Missouri Must Do Better at Controlling Spending

Posted on by Patrick Tuohey

A version of the following commentary appeared in the Springfield News-Leader.

Elections and inaugurations are a time for reflection and a recommitment to principles. As Missouri prepares for the new administration of Mike Kehoe, it’s worthwhile to consider the performance of his predecessors—especially on issues relating to fiscal management of taxpayer resources.

The Cato Institute, a libertarian-minded think tank based in Washington, DC, rates the fiscal performance of governors. The good news is that Governor Mike Parson is not the worst governor in the United States, but he’s the worst one who claims to care about limited government.

Cato has issued its report every two years since 1992. The report methodology, available online here, issues a letter grade based on each governor’s success at restraining spending and tax increases. Parson earned a D grade in 2024. Author Chris Edwards wrote, “Parson has been a tax reformer, but he has dropped the ball on spending control. The general fund budget has jumped from $10.5 billion in 2022 to an expected $15.6 billion in 2025, a 49 percent increase in just three years.”

The D grade placed Parson 40th of the 48 governors rated. Florida governor Ron DeSantis was ranked 19th and Virginia Governor Glenn Youngkin came in 15th. Parson was closer to Minnesota governor and recent vice-presidential caudate Tim Walz, who came in last. Of Missouri’s neighbors, governors of Iowa, Nebraska, and Arkansas each earned an A grade, ranking 1st, 2nd and 4th respectively. Even Illinois governor J.B. Pritzker and California’s Gavin Newsom outperformed Parson, placing 32nd and 35th respectively.

If one uses Republican party identification to denote a preference for small government and low taxes—and that is arguable these days—Parson’s 40th-place ranking stands out even more. It made him the worst-scoring Republican in the nation. And 2024’s score is not a fluke; Parson scored a D in 2022 and a C in 2020.

Parson doesn’t just compare poorly to other current governors; he scored poorly compared to past Missouri governors. Parson’s letter grades surpass only those of Mel Carnahan (scoring D, D and F) and Robert Holden (F). Parson even seems to score worse than Jay Nixon, whose scores were B, C, D, and D. (If you’re wondering, Matt Blunt was the best scoring governor since 1992, earning Missouri’s only A in 2006 and a B in 2008.)

Note that the report’s methodology changed for the 2008 report but has remained the same since. Previous iterations relied on many more variables, but the outcomes are unlikely to have been much different.

Missouri’s total spending has practically doubled in the last five years, including not just the general fund, but other dedicated state funds and federal money. That total spending jumped from $27 billion in 2019 after Parson’s first year in office to a little more than $50 billion for 2025. It now costs three times as much to run Missouri as it did in the Carnahan and Holden administrations!

Parson’s profligacy stems from the decisions he’s made since the federal government’s COVID relief funds flooded Missouri’s budget with billions of dollars in one-time cash. States were given considerable discretion on how to use much of the relief funding, not to mention the state tax dollars the federal cash freed up for other uses. Unfortunately, Parson, with the help of Missouri’s General Assembly, fell victim to the allure of so-called free money.

Today, Missouri’s budget is littered with what were once temporary initiatives that never ended and now receive permanent funding. Or, perhaps worse, formerly federal obligations that are now borne by state taxpayers.

Key among these includes Parson’s decision to use state funds to maintain the higher childcare subsidies the federal government subsidized during the COVID pandemic, now costing state taxpayers at least $70 million annually. Parson also failed to meaningfully manage Medicaid spending. Missouri’s lackadaisical approach to checking program recipient eligibility, after the federal government lifted its COVID-era ban on the practice, has likely cost taxpayers hundreds of millions of dollars thus far.

In addition, Parson increased state employee pay by 7.5% plus an additional 3.2% cost of living increase last year. These raises were paid for with a temporary influx of state funds, but because the increased pay was not made commensurate with employee reductions, the higher salaries will require new permanent funding sources and will increase the obligations of the already underfunded state pension system.

Governor-elect Kehoe has a difficult job ahead of him administering government and working to attract more families and employers to the Show-Me State. Unfortunately, his predecessor has done him—and the people of Missouri—a great disservice by failing to properly manage taxpayer funds.

Banning Smartphone Use in Schools with John Ketcham

Posted on by Susan Pendergrass

Susan Pendergrass speaks with John Ketcham, legal policy fellow and director of cities at the Manhattan Institute, about his Model Legislation to Restrict Smartphone Use in K–12 Public Schools. They discuss the growing concerns over smartphone use in schools, its documented negative impacts on students’ academic performance and social development, how the proposed legislation aims to create a more focused educational environment, and more.

