David Stokes, Elias Tsapelas, and Avery Frank join Zach Lawhorn to discuss: a Missouri Taxpayer Bill of Rights, St. Louis County considering adopting a ‘county manager’ form of government, what the latest test scores tell us about Missouri schools, and more.
Read the Missouri Taxpayer Bill or Rights here
Produced by Show-Me Opportunity
As a former Tennessee resident, I think I am still mentally recovering from paying a state income tax. It’s not something that I am used to. Having no income tax is a Tennessee staple, and I miss it. But it could become a Missouri staple too, as top state officials have been discussing the need to slash the income tax down to zero. This idea has picked up steam in Missouri over the last couple of years. It is time to turn this talk into a reality.
Think of some of the top GDP growth states in the nation: Florida, Texas, Tennessee. None of these states have a state income tax. Free markets really do matter, and it has been demonstrated time and time again around the world and in the United States.
The Fraser Institute issues a periodic ranking of states according to “economic freedom.” According to its most recent ranking, Tennessee came in third—right ahead of number four Texas, but behind number one New Hampshire and number two Florida. Missouri came in at a respectable, but distant, number 15 ranking. Almost all of the “least economically free” states in Fraser’s report (New York, California, Illinois, West Virginia, and New Mexico), saw population loss.
Not coincidentally, Texas, Florida, and Tennessee have also dominated the U-Haul Growth Index, which measures the ratio of one-way, inbound U-Hauls versus one-way, outbound U-Hauls.
Granted, it is hard for Missouri to be Texas or Florida when we do not have the geographical gifts that those states enjoy.
But Tennessee is right on Missouri’s border and has much in common with the Show-Me State. Tennessee eliminated taxes that hamper growth (such as the Hall Tax, which taxed stocks and bonds), prioritized education reform to increase school choice and accountability, and its leaders are embracing its identity as a pro-growth, freedom-loving state.
Missouri has made recent progress in lowering the income tax burden. Since 2017, the top income tax rate has decreased from 6 percent to 4.7 percent for 2024.
Bringing the number down to zero should not just be a talking point—it ought to be a serious goal. If we want to be a top growth state, a nationwide destination for families, and attract more businesses, lowering the income tax is a great place to start.
I can speak from experience: having no state income tax is a luxury and a draw. Don’t we want that in our state too?
The more something costs to produce, the less is produced. This is a basic principle of economics; one doesn’t need to have a Ph.D. to understand it. And yet, the folks running Kansas City seem to be struggling with it.
Since September 29, 2023, Kansas City has required new home builders to adhere to the most recent energy code standards, labeled 2021 IECC. In doing so, Kansas City leaped over a few previous iterations of the code, updated every three years. The result has been a drop in the number of new construction permits sought due to the dramatically higher cost of construction the new standards require.
As a recent article in the Kansas City Business Journal points out, “Through May — the most-recent data available — Kansas City approved 132 single-family permits across the three counties it covers. By that time last year, it had granted 480. The year before that, builders pulled 346 permits through May.”
Even that number is high, because it includes applications submitted before the new energy code standards were put in place. The actual number of single-family permits issued in Kansas City under the new energy code is 32.
Proponents of the new regulations argue they are necessary to increase energy efficiency and lower energy costs. Fair enough. But those savings come with their own costs of construction. It’s a trade-off. Public policy almost always presents us with such trade-offs. If policymakers want to increase energy efficiency without abruptly killing new home construction, they need to work on some sort of compromise. Ordinance 240434 is one such effort, but its consideration is being repeatedly put off. Regardless of the exact solution, Kansas City leaders need to show some urgency to fix this problem.
The city of Kirkwood made a smart decision by issuing a request for proposals (RFP) last December to develop two lots on East and West Jefferson Avenue. The lots, both zoned in the Central Business District, offer a great opportunity for developers to add to the community by replacing the city-owned surface-level parking lots that sit there now.
Unfortunately, the city announced in June that it would not be moving forward with any of the six proposals that were submitted. These proposals would have offered downtown Kirkwood new retail storefronts, additional parking, and residential spaces.
So why would the city of Kirkwood reject all six proposals? Frustratingly, the city council hardly offered any reasoning other than general opposition to large developments in the downtown area. Parker Pence, a Kirkwood native who has written about the rejected proposals in his blog, the Kirkwood Gadfly, quotes a newly elected council member in a comment to one of his pieces:
One of the main promises of my campaign was a promise to stop large developments in our downtown and I am delighted to inform everyone that the current council voted unanimously against any new large developments and advised the city staff to tell all developers that we are not moving forward with any proposals for those parking lots.
These lots are zoned in the Central Business District, which, according to the Kirkwood Municipal Code “seeks to encourage mixed-use development with commercial services, retail facilities, and residential uses that complement each other and attract customers from outside the district.” This type of blanket opposition to “any new large developments,” is the opposite of productive for this area.
Pence investigates how much money Kirkwood stands to lose by rejecting these proposals. He notes that Clay|Adams estimates that the city forfeits nearly $90,000 in additional sales tax revenue and $145,000 in property tax revenue by turning down its proposal. Developer assessments should be taken with a grain of salt, but this still provides a ballpark idea.
