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The Beam in the Star’s Eye

Posted on March 31, 2016January 13, 2026 by Patrick Tuohey

On Tuesday, The Kansas City Star published an editorial about the level of funding for mental health services in Kansas, concluding:

Under the poor leadership of Gov. Sam Brownback and the Republican-controlled Legislature, Kansas has severe funding problems brought on by irresponsible tax cuts. But for the sake of Kansans with severe mental health needs, lawmakers should plug the financial holes so the state hospitals can provide good security and services.

This is at least the second time the Star has examined the topic, having done so last summer as well. Our response now is the same as it was when the Star was seeking a tax abatement extension that it was eventually granted:

The Star is asking to extend for 15 years the tax abatement on its downtown printing press. As a result, the Community Mental Health Levy in Jackson County, Missouri, will be denied $245,000 over 15 years. That is a quarter-million tax dollars from the Star's single property.

The Show-Me Institute welcomes any discussion of policies surrounding taxation and government spending. But it seems disingenuous for the Star to criticize tax cuts in Kansas when it seeks them for itself in Missouri.

Report: Saint Louis, Kansas City Not Among Most Cost-Friendly Cities for Business

Posted on March 31, 2016January 13, 2026 by Joseph Miller

Recently, the Post-Dispatch prominently published an article claiming that, “St. Louis is among the top 10 most cost-friendly cities to do business in the country.” The article’s source was a study by KPMG, which ranks more 70 cities by business costs (lower index being better). The only problem is that, if one follows the links in the Post-Dispatch article, they’ll find that Saint Louis is certainly not one of the most cost-friendly cities for business.

Far from it. Of the 77 U.S. cities that KPMG ranked (which was not exhaustive of all major metros), Saint Louis ranked 45th and Kansas City ranked 46th. Among the cities cheaper than Saint Louis (and Kansas City) are regional competitors like Nashville, Omaha, Cincinnati, Memphis, Indianapolis, Cleveland, and Oklahoma City, to name a few. Worse yet, Saint Louis was more expensive than all 18 Southeastern cities KPMG looked at, from Atlanta to New Orleans.

