Kansas City Council Should Say November Oscar to Hotel Bravo

The developers of a luxury hotel proposed for downtown Kansas City are back seeking major tax subsidies for their proposal. In a great but all-too-rare decision in 2019, the Kansas City TIF Commission recommended against using TIF for this exact project. Apparently, in modern America, you can’t build high-end luxury goods without taxpayer subsidies (as twisted as that is).

But the developers of the Hotel Bravo plan are back requesting subsidies from the council. They have not amended the plan, and because of the TIF commission’s 2019 rejection, the developers will need a supermajority of the Kansas City City Council to approve (9 votes out of 13) for it to pass. One would hope that there are five members of the council, including the mayor, who are opposed to a $47 million tax subsidy for another hotel in downtown Kansas City. Even the region’s tourism agency, Visit KC, has opposed new tax subsidies for more hotels because its own analysis concluded there were too many already.

Our former colleague, Patrick Tuohey, covered the issue of Kansas City hotel subsidies with gusto during his time here. I highly recommend reading or watching his work on the topic.

This should not be complicated. $47 million in tax subsidies for a high-end hotel in a saturated market (according to Visit KC) is insane. Vast evidence on the subject indicates that subsidy-based economic development doesn’t work. Local economic development officials can’t predict the future and are influenced by politics in their choices.

The TIF commission made the right decisions when it rejected the proposal in 2019. The city council should once again decisively say November Oscar to Hotel Bravo.

Yes, We Should Be Concerned About Critical Race Theory

Caroline Cureau was my great-great-grandmother. In 1902, Caroline married Onesiphore Sarafin Manade, my great-great-grandfather, and the couple moved from Louisiana to Missouri several years later. Much about their life story has been lost with the passage of time, but as facts go, two things are certain: Caroline was black, and Onesiphore was white.

Many Americans don’t know that anti-miscegenation laws—laws prohibiting certain races from marrying one another—were in effect well into the 20th century, including here in Missouri. They were odious laws affecting the marriages of not just the first generation, but of their children, their children’s children, and their children’s children’s children. The generational injustice of such laws was breathtaking.

For the better part of a century, Americans tried to move past this sort of thinking. Martin Luther King, Jr.’s dream that his “four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character” is the American dream, of a world defined not by who your family was but by who you are. It’s the dream of families of all colors that their children will not suffer because of the stations or sins of earlier generations.

It is right and proper that America’s tumultuous racial history is taught in every American classroom. Yet the line between racial understanding and racial grievance can be a thin one, so it’s unsurprising that there has been so much debate recently over the issue of critical race theory (CRT) and whether it should be taught in our schools.

While the precise contours of CRT vary from adherent to adherent, CRT as a belief system posits that white supremacy serves as the foundation of American institutions and government, and that white supremacy is advanced by whites as a class and who, individually, are definitionally racist regardless of their personal views. If the use of “class” sounds vaguely Marxist, it’s because CRT indeed has roots in Marxism, and some of its adherents are plain about their support for the suspension of private property rights and redistribution of wealth on the basis of race. Additionally, CRT (again, generally) gives great weight to ideas of race essentialism (that the color of our skin drives our value system,) neo-segregation (that racial groups should be regularly separated to develop their own identities), and collective guilt (that the wrongs of the past are assignable to racial groups today.)

In other words, it’s a belief system that is in direct contradiction to King’s dream. That, to me, is intolerable, and promoting such a worldview in public schools would be an alarming throwback to the bad old days of legally-enforced and culturally-accepted racism.

Some may feel differently, and that’s their right. But do Missouri parents even know whether their kids are learning this content? Have Missouri schools been transparent about whether and to what extent they agree with the principles of CRT? Parents have a right to know what’s being taught to their children regardless of the subject, but that’s especially true of contentious curricula that use CRT concepts.

For my part, I’d like to think that Missourians will reject critical race theory for themselves and their kids. Maybe that’s because of my own background and upbringing. Above all else, I think most Missourians believe we are all really part of an “American family,” with shared successes, shared disappointments, and shared history.

But being American isn’t about who our parents were or what we look like. It’s about what we choose to be . . . and what we choose to be together. As we look back at our American story, I hope we don’t lose sight of that; otherwise I fear we won’t just be looking back at the past, but falling back into its errors, as well.

Coming up for AIR After COVID

The last year has been a difficult one for Missourians. Our friends and neighbors have not only contended with a serious public health threat but have also had to fight government stifling their liberties in ways that would have been unimaginable a year ago. It’s no surprise that as fear and government restrictions recede, Missourians may feel like they’re finally coming up for air.