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Produced by Show-Me Opportunity

The Gang that Couldn’t Plow Straight

Posted on by Scott Tanner

There’s an old warning that “the plural of anecdote is not data.” But there sure are a lot of anecdotes regarding the City of St. Louis’s alarmingly ineffective performance in clearing ice and snow from the streets after the recent (although, at this point, not all that recent) snowstorm.

I live in the Central West End neighborhood of the city, and my street (to the best of my knowledge) was never plowed. For the better part of two weeks, I was not able to move my car. As of this writing, the trash in the dumpster in my alley has not been picked up since before the storm—a storm that began on January 5.

For one thing, the inability to clear the roads created much more serious problems. Some people have had to rely on friends or family just to get groceries. Mail delivery in the city has essentially ground to a halt. Most pressingly, impassable streets create difficult scenarios for emergency services. There are stories of people who need medical help and live on streets that ambulances can’t currently reach.

It is fair to point out that this was a big storm, and probably an unusually difficult storm to deal with. Freezing rain falling right before a lot of snow is a headache. But this was also not some once-in-a-century storm. We had about 10 inches of snow and some ice—Midwest cities ought to be prepared to deal with storms like that occasionally.

A KSDK story noted that $600,000 was cut from the city streets department for snow removal, but city officials have explained that this money was mostly for salt, and that the city already had stockpiles of extra salt because of recent mild winters.

This isn’t a story about resources. It’s a story about incompetence.

Predictably, we’re beginning to see finger-pointing and recriminations. The mayor blamed residents for leaving parked cars in the path of snow plows. The director of the streets department claimed she was getting “incorrect information” regarding the situation. Leaving aside the morality of throwing your staff under the bus, this claim does not pass the smell test. Figuring out street conditions is not a difficult feat of intelligence gathering—this is not like trying to gain information about a nuclear program in a rogue nation. If you step outside pretty much anywhere in the city, it’s apparent. Or you could check any of the hundreds (maybe thousands?) of posts on social media detailing the situation.

The city seems to be conceding that it screwed up, and that something needs to change. Officials have signaled that the longstanding policy of not plowing side streets might be changing. The city also resorted to hiring outside contractors to help clear the ice.

This is a great example of the wisdom in my colleague Patrick Tuohey’s pleas that Missouri cities focus on providing basic services. Instead of addressing crime or maintaining infrastructure, the City of St. Louis seems eternally fixated on shiny objects like economic development subsidies that don’t work or expanding train service that very few people use. People don’t want to live in a place that can’t provide an adequate level of essential services—and residents are voting with their feet. How long is it going to take city leaders to figure this out?

Missouri is Shrinking

Posted on by Patrick Tuohey

In each decade of the past 50 years, Missouri’s population growth has failed to keep pace with the nation. From 2004 through 2023, Missouri had the 11th-worst decline in population share. As a result, Missouri lost a congressional district due to the reapportionment after the 2010 Census.

Our two biggest cities—the economic engines of the state—have failed to grow as well. The City of St. Louis is emptying out, dropping from 622,236 in 1970 to 301,578 in 2020, though the larger metropolitan area has absorbed much of that loss. Kansas City saw dramatic population drops in the 80s and 90s, though recent growth has brought us up to over 500,000 around where we were in 1970. (Even still, the Kansas suburbs have been growing at a much higher rate than the city proper for decades.)

U-Haul publishes a migration index each year. For 2024, Missouri ranked 28th for growth.

Where is everyone fleeing to? The largest beneficiary of Missourian departures is Kansas—which is not a surprise to those of us here in the eastern part of the state. Kansas’s suburbs offer better schools, seemingly better-maintained infrastructure, and lower crime. Second is Illinois, with Texas, Arkansas and Florida rounding out the top 5 destinations.

(Aside: Yes, Florida and Texas have better climates than Missouri, but so do plenty of other states. Florida and Texas also have no state income tax. The Tax Foundation reports that low-tax states saw greater population growth than high-tax states.)

Missouri’s portion of the national GDP is shrinking as well. We produced 2% of the nation’s GDP in 1997. Today we produce only 1.5%.

Missouri’s leaders, at the state and local level, must decide if they are satisfied with our slow and steady decline. If they aren’t, what are their plans to reverse it? It can’t be more of the same, where we have driven up housing costs through foolish energy policies, or failed to deliver basic public safety. It certainly cannot be a continuation of former Governor Mike Parson’s profligate spending.