Rank	Metro Area	Region	Cost Index
1	Charlottetown, PE	New England	83.9
2	Shreveport, LA	Southeast	91.7
3	Youngstown, OH	Northeast	92.5
4	Baton Rouge, LA	Southeast	92.8
5	Savannah, GA	Southeast	93.1
6	New Orleans, LA	Southeast	93.1
7	Lexington, KY	Northeast	93.2
8	Little Rock, AR	Southeast	93.3
9	Gulfport-Biloxi, MS	Southeast	93.3
10	Jackson, MS	Southeast	93.3
11	Montgomery, AL	Southeast	93.4
12	Mobile, AL	Southeast	93.7
13	Charleston, WV	Northeast	93.8
14	Nashville, TN	Southeast	93.8
15	Cedar Rapids, IA	Midwest	93.8
16	Omaha, NE	Midwest	93.9
17	Cincinnati, OH	Northeast	94
18	Sioux Falls, SD	Midwest	94.1
19	Fargo, ND	Midwest	94.3
20	Boise, ID	Pacific	94.3
21	Memphis, TN	Southeast	94.4
22	Orlando, FL	Southeast	94.4
23	Albuquerque, NM	Midwest	94.4
24	Billings, MT	Midwest	94.4
25	Spartanburg, SC	Southeast	94.5
26	Indianapolis	Northeast	94.6
27	Cleveland, OH	Northeast	94.6
28	Tampa, FL	Southeast	94.6
29	Cheyenne, WY	Midwest	94.6
30	Saginaw, MI	Northeast	94.7
31	San Antonio, TX	Midwest	94.7
32	Wichita, KS	Midwest	94.7
33	Oklahoma City, OK	Midwest	94.7
34	Bangor, ME	New England	94.8
35	Champaign-Urbana, IL	Midwest	94.8
36	Beaumont, TX	Midwest	94.9
37	Salt Lake City, UT	Midwest	95
38	Raleigh, NC	Southeast	95.1
39	Atlanta, GA	Southeast	95.1
40	Charlotte, NC	Southeast	95.2
41	Miami, FL	Southeast	95.4
42	Richmond, VA	Northeast	95.5
43	Madison, WI	Midwest	95.7
44	Spokane, WA	Pacific	96
45	St. Louis, MO	Midwest	96.1
46	Kansas City, MO	Midwest	96.2
47	Phoenix, AZ	Midwest	96.2
48	Austin, TX	Midwest	96.2
49	Dallas-Fort Worth, TX	Midwest	96.2
50	Baltimore, MD	Northeast	96.5
51	Providence, RI	New England	96.7
52	Detroit, MI	Northeast	96.8
53	Minneapolis, MN	Midwest	96.8
54	Burlington, VT	New England	96.9
55	Pittsburgh	Northeast	97
56	Manchester, NH	New England	97.2
57	Houston, TX	Midwest	97.6
58	Portland, OR	Pacific	97.6
59	Wilmington, DE	Northeast	97.7
60	Denver, CO	Midwest	97.8
61	Las Vegas, NV	Pacific	98
62	Hartford, CT	New England	98.2
63	Rochester, NY	Northeast	98.3
64	Chicago, IL	Midwest	98.3
65	Sacramento, CA	Pacific	98.5
66	Riverside-San Bernardino, CA	Pacific	98.5
67	Metro DC	Northeast	99.4
68	Philadelphia	Northeast	99.8
69	San Diego, CA	Pacific	99.9
70	Seattle, WA	Pacific	100.8
71	Los Angeles, CA	Pacific	100.8
72	Boston, MA	New England	101.2
73	Trenton, NJ	Northeast	101.8
74	Honolulu, HI	Pacific	103.9
75	San Francisco, CA	Pacific	104.5
76	New York City, NY	Northeast	104.7
77	Anchorage, AK	Pacific	108.1

So where did the Post-Dispatch get a top ten ranking for Saint Louis? If we only consider regions with populations greater than two million (of which KPMG ranked 31), Saint Louis is the 9th cheapest. I will leave it to the readers of this blog to decide if Saint Louis should pat itself on back for being cheaper than New York, Los Angeles, and Chicago, when it has higher costs for businesses than Nashville, Memphis, and just about every other regional competitor. But if we do decide to use population as criteria, it seems more justified to look at metros with populations similar to those of Saint Louis and Kansas City (between two and three million residents). When we do that, Saint Louis is 7th and Kansas City is 8th out of 14 such cities. That seems awfully middling.

That’s probably why, if one reads the study that the Post-Dispatch reports on, they’ll find that it does not claim that Saint Louis is among the most competitive cities in the country. KPMG didn’t even break down cities by population in the study, choosing instead to do so by region. The Post-Dispatch story (while citing the study) is actually based on an ancillary KPMG press release, which lauds Cincinnati, and is careful to note context.

Titling an article “St. Louis among most cost-competitive cities for business, report says” when the report in question says no such thing is a questionable decision for a newspaper of record. But this is not just a problem with the headline. The article itself is equally misleading, and it was not a headline writer who placed this story front and center on the Post-Dispatch’s website less than a week before a vote on multiple tax issues (where the city’s business climate is an issue).

Rams Park: A Case Study of Professional-Sports Welfare in Saint Louis

Posted on March 30, 2016January 13, 2026 by Joseph Miller

As we discussed last week, Saint Louis may be forced to turn over a $19 million practice facility to the Rams for one dollar, despite the fact that the team decamped for Los Angeles. That’s because the city agreed, as part of an ill-conceived deal to get the football team to move to Saint Louis in 1995, to give the Rams a purchase option on the practice facilities known as Rams Park (located in Earth City). The angle of a callous NFL team extracting a parting real estate gift from a jilted city is compelling, and most news reports stopped there. But the full story of the how Rams Park got built is even worse for Saint Louis, and illuminates why cities often fail to reap hoped-for tax benefits from pro sports.