But Missouri policymaking could use fresh AIR as well—Accountability, Investment, and Reform. As pandemic restrictions end and life moves back to normal, policymakers have a unique opportunity to reassess where the state is going and enact free-market and good-government reforms that would have helped during the pandemic but will certainly help after it is long gone. With federal stimulus dollars waiting in the wings, policymakers will also have spending decisions to make, and they should make those decisions conservatively, deliberately, and with reform as a top priority. But whether these ideas are funded with federal or state money, having a framework of potential programs and reforms ready for them as they embark on their work is crucial. The ideas presented in this document provide a starting point for the work ahead.

Click HERE to Download Coming Up for AIR After COVID

https://issuu.com/showmemo/docs/coming_up_for_air__1_

Jobs, Jobs, and More Jobs

It’s fitting that a new report from the Bureau of Labor Statistics (BLS) on job openings was released during Missouri’s last week of federal pandemic-related unemployment benefits. At the end of April 2021, job openings reached 9.3 million, the highest since the BLS began its job openings series in December 2000. The industry with the largest increase in job openings from March to April was accommodation and food services, which shouldn’t come as a surprise to anyone who has seen “Help Wanted” signs at their favorite eateries. The hiring rate, on the other hand, remained unchanged at 4.2 percent from March to April.

With all these job openings, it really does seem like it’s time for things to finally get back to normal and for people to get back to work. The reasons we may have needed additional unemployment benefits during the height of the pandemic are fading fast—businesses are opening, vaccines are widely available, and people are returning to life outside their homes.

The economy is recovering from the pandemic, but it’s possible that increased federal unemployment benefits have slowed down our recovery by causing people to push back their job search. Governor Parson decided that Missouri would end all federal pandemic-related unemployment benefits on June 12th to incentivize people to get back to work. I think this was a smart move because jobs are clearly available. It’s time to stop relying on government handouts and fill those job openings.

Residential TIF Versus School Districts

The St. Louis TIF Commission approved a second phase of the City Foundry TIF project by a vote of 5 to 3. The first phase of this project is nearly complete, turning an old Midtown factory into a food hall with other entertainment and retail spaces. Two of the votes against the amended second phase, which now includes an apartment structure with over 280 units instead of an office building, were from the school district representatives on the TIF commission. This really shouldn’t be a surprise, as residential TIF projects have direct negative effects on school districts.

When a TIF district is created, the property taxes allocated to the school district (and all other taxing districts in the TIF district) freeze at the pre-development amount. The developer receives any increase in property tax payments due to the increase in the property value during the life of the TIF project (up to 23 years). If the property generated $100 in property taxes before it was developed and generates $300 after it was developed, the developer gets to keep the increment of $200 for certain development costs while the school district and other taxing districts continue to only receive their portion of $100.

This aspect of TIF is always harmful for these taxing districts, but it is especially harmful for school districts when the TIF project has a residential component. With such residential projects, some families with school-aged children will likely move in, and the children will likely attend the local school district. The school district, however, won’t get additional funding. How are school districts supposed to educate additional kids without the appropriate funding?

Harmful residential TIFs have been proposed elsewhere in Missouri. In some cases, the school district raises taxes on everyone to cover the additional expenses. These potentially huge negative effects on the school district—on top of the $18 million in tax dollars, sales tax exemptions, and general display of governmental special treatment—should make us question whether the City Foundry project is actually a good thing for St. Louis’s citizens.

Missouri’s $17 Million Grocery Store

The Crestwood TIF Commission is considering a proposal to redevelop the land that was once the Crestwood Mall. The plan includes a Dierbergs grocery store and multiple retail spaces that would be partially funded with $13.5 million from tax-increment financing and $3.5 million from a community improvement district. There is also a residential component of the development that will not include public funding. There is a TIF Commission public hearing on this proposal at 7 p.m. on June 17th, 2021.

Read our Testimony on The Crestwood Mall TIF Proposal here: bit.ly/3wtnO3q

Read the commission meeting notes here: bit.ly/35sv7w8

More on the Crestwood TIF:

https://showmeinstitute.org/blog/subsidies/if-at-first-you-dont-succeed/

https://showmeinstitute.org/blog/subsidies/tax-hikes-to-fund-tax-cuts/

https://showmeinstitute.org/blog/municipal-policy/what-should-crestwood-do/

Why Should the Early Bird Get the Worm?

A version of this commentary appeared in the Columbia Missourian.

Although it’s a little trite, “the early bird gets the worm” is harmless enough as far as old sayings go. Still, living by those words is one thing, and governing by them—as Lake Ozark seems to be doing—is quite another.

Food truck operators want to set up business along The Strip in the city of Lake Ozark, but the Planning and Zoning Commission is prohibiting them from doing so. While identifying consumer desire for food truck options in this area, the Commission says that its intent is to protect brick-and-mortar businesses that are already there. As the daughter of a restaurant owner, I fully support brick-and-mortar businesses, but why is the Planning and Zoning Commission choosing to protect these businesses at the expense of others, namely food trucks? Why are we only allowing the early bird a chance at getting the worm?

