Are Missouri’s Neighbors Passing It By?

Posted on by Kelvey Vander Hart

As a general rule, it isn’t wise to spend too much time worrying about keeping up with the neighbors. But we might make an exception to that rule for Missouri, especially in light of a new report that shows how weak our economy is relative to other states in the region.

The State of the Heartland Factbook 2018, a joint effort by the Walton Family Foundation and the Brookings Institution, uses 26 different socioeconomic measures to detail the performance of the 19 states that compose America’s Heartland. This data is compiled into the full report, and is accompanied by an interesting interactive database.

This new information makes it easy to compare Missouri to the other states in our region. However, the comparison is hardly flattering. The two best examples of Missouri’s stagnation are the change over time in Gross Domestic Product (GDP), which is the total value of everything produced by the people and companies of the state, and standard of living. Measuring the change in GDP from 2010 to 2016, Missouri only grew faster than two nearby states (Mississippi and Louisiana), averaging a 0.8 percent compound annual growth rate (CAGR). Most of the other states had a CAGR of over 1.0 percent.

Standard of living (which the authors measure as GDP per capita) showed practically identical results, with Missouri once again coming in third from the bottom (again ahead of only Mississippi and Louisiana). While Missouri showed a positive CAGR of 0.5 percent in standard of living, the majority of the states where data was reported averaged at least a 1.0 percent CAGR from 2010 to 2016.

The story was the same with regard to wage growth. Missouri held its popular position of third from the bottom, a CAGR of 0.4 percent from 2010 to 2016.

Clearly, there is work to be done in Missouri if we want to climb to a position where we are competitive with the states surrounding us. Policy initiatives that spur economic growth will be key in helping turn the Show-Me state into a better place to work and live.

Does Kansas City Really Have Too Many Hotel Rooms?

Posted on by Patrick Tuohey

The other day we highlighted a letter from a developer who claimed that his client, a hotel company, should receive higher-than-offered taxpayer subsidies because of a saturated hotel market. The hotel won’t make as much money, he argued, so the city should be more generous in its offering. That taxpayers should continue subsidizing hotels when there are already plenty seemed an odd position to take. But are there really too many hotels in downtown Kansas City?

Yes, according to the Hotel Muehlebach, a Kansas City landmark first opened in 1915. A developer is asking the City Council to execute “a Tax Contribution Agreement with Platform Ventures LLC for the purpose of incentivizing the redevelopment of the historic Hotel Muehlebach” (Ordinance No. 180842.)

The developers want tax money to help them redevelop the hotel into offices, residential apartments, and a 144-room hotel. This is a dramatic reduction from the Muehlebach’s current 420 hotel rooms. This is not the first time the Muehlebach has sought taxpayer subsidies. As we pointed out a few years ago in a post about Kansas City’s long history with hotel subsidies, a previous subsidy for the Muehlebach in 1992 was a disaster for taxpayers because there wasn’t enough demand for the hotel rooms to make the venture profitable.

Too Many Hotels in KC, According to Hotel Developer Seeking Subsidies

Posted on by Patrick Tuohey

In a blog post earlier this year I wondered about Kansas City, “If previous subsidies successfully created a vibrant economic center, then why are they still needed?” The recent news that Drury Hotels is withdrawing its application for tax-increment financing (TIF) makes this question relevant again.

The reason for the withdrawal is that Drury’s original request for TIF was only partially approved by the Economic Development Corporation (EDC). Drury would have received some taxpayer support if the development had gone forward—but not as much as requested.

Consider the letter from a development attorney working for Drury announcing the withdrawal. According to the letter, the subsidy is needed not because downtown is an economically challenged market, but because there is too much hotel development.

From the letter (which is available in its entirety via the link at the bottom of this post):

Additionally, Drury believes that the Project is financially risky, particularly given the projected doubling of downtown hotel room inventory over the next twenty-four months. Drury anticipates that a substantial decline in revenue per available room will take place over the next several years while the market absorbs this unprecedented growth in available rooms.

Let that sink in. Developers think that the area is overdeveloped, so taxpayers need to protect them from the risk of low revenue due to market saturation.

We only know this because a representative of this developer stated its position bluntly in writing. How many other developers—hotel or otherwise—are using economic development subsidies not to address a public need, but to protect themselves from offering too much of a private product?