The Show-Me Institute has some ideas, thank you for asking, and most of them are about helping Missourians by getting government out of the way of families, businesses and entrepreneurs.

Not everyone will agree with our proposals. That is fine. But every leader should be asked: if not these policies, then what is your plan for reversing Missouri’s glide path to oblivion?

Missouri Economic Development Incentives Aren’t Worth It

Posted on by Patrick Tuohey

From January 1, 2023, through December 31, 2023, Missouri issued just under $233 million in economic incentives, according to the Missouri Department of Economic Development (DED). For the period from July 1, 2023, through June 30, 2024, the department showed that self-reported data indicated the “actual number of jobs created as a result of the tax credits” was 4,696. These figures, published two pages apart in the 2024 Tax Credit Accountability Report, are telling.

It is first worth noting that job creation figures from economic development agencies are often misleading, with creative accounting used to inflate the numbers. And the numbers almost never account for the possibility that these “created” jobs would have happened with or without subsidies. Numerous academic studies have shown that economic development programs rarely work as advocates claim.

But just for the sake of argument, let’s take the numbers at face value. If we divide the jobs created by the incentives provided, the cost amounts to roughly $49,500 in taxpayer money for each job. Is that expense worth it?

Consider this: according to the Bureau of Labor Statistics (Table 6), Missouri’s economy added 589,337 jobs in calendar year 2023.* In other words, the ordinary functioning of the state’s economy produced roughly 125 times more jobs than the Department of Economic Development’s incentive programs. The DED’s contribution is a tiny fraction of the state’s overall job creation—and it comes at a substantial cost.

The price tag goes beyond the incentives themselves. The total department budget for salaries is $14.6 million for approximately 202 full time employees, meaning taxpayers not only footed the bill for the incentives but also paid for the administrative costs of distributing them. It’s an expensive way to do something the broader economy already does more effectively.

Perhaps it’s time to rethink the role of the Missouri DED. Those funds could be redirected to areas that deliver tangible benefits to all Missourians, like roads, schools, or public safety. Instead of propping up a costly system that yields meager results, Missouri could invest in the essentials that make the state a better place to live and work.

 

*NOTE: The BLS statistics I cite offer both gross job gains and gross job losses. I cite only the gross gains. A fair-minded person might suggest a more accurate approach is to calculate net job gains by subtracting gross job losses from gross job gains. I would agree with that in most cases. However, economic development professionals do not make a habit of acknowledging job losses. For example, it is often the practice to count as “new” a job that may have only changed location. Until economic development advocates provide a more rigorous accounting of jobs “created,” using BLS numbers on gross job gains is the best comparison.

Sedalia Doesn’t Need a 353 Redevelopment Plan

Posted on by David Stokes

There is a lot happening in Sedalia right now. Many local residents are starting to ask questions about the goings-on in local government, and that is a great thing. One of the items that people are concerned about is the city’s plan to expand and reauthorize its chapter 353 redevelopment plan, otherwise known as an urban redevelopment plan. Chapter 353 plans exist to create a large number of tax abatements. One member of the Sedalia City Council says he supports the 353 plan:

First Ward Councilman Tom Oldham commented that he feels that Chapter 353 is a great tool, as evidenced by his visits to Elm Springs, a community that also took advantage of the Chapter 353 program. Elm Springs went from blight to beauty as a result, Oldham said.

(Note: I assume he meant Excelsior Springs, which has a 353 plan, and not Elm Springs—I can find no municipality in Missouri with that name.)

Did a 353 urban redevelopment plan really turn Excelsior Springs (or Elm Springs?) from blight to beauty? Of course not. Granting some properties in a designated area a tax abatement if they undergo the required legal process isn’t going to grow the economy. If you want to cut taxes, great—cut taxes for everyone, not just a designated few. The idea that politicians are qualified to pick the right companies or properties is absurd.

Economist Dick Netzer once mocked the exaggerated claims of success by economic development officials and politicians by writing, “Who needs oil wells, when a state can be another Kuwait just by increasing the budget of a tiny agency?” Those claims of subsidy success often border on the absurd. I once heard a Clay County economic development official claim that “all of the growth” in the town of Liberty—a fast growing, exurban community north of Kansas City the likes of which have been growing across the nation for decades—was due to a tax increment financing (TIF) package. All of it, he stated with certainty, as if suburbanization didn’t exist until Missouri’s TIF law was passed in the late 1980s.