The commission fears that food trucks would compete with existing businesses. That is not something that should be feared; it should be expected and encouraged. In the same way that existing businesses compete with one another, food trucks should compete with other restaurants—and may the best food and dining experience win! It’s through this competition that we end up with a collection of businesses that consumers really want. That’s how competition in the market should work; consumers, not commissioners, pick winners and losers. It shouldn’t be the early bird that gets the worm, but the best bird.

After the Great Recession, many were looking for cheaper, on-the-go food options, and a lot of culinary experts were unemployed, laying the groundwork for a surge of food trucks. (And it’s not a stretch to think that our current economic situation could increase the demand for food trucks even more.) From 2013 to 2018, the number of food truck establishments in the U.S. doubled, employing over 16,000 workers in 2018 and reporting sales of $1.2 billion in 2017 according to the U.S. Census Bureau. More options increase the chance that consumers find exactly what they are looking for at a price they are willing to pay. Additionally, more businesses mean more entrepreneurship and opportunities for workers.

Other cities have found ways for food trucks to operate that would be better options than an outright prohibition. For example, Clayton allows for food trucks to operate for city or private events provided that they follow specific guidelines. Branson prohibits food trucks from operating within 100 feet of a restaurant and also allows for food truck courts. While these examples still place regulatory burdens on the food trucks, they show that there are ways for brick-and-mortar restaurants and food trucks to coexist.

Existing businesses should not receive special treatment just because they already exist. We allow brick-and-mortar restaurants to compete with one another—is it really that dangerous to allow them to compete with food trucks? Lake Ozark says it’s working on an ordinance to lay the groundwork for food trucks operating in the area. I say, let all the birds go and see which one gets the worm.

WATCH: More From Show-Me on Food Trucks

Podcast: Missouri Education Spending, More Corporate Giveaways and Talk of a Special Session on Public Safety

Susan Pendergrass, Patrick Ishmael and David Stokes discuss a new report that claims Missouri ranks 49th in K-12 education funding, Property Reassessments and Upcoming Property Tax Hike Votes, new TIF deals around the state and the call from some Missouri legislators for a special session on public safety.

More ways to listen:

Apple Podcasts

Better Preparation for a Rainy Day

Imagine opening a savings account so that you can put aside some money in case of an emergency. But when you go to the bank, the bank won’t allow you to put as much money in the account as you think you’ll need. And when an emergency arises, you are only allowed to withdraw half of what you had put away. That wouldn’t be a very helpful savings account, would it? That’s essentially how Missouri’s rainy-day fund works today.

Missouri’s savings account, or rainy-day fund, was created more than two decades ago to serve two purposes: provide the state government with short-term liquidity (cash flow) and help stabilize the state’s budget whenever there’s an unexpected shortfall (emergency). On average, Missouri spends a little more than $800 million in state tax dollars every month. With such significant spending obligations, it’s relatively common for the timing of revenue collections and immediate spending needs to not perfectly align. When this happens, the state’s budget administrator can authorize the transfer of some funds from the rainy-day account to help fill the short-term cash-flow gap. The only requirement is that the amount borrowed must be repaid to the fund by May 16th of the current fiscal year. So long as the cash-flow needs are truly short term, the fund can be reliably used for this purpose.

When the disparity between revenue collections and spending obligations are longer term—for example, during a recession or pandemic—Missouri’s current rainy-day fund is much less useful. The fund has a strict minimum and maximum balance, which can be problematic when times are bad. Each year, the fund typically has around $700 million at the beginning of the state’s fiscal year, before money is borrowed for cash flow. Missouri ranks in the bottom half of states for available savings, and during the 2008 recession state tax revenues declined by more than a billion dollars. In other words, the current fund is too small.

There are also strict rules about how the funds can be spent, and how they must be repaid. First, the governor must declare a state of emergency, or state expenditures must be reduced below their original estimates (which would happen if there was a revenue shortfall because Missouri’s budget must remain balanced at all times). Then the governor must request that the legislature approve emergency use of the fund, and the legislature must approve the proposed use by a two-thirds majority. Once approved, only half of the fund’s balance can be used for budget stabilization, and at least one third of the borrowed amount must be repaid by the following July 15th. In short, the fund is very hard to use.

The difficulty in using Missouri’s rainy-day fund for budget stabilization discourages lawmakers from calling on the fund in times of need. Its insufficient balance makes any effort even less worthwhile. While some of the limitations placed on the fund’s use are likely an effort to ward against improper overuse and needed, there’s a fine line between discouraging bad behavior and encouraging inaction. In fact, ever since this version of Missouri’s rainy-day fund was created in 1999, it’s never been used for anything other than cash-flow assistance.

The COVID-19 pandemic has illustrated the importance of governments preparing for rainy days. Ensuring Missouri’s rainy-day fund is something that can be reliably turned to when unforeseen events arise would help our state prepare for the future. I know I’d never sign up for a savings account like Missouri’s.

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