During the negotiations to lure the Rams to Saint Louis in the 1990s, Saint Louis agreed to spend $15 million on practice facilities for the Rams. As part of the agreement, the St Louis Regional Convention and Sports Complex Authority (RSA) would retain ownership, allowing the Rams to avoid any property taxes, but would lease the property back to Rams at a low rate ($25,000 per year).

When time came to build the practice facilities, the city did not have the wherewithal (or perhaps the stomach) to fund the entire project. The city agreed to pay $5 million, Saint Louis County paid another $5 million, and a private organization called Fans Inc. put up $2.5 million. The Rams covered the rest. The city’s $5 million contribution came from diverted amusement tax revenue, while the county’s support came from hotel/motel taxes.

One might think that the city came out ahead in the final deal, avoiding paying everything it initially said it would and pushing at least some cost off on the Rams. But it didn’t work out that way. The Rams organization claimed the city owed it money for not covering the entire cost of the practice facility. That charge, along with a penalty for failing to finish the (entirely publicly funded) Dome on time, totaled $13 million. The Rams agreed that they would drop their claim if the city took on the task of suing the NFL over the $29 million relocation fee the NFL had charged the Rams for leaving Los Angeles. If the city won, it would have had to split the proceeds with the Rams 50/50 (despite the fact that Saint Louis, and not the Rams, had covered the relocation fee). The city lost the case.

To sum up the story of Rams Park: the city and county paid $10 million up front, and agreed to pursue (and pay for) a losing court case against the NFL. They then leased Rams Park, likely at a loss, to the Rams for twenty years. All of this money came from local tax revenue—revenue that was supposed to offset the costs of other parts of this sweetheart deal. The Rams, despite paying little/nothing for its fields and getting shielded from as many taxes as possible, may now get Rams Park (valued at $19 million) for one dollar.

When the city hall discusses what pro football cost Saint Louis and what tax dollars it generated, Rams Park rarely figures. But it should be a lesson for local residents, because side deals like these make sports franchises more expensive than people realize, and make less tax gains less lucrative than backers hope.

The Earnings Tax and Its Alternatives

Posted on March 30, 2016January 13, 2026 by Patrick Tuohey

On March 22, Patrick Tuohey spoke on the earnings tax–its effect on the Kansas City economy as well as possible alternatives for generating revenue if the tax were to be repealed. Click above to see the entire discussion.

Is Missouri’s A-Plus Program a Model for the Nation?

Posted on March 30, 2016January 13, 2026 by James V. Shuls

The bar for being an exemplary government program must be pretty low these days. Last week at a meeting in Ashland, Missouri, Senator Claire McCaskill described Missouri’s A+ Scholarship Program as a “bright shining light in Missouri higher education” and offered it as a model for higher education reform nationwide. If it becomes that, students and taxpayers nationwide are in trouble.

The A-Plus program currently grants over 13,000 scholarships to Missouri community college students. To be eligible, students need to attend a community college or vocational school, must have graduated from a Missouri high school with at least a 2.5 GPA and 95% attendance, and have completed at least 50 hours of community service. The cost for the program in 2014–15 was more than $33 million.

At slightly more than $2,500 per student, this may seem like a good deal, until we see exactly what we are getting for our money. A forthcoming study in the Journal of Higher Education by scholars at the University of Missouri, for example, finds the A+ program increased “two-year college-going rates by 5.3 percentage points.” This gain, however, was nearly offset by a 3.8 percentage point decline in the number of students attending four-year institutions. While this is not entirely bad, it is a far cry from a “bright shining light.” If the goal is to get more students into college, we are not seeing much bang for our buck.