Economists Alan Peters and Peter Fisher studied tax incentives closely and concluded that they work about ten percent of the time (as measured by job creation), and the other 90 percent are simply a waste of money. They added that, like the Clay County official mentioned above, economic development officials often credit all new employment and growth to tax subsidies.

The City of Saint Louis has been using tax incentives like 353 urban redevelopment plans, Enterprise Zones (EZs), TIF, and other subsidies as redevelopment tools for over half a century. How has it worked out? Colin Gordon, in his 2008 book Mapping Decline, documents the decline of the City of Saint Louis. The book’s research is exhaustive. The dominant theme of the book is the use of urban renewal tools and tax subsidies—and their absolute, total failure. From his conclusion:

The overarching irony, in Saint Louis and elsewhere, is that efforts to save the city from such practices and patterns almost always made things worse. In setting after setting, both the diagnosis (blight) and its prescription (urban renewal) were shaped by—and compromised by—the same assumptions and expectations and prejudices that had created the condition in the first place.

The dirty little secret that nobody seems to want to recognize is that 353 Plans, EZs, TIF projects, , tax abatements, and other subsidies do not work. They don’t succeed in growing the local economy, be it urban, suburban, or rural. The panoply of subsidies that come into play when a large area is declared blighted can have a number of adverse side effects. They shrink the local tax base, introduce more cronyism and favoritism into the economy, encourage more government planning of the economy, and increase the chances of eminent domain abuse. As a famous Swedish economist once said:

It is not by planting trees or subsidizing tree planting in a desert created by politicians that the government can promote . . . industry, but by refraining from measures that create a desert environment.

The Chapter 353 urban redevelopment plan didn’t help grow Excelsior Springs. It didn’t help grow St. Louis, nor any of the other cities that have such a plan. It won’t help grow Sedalia, either, but it will be great for the politically connected parties who get the tax subsidies they are after.

Is Professional, Non-Partisan Management the Solution for St. Louis Government?

Posted on by David Stokes

Both the City of St. Louis and St. Louis County are debating whether or not to adopt a city manager system of government (or county manager, obviously, in the county). Lucky for you, dear readers, the Institute just released my paper on local government structure that discusses the pros and cons of such systems in depth.

In a city or county manager system, the manager is employed by elected officials to run the day-to-day operations in a (hopefully) non-partisan and less politicized manner. Many municipalities use city managers or city administrators (a very similar system where the professional manager has slightly less power) in Missouri, including Kansas City and Springfield. Clay County is the only county that uses a county-manager system; it just instituted the system in 2021. The system works well, in my opinion, for small to mid-sized cities. I am less sold on this system for larger cities and, especially, counties.

Overall, the academic evidence suggests that adopting professional management would reduce corruption, improve financial reporting, lead to more broadly focused legislation (and fewer narrowly targeted measures), reduce political conflict, and increase innovative policy thinking (in ways both good and bad). These changes would be generally beneficial for the City of St. Louis and St. Louis County, though the idea that politicians would now have more time for “innovative” thinking terrifies me. Usually, that “innovation” means harmful policies involving subsidies and mandates.

On the other hand, there is not enough evidence to state that professional management would significantly affect taxes and spending, government employee pay levels, or the quality of local services, despite what proponents of city manager systems claim.

The last claim regarding the quality of local services is key. Would the adoption of a city or county manager improve the quality of basic governmental services? (For example, would the snow get cleared off the roads faster under a city manager?) The presumption of better service quality with professional management is common, and it may be correct in some cases. But the evidence is not as clear as its supporters would suggest. Professional management might well perform better than management by elected officials. But as one academic stated, “For decades, analysts have presumed this performance gap exists, but they have yet to empirically demonstrate that any differences actually exist.”

Interestingly, the one proven downside of professional management is lower voter turnout for local elections. It seems that when you depoliticize local government (which is not a bad thing), people understandably depoliticize their own involvement with local government.

I remain unconvinced that professional management is the cure for the governmental problems in the City of St. Louis or St. Louis County. Adding another layer of bureaucracy is rarely the right solution.

Forming a Missouri Nuclear Advisory Council

Posted on by Avery Frank

The recent snowstorm reinforces the necessity of a reliable, consistent energy grid to power homes and businesses. As America and Missouri grapple with rising electricity demand and widespread closure of coal plants, nuclear energy has emerged as a key piece to power future electricity needs.

