulgated that would significantly increase the program’s costs without much evidence of benefiting the health of recipients. The OBBB rolls back many of these rules, specifically one that would drastically raise the cost of nursing home care.

Taken together, the reforms contained in the OBBB represent a forward-thinking evolution of the Medicaid program. By focusing on clearer eligibility requirements, more practical retroactive coverage, and a scale back of burdensome regulations, these changes could strengthen Medicaid, making it more sustainable and better equipped to provide essential healthcare services for those who depend on it.

In my next blog post on the OBBB topic, I’ll dive into some of the healthcare reforms that will impact the entire sector, not just Medicaid.

Municipalities Should Not Be Commercial Landlords (I’m Looking at You, Chesterfield)

Chesterfield, which is poised to be the largest city in St. Louis County, is attempting to get into the commercial real estate business. I mean that literally. The city is planning to purchase a commercial property building and operate it as a landlord. I can’t believe this has to be said, but municipalities have no business being in the commercial property business. I don’t think you have to be a libertarian extremist to believe that. The more extreme position is actually that owning and operating a commercial office building—or any business, really—is, in fact, the proper role of government. (In fairness to the city, they do plan to hire a property manager for the building.)

I attended the city council meeting where the relevant bill was introduced. Supporters of the proposal offered two different reasons why this was a good move for the city. First, supporters said the leases for the businesses in the building would pay the costs of the purchases, so the city would come out ahead. According to the Chesterfield city manager, the current leases “would mean the building would create no annual cost for the city.” This reminds me of the famous story of when former St. Louis Mayor Vince Schoemehl told some veteran members of the St. Louis Board of Aldermen that the new convention center downtown would not cost the city anything, and longtime alderman Red Villa responded with, “Well then, why don’t we build two of them?”

The other reason why supporters like the purchase is because Chesterfield could use some of the building for its own future needs, such as a police substation, civic center, or parks department headquarters (all these examples were given at the meeting). But here is the problem: If you use the building for city offices or needs (which may be the more defensible position), then you don’t have the paying tenants who will cover the price of the purchase for the city. Yes, the building’s parking lot would come in handy for some events at the nearby park, but, as opponents noted, that is just a few events each year.

Then there is the belief by the city that they won’t have to pay property taxes on the building, leading to a higher profit margin for the city (stated by a member of the board and elsewhere). That is a very dubious argument. There is plenty of case law that says if a tax-exempt entity owns property but that property is not used for tax-exempt purposes that property taxes are still owed. (Scroll down here for citations.)

If one believes that buying and operating a commercial office building is the proper role of local government, then I wonder what limits there would possibly be on the role of government? If a municipality can do this, what can’t it do? That’s the scary part.

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