There is no question that college costs have been spiraling out of control. According to the College Board, the cost of public, two-year college has more than tripled in inflation-adjusted dollars since 1975. It has almost quadrupled at public four-year colleges. Middle class families are feeling the squeeze. They want their children to get good jobs, which increasingly require a college degree, but cannot afford the skyrocketing prices.

Some politicians are tapping into those fears and proposing plans, like the A+ scholarship, that would make some or all of college “free.” But here is the dirty little secret about “free college” plans. They don’t actually make college free. They simply shift who pays for it.

We have a college cost problem. Just changing who pays that cost doesn’t make it any less of a problem. We should be talking about ways to rein in the cost of college, like promoting greater transparency of results and breaking up the accreditation cartel that keeps out new, lower-cost providers. We should also make universities that accept public scholarship dollars have some skin in the game, and require them to pay the state back some portion of those dollars if students do not succeed. Andrew Kelly at the Center on Higher Education Reform at the American Enterprise Institute has written volumes on how to accomplish this.

These reforms would actually help drive down the cost of college and help the state strategically use its scholarship dollars to promote real student success. That, not revolving-payer shell games, is what we can do if we really want to help our students.

The goals of Missouri’s A+ program are certainly commendable, but that does not make the program a model for the nation. We’re not even confident that is the right model for Missouri.

A Big Step Backwards for Municipal Reform in Saint Louis County

Posted on March 29, 2016January 13, 2026 by Joseph Miller

Last year, Missouri passed legislation restricting the ability of cities to rely on fines and fees to run their local governments. That legislation, known as SB 5, restricted fines and fees to 20% of general revenue for cities across the state, and to 12.5% of general revenue for cities in Saint Louis County. These provisions tightened restrictions originally put in place in the ‘90s with the Macks Creek law, but, critically, SB 5 included monitoring and enforcement mechanisms the older legislation lacked. Unfortunately, the achievements of SB 5 are now in jeopardy, following the ruling of a Cole County judge.

Many municipal leaders in Saint Louis County are opposed to SB 5, especially those officials from cities who heavily rely on fines (traffic and otherwise) for revenue. They sued the state over SB 5, claiming the provisions limiting Saint Louis County’s municipalities’ ability to collect fines and fees to 12.5% of general revenue constituted a “special law,” because elsewhere in the state the limit is 20%. Despite the fact that laws tailored to individual counties are passed all the time (think the provisions restricting floodplain tax incentives in only Saint Charles County) the judge in this case found SB 5’s fine limits unconstitutional. The judge also ruled that law’s reporting requirements and policing standards were unfunded mandates, and thus also unconstitutional. For all intents and purposes, much of SB 5 is gutted.

This is a disappointing outcome for those hoping that the state’s actions last year might rein in those small cities keeping themselves afloat by turning law enforcement into tax collection. On a hopeful note, the state plans to appeal, and the governor indicated a willingness to work with the legislature on a bill that will pass constitutional muster.

Supreme Court Decision Deals a Blow to Union Reform

Posted on March 29, 2016January 13, 2026 by John Wright

For decades, a teacher’s union has forced public school teacher Rebecca Friedrichs to subsidize union activities that run counter to her beliefs. When she finally sued the union to enforce her constitutional rights to free association and speech, her case made it all the way to the nation’s highest court. Her case comes to an end this week, with the Supreme Court’s 4-4 vote maintaining the status quo. Now that it’s clear that the first amendment rights at play in Rebecca’s case will not be recognized any time soon, it’s critical that all unionized government employees have access to fair union elections.

Kansas is taking a step in the right direction. The Kansas Senate just passed a bill that would give teachers the right to vote for their union on a regular basis. In most states, including Kansas and Missouri, once a union takes control of a group of public employees, such as teachers or firefighters, that union remains in power indefinitely. There is no election every two or four years whereby workers can hold their union accountable. If workers want to remove a union from power, they need to organize again and go through a difficult “decertification” process.