Reading the letter, it’s difficult to understand why the EDC would have recommended any subsidy at all for hotel development. Downtown clearly has enough hotel rooms; taxpayers don’t need to fund any more. Unfortunately, the EDC is funded with fees paid by TIF recipients, so they have every incentive to say yes. Maybe Kansas City leaders need to follow Nashville’s lead and put a halt to TIF until the process can be improved.

No Longer Forgotten

Posted on by Susan Pendergrass

Far too often, our policy conversations focus heavily on urban locations. This is especially true in education. Yet there are over 9 million children in America’s rural schools who deserve our careful and thoughtful attention as well. That was what prompted Show-Me Institute Senior Education Policy Fellow Mike McShane and Andy Smarick, director of the Civil Society, Education and Work program at the R Street Institute to assemble an edited volume on rural education titled No Longer Forgotten: The Triumphs and Struggles of Rural Education in America.

Show-Me Institute Distinguished Fellow of Education Policy James Shuls contributed a chapter on rural school finance. Although the chapter is not about any specific state, James drew on several examples from Missouri. For instance, he explained how Missouri’s property tax assessment practices place rural schools at a disadvantage when raising local funds for schools and how many rural communities tax themselves at lower rates. When you combine these two facts, it’s easy to see why rural schools receive much less money than their suburban and urban counterparts.

There are a myriad of issues affecting rural schools, and the book is a good reminder that education reform shouldn’t stop at city limits.

 

How Can Missouri Support Students with Special Needs? Find Out.

Posted on by James V. Shuls

In November, the Show-Me Institute will host two events on Bryce’s Law.

Haven’t heard of it? Don’t worry, few have—and even fewer have benefitted from it.

Bryce’s Law was passed in 2013. It was intended to provide scholarships to students with special needs so they could get the educational services they need from specialized private institutions such as the Judevine Center for Autism. As Mike McShane, Susan Pendergrass, and I point out in our recent essay, “Bryce’s Law Revisited: Serving Missouri’s Neediest Students through Targeted Scholarships,” not a single student has benefited from Bryce’s Law.

Join Mike on November 13 in Kansas City or Susan in St. Louis on November 15 as they share how Bryce’s Law could be revised to do what it was meant to do—serve students with special needs.

If you have a child with special needs or know someone who does, or even if you just want to find out more, I highly recommend you attend one of these events. Unlike some political issues that generate millions of dollars in backing from organized interest groups, scholarships for students with special needs are not likely to receive that kind of substantial support. You won’t see any television adds. You won’t see yard signs. And if people are not educated on this issue, we won’t see any special needs students benefitting from Bryce’s Law.

The Tax Burden in Kansas City Is High

Posted on by Patrick Tuohey

On Ruckus the other day, panelist Woody Cozad mentioned that taxes in Kansas City are high. He’s right. My colleague Patrick Ishmael has made the point repeatedly. But a study of taxation out of Washington, D.C., underscores just how bad things have gotten here relative to other U.S. cities.

The study, issued by the government of the District of Columbia in December 2017, “aims to calculate the combined state and local tax burdens that would apply to a hypothetical family at five different income levels living in D.C. as well as the largest city in each state.” Kansas City is included and St. Louis is not, and neither are some cities that we’ve identified as peers. But the data are valuable nonetheless.

The estimated tax burden for a family earning $50,000 in Kansas City—the median income is $47,000—is $5,444. That’s 10.9 percent of income and includes income, property, sales, and auto taxes. This places us 8th in the country, ahead of places well-known as expensive such as Boston, New York, Portland, Seattle, Denver, and Los Angeles.

Dave Helling of The Kansas City Star has pointed out that taxes in Kansas City are also regressive. This report supports that conclusion regarding auto sales taxes, stating that “Providence, Rhode Island; Bridgeport, Connecticut; and Kansas City, Missouri are the cities with the highest automobile tax burdens across all income levels.” Combined with all other taxes, a Kansas City family earning $25,000 pays a combined tax burden of 12.6 percent; 8th highest of the cities measured. For a family earning $100,000, the burden is lower at 11.2 percent, placing us 12th.

What’s worse, the sales tax estimates are low for Kansas City. On page 39, the study lists Kansas City’s sales tax rate to be 8.475 percent, but anyone living here knows it goes much higher due to the proliferation of special taxing districts across the city.

Individuals can determine for themselves if City Hall is providing a return worthy of the investment, but the debate over whether taxes are high is settled. Kansas City is a high-tax city. Our taxes are regressive, too, but they are certainly high.