Positive trends in regulation, attitudes toward nuclear power, and technology have fueled a resurgence in American nuclear power. The good news for Missouri: our state has a strong history with nuclear power and engineering. With real national momentum, Missouri has an opportunity to leverage our existing strengths to benefit from this resurgence.

A Simple First Step: Forming a Nuclear Advisory Council

A straightforward step would be forming a Missouri Nuclear Advisory Council to inform comprehensive strategies for guiding nuclear development. Tennessee’s recent experience offers a replicable model.

In 2023, Governor Bill Lee of Tennessee established a nuclear advisory council through executive order to inform legislative actions for addressing regulatory, education, and workforce barriers, as well as strategies for financing, waste storage practices, and opportunities Tennessee should pursue with federal partners and agencies. For example, the council recommended amending a regulatory statute to classify nuclear energy production facilities as Certified Green Energy Production Facilities, leveling the playing field with renewables.

Tennessee’s council serves as a model of collaboration and expertise, with membership that includes:

  • Directors of interested state departments: Environment and Conservation, Economic Development, and Emergency Management
  • Officials from the state legislature, congressional delegation, and local government
  • Experts from higher education, utilities, workforce development, the energy production sector, and the nuclear industry
  • Representation from the regional national laboratory
  • Additional members as determined necessary by the governor (Tennessee opted to include more experts and scientists).

Missouri could create a similar council through executive order, establishing a platform for collaboration among the state’s brightest minds.

Potential Focus Areas for the Council

While Tennessee’s council had a partial focus on economic development, Missouri’s council could prioritize identifying best practices and potential legislative solutions without interfering in market outcomes.

To provide one example, the council could identify and evaluate suitable locations for new advanced nuclear facilities. The U.S. Department of Energy reports that repurposing coal plants for advanced nuclear reactors can reduce construction costs by up to 35%. Oak Ridge National Laboratory has already identified retired and retiring coal plants in Missouri as promising sites for new reactors. The council could assess these opportunities and recommend actionable steps.

The Potential for Missouri

Missouri has the talent, the track record, and the need to build new, advanced nuclear facilities. A nuclear advisory council could bring these elements together to inform best practices for new nuclear development in our state, catalyzing investment, attracting high-paying jobs, and securing a reliable energy supply for decades.

Public Dollars for Public School Students: Discrimination of Choice

Posted on by James V. Shuls

Critics of school choice programs like to claim that these programs create new expenses for the government. They argue that the primary beneficiaries are those already enrolled in private schools and thus these programs will lead to millions and millions of dollars in new expenses. The problem with this argument is that these critics are assuming these are new costs instead of unfunded liabilities that already exist.

Each state has already promised every student a free public education. This includes every student currently enrolled in private schools or currently homeschooled. If tomorrow those students decide to go to public schools, public schools would be required to accept them and to educate them. This means states and local communities would be required to fund the education of those students. In other words, the state currently has an obligation to provide funding for every single eligible student in the state.

The only way a parent loses access to the funding for education is by expressing choice. We discriminate on the basis of choice. Parents of school children have the opportunity to receive public funding, but only if they sacrifice their ability to choose the school they want their children to attend.

I cannot think of another public entitlement program that removes the benefit when an individual expresses choice. Poor students can use Pell grants at the school of their choice. Veterans can use the G.I. Bill at the school of their choice, public or private. Welfare recipients who receive food subsidies can choose the place where they will use those funds.

Critics of school choice might point to healthcare programs as an example of government funding with limited choice. Some doctors or hospitals do not not accept certain government funding sources, such as Medicare or Medicaid. That is true, but notice the difference. In that case, it is the provider who doesn’t accept the funds—it is not the individual who loses it based on their choice. Many private schools would like to accept funds but are not eligible to. That is a key distinction.

When we tell families they are no longer eligible to receive funding because they choose to send their children to a school that aligns with their values or provides the type of education that they want, then we are discriminating against them based solely on their choice.

This is not a system designed to meet the needs of every child, but a system designed for control. It is a system designed to force people into accepting the education that the government provides.

It would undoubtedly cost a lot of money to provide the public subsidy to those individuals who are presently in private schools. But the only reason it will cost new money is because we have been discriminating against families who use alternatives to public schools for decades. We have denied them access to the public funding that they should receive. It is time to end the discrimination against choice in our public education system. It is time to end the discrimination against parental power and educational opportunity.

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