Some Missouri lawmakers have also explored the possibility of regular union elections for government workers. So far, these bills haven’t had a floor vote.

If individual employees of our public institutions are going to be forced to subsidize a union, we need to protect them from unaccountable union executives. Unions can force people to pay for their services on the theory that an individual’s rights can be curtailed for “workplace democracy.” So let’s ensure there’s democracy. Require unions to run for re-election every couple of years. This is how democracy works.

Sewer Infrastructure in Saint Louis May Get More Money

Posted on March 29, 2016January 13, 2026 by Joseph Miller

On April 5, voters in Saint Louis City and County will vote on two proposals for funding sewer infrastructure in the region. The first proposal, Proposition S, would impose a uniform taxing district for storm water service, with a tax (already in place) of $0.0197 per $100.00 of assessed valuation and an additional tax of $0.10 per $100.00 of assessed valuation. Should the proposal go into effect, some areas of the district would pay less in tax then they do now, while others (especially outside of I-270) would pay more. The second proposal, Proposition Y, would allow the Metropolitan St. Louis Sewer Division (MSD) to issue bonds to fund $900 million in sewer upgrades.

The fact that Saint Louis must make such costly repairs to its sewer system is the result of decades of putting capital improvements off into the future. Many of the pipes in Saint Louis City and County have long needed replacement, creating a safety hazard. For example, in 2014, a city street collapsed under the weight of fire truck due to aging sewer pipes. The region has been unwilling to raise water or sewer fees to the necessary level to make needed repairs, and too often there has been resistance to implementing pricing practices to better align the use of sewer services with what properties pay. For instance, MSD does not require water metering, and the region has been unable to implement an impervious surface tax.

While MSD’s policies may be questionable, the department must go forward with costly sewer upgrades, much of which is EPA mandated. Some critics of Proposition Y argue that Saint Louis should simply pay all the costs up front, instead of allowing MSD to take out bonds to make improvements. This, they argue, would eliminate any future financing costs. MSD claims that a pay-as-you-go model would require significant up-front sewer fee increases, while bonding would allow rates to slowly go up over time. That would allow those on a tight budget to adjust to the increased property taxes. In addition, interest rates are now at historic lows, meaning the cost of borrowing is at a minimum.

Whatever way residents vote on April 5, the region is going to pay more in return for long-overdue sewer upgrades.

KC Fire Union Donates to Pro-Tax Campaign the Day after Winning Deal

Posted on March 29, 2016January 13, 2026 by John Wright

The Kansas City government bowed to the fire fighters union last week, agreeing to a major increase in spending on fire protection. The very next day the union made a $50,000 donation to the city’s earnings tax campaign.

The agreement between the city council and the fire fighters union awards the fire department over $8 million more than the amount outlined in the city’s five-year plan. Even Yael Abouhalkah of the Kansas City Star, normally sympathetic to Kansas City government, blasted the city council in a scathing opinion piece.

The fact that the union donated to the city’s pro-tax campaign the day after winning a favorable deal from the city illustrates a larger point about what can happen when government employees unionize. Government unions have the ability to work through both the political process and the collective bargaining process. By playing the processes off of each other, a government union can do quite well for itself.

When a union works the political process it influences, donates to, and campaigns for political officials. Then when it comes time to negotiate a union contract, the union may end up bargaining with a friendly party who owes his or her success, at least in part, to the union’s previous support. This is very different from a traditional labor negotiation where union leaders bargain with business managers in an attempt to capture a worker’s fair share of the profits. In government there is no profit. Revenues come from taxpayers.

Taxpayer advocates often liken politicians negotiating with unions to a fox guarding a henhouse. And for good reason: Politicians get powerful and reliable support in the form of government unions; unions get better deals for their members, usually in the form of more tax money directed to government payrolls. Everybody wins but the taxpayer.

To some readers this may just be how government works. But why does it have to work this way?

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