Food Deserts and Demand

Posted on by Patrick Tuohey

The Kansas City Star published a 2,500 word front page story on Sunday that asked, “Why do so many stores east of Troost lack healthy food?” It wasn’t until the 11th paragraph that we got the answer: demand. This answer shouldn’t surprise anyone—we’ve known it for years.

The story also makes clear that it’s not that stores east of Troost Avenue “lack healthy food,” as the headline suggests. It’s that nutritious food isn’t presented immediately as one enters the store. We’re told, “Customers must walk back 100 feet before they encounter the produce section.” 100 feet.

There’s no bad guy in the story, either. Grocers admit to stocking what people want.

“You can pick apart any store that you want to on what they have or don’t have, but it’s about if people request these things or not,” [Sun Fresh store director Kim] Nagel says. “We’re going to give our customers what they want. Not just what looks good.”

Grocers aren’t fools. They’ll quickly learn what the community wants and work hard to provide it. All the fresh and brightly colored produce goes to waste if no one buys it, which is exactly the problem. Kansas City seems to think that building a new supermarket will address the problem. It won’t, as was addressed directly in recent USDA research. In fact, the Star’s own reporting echoes the research findings on food deserts: People do not necessarily drive to their closest grocery store. If they want something that isn’t available, they travel to where it is available.

I can’t get ground veal at the two grocery stores nearest me. I must travel to a third, more distant store. Am I the victim of a veal desert? Of course not.

The challenge of poor nutrition is very real, and addressing it will require a lot of work. That work should be focused on increasing demand rather than on counting kale and measuring miles. As the Star editorialized a few years ago about the announcement of the taxpayer subsidized Sun Fresh on Prospect:

[Kansas City Mayor Sly] James said building the Sun Fresh Market would be the “beginning of the revitalization of this entire corridor.” In truth, that’s been said before. For example, the current forlorn Linwood Shopping Center opened to rave reviews almost 30 years ago on the site of the demolished St. Joseph Hospital.

Yet the old grocery store there closed almost a decade ago. The center today is a reminder that investing in the East Side must overcome hurdles that don’t exist in other parts of the area. History shows that a lone project can’t really lift up an entire community. It takes a much bigger effort to do that.

The current “rave reviews” over some offerings at the new location will likely end if the demand does not keep up. And there are hurdles specific to the East Side when it comes to nutrition. Pretending otherwise is not just bad public policy; it is a disservice to residents.

Kansas City’s Unrelenting and Unaddressed Homicide Problem

Posted on by Patrick Tuohey

Four years ago, when Kansas City’s homicide rate was down, City leaders were eager to let people know.

“There is still work to do because even one homicide is too many,” [Mayor] James said. “But I have faith in the collaborative and strategic approach of KC NoVa. This year’s data tells us that so far we are making great strides in the right direction.”

Fast forward to today—after years of a nation-leading spike in homicides (currently #5 in the nation with 108 in 2018 as of this writing)—and those same people seem to want to deny any affiliation with policing. The mayor, whose role as a member of the police board was highlighted in 2014, seems to shrug off any role in policing today. In a KCPT panel discussion about the 50th anniversary of the Kansas City Race Riots, moderator Nick Haines raises a question about minority hiring in the police department, “Mayor, you’re on the police commission.” James responds, “Yes . . . and…?” to laughs from the audience. (Starts at 35:32.)

In a more recent press conference, Mayor James complained bitterly about lack of gun control legislation and political ideology in the state legislature. But as a recent KSHB report on homicides made clear, there is no evidence that Jackson County, Missouri, has significantly more gun ownership than, say, Johnson County, Kansas, or that gun ownership in Kansas City has increased over the same time frame that homicides have spiked. It’s not the guns.

There is research, however, that indicates that increasing the number of police officers does reduce crime. KSHB’s Andy Alcock makes that point in his report, too. In fact, according to FBI statistics, Kansas City has fewer police officers per capita than all other cities with high homicide rates. What’s worse, since 2011, the number of uniformed police officers in Kansas City has declined.

As I laid out in a Kansas City Star guest column, no one in Missouri has more power over policing in Kansas City than the mayor’s office. What is lacking is not power, but will. And until Kansas City leaders get serious about adopting policies and policing methods that actually contribute to reductions in violent crime, we are figuratively whistling past an ever-growing graveyard.

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