Furthermore, proposals that include apartments, such as the Clay|Adams proposal, could even boost housing affordability by providing higher-density housing. For many, apartments are likely to be more affordable than the median half million-dollar single-family home found in Kirkwood.
It is disappointing to see Kirkwood pass on such an opportunity with its vague opposition to large developments. I hope that in the future, Kirkwood and other cities will objectively and transparently evaluate the economic growth and community benefits these types of developments could bring.
It’s been a few years since we’ve checked in with COMBAT, Jackson County, Missouri’s Community Backed Anti-Crime Tax.
Back in 2016, I noted that Jackson County Executive Frank White said of the tax at its renewal: “Anything that we can do to help our citizens in terms of prevention, and being proactive in what we do, is really what this (tax) is about.”
I pointed out at the time that the DARE program, funded by the COMBAT tax, has failed to show positive results in the research studies that have examined its effectiveness.
Four years later, in 2020, I mentioned an audit of the tax by then-Auditor Nicole Galloway. She wrote: “The county has not developed a plan for ensuring that performance evaluations of the programs funded by COMBAT are performed annually as required by county code.”
Now, in 2024, precious little seems to have changed. In a column for The Kansas City Star, I noted:
COMBAT doesn’t appear to measure outcomes. The closest it comes is a Community Impact Report, which relies chiefly on anecdotes and testimonials — many from people with financial interests in supporting COMBAT. A clue COMBAT doesn’t monitor program effectiveness is a note in the report indicating the number of those served by various programs are based on “grant application projections.” Not only is this relying on self-reporting by those receiving funds, but doing so at the moment they apply, when their plans are the most optimistic and least tested.
Kansas City’s homicide rate reached a record high in 2023. It has been a little lower so far this year, which is good. Unfortunately, it’s not clear that anyone knows why. Maybe it’s just a matter of chance.
While the lower homicide rate is great news, if we don’t measure the effect of the money we are spending, we risk not doing enough of what is working. That assumes any of it is working. We just don’t know, and that isn’t good enough for policymakers or the families of those lost.
If Kansas City leaders want COMBAT to be taken seriously, we must measure the effectiveness of the program and focus funding on what works.
On August 12, the Show-Me Institute and Show-Me Opportunity hosted a virtual event where Elias Tsapelas, director of state budget and fiscal policy at the Show-Me Institute, and Aaron Hedlund, chief economist at the Show-Me Institute, made the case for a Missouri Taxpayer Bill of Rights. The event explored the limitations of the current Hancock Amendment, proposed reforms to better protect taxpayers in the state, and more.
Produced by Show-Me Opportunity
In 2019, I wondered where those jobs were that Cerner promised to create in return for the subsidies handed to the firm. It was evident Cerner was nowhere near making good on its commitment to hire 16,000 people. I asked:
If Cerner fails to live up to the promises that made it Missouri’s top recipient of taxpayer subsidies according to Good Jobs First, what are the consequences? Did the issuing agencies insist on clawbacks? Were subsidies issued on a performance basis? Or did taxpayers’ representatives just believe what they were told and not insist that Cerner actually deliver on its promises? If experience is any indication, it’s likely the latter.
Now we have an answer. According to a story in the Kansas City Business Journal, the Kansas City Council requested a report from the Tax Increment Financing Commission on the status of the Cerner development, now owned by Oracle. According to the author:
Cerner pledged 15,000 new jobs ahead of its TIF plan’s 2013 approval, and 16,000 with revisions through 2018. A Bloomberg report in April found Oracle Health had 40% of that count, or 6,400 employees, designated in Missouri, where the Innovations Campus is its lone metro location. However, the commission’s report did not discuss the campus’ job creation or retention, as its redevelopment terms do not have binding job thresholds.
The job creation promises were not binding. Our representatives, including members of the city council and the mayor, just took the company at its word. And what’s more, they didn’t even ask for any guaranty. We apparently just handed Cerner the money. Kansas City leaders should have set up measurable markers and demanded Cerner meet them lest it lose the subsidies and potentially face additional penalties.
As my colleagues here can attest, researching public policy will make you a skeptic. Often, one needs to resist becoming a cynic. But rarely—though maybe not as rare as we’d hope—you find out the truth is as bad or worse than you feared. This is one such occasion.
In this episode, Susan Pendergrass speaks with Jude Schwalbach, a Senior Policy Analyst at the Reason Foundation, about his recent article on the urgent need for school districts to either reduce staffing or consolidate to survive. They discuss the financial pressures facing many districts due to declining enrollment, the tough decisions schools must make to remain viable, the potential benefits of consolidation, the resistance from various stakeholders, innovative solutions to navigate these challenging circumstances, and more.
Produced by Show-Me Opportunity
It was only a matter of time before the benefits of hospital price transparency became evident. Recently, the St. Louis Area Business Health Coalition released a report showing that some hospitals in the St. Louis region may be overcharging their patients.
According to the report, most hospitals in the St. Louis region are charging above what is considered a “fair price,” with BJC hospitals charging the most. To determine what was “fair,” the report used guidelines established by the National Alliance of Healthcare Purchaser Coalitions. The coalition determined that any rates below 200% of what the federal government reimburses for Medicare to be “fair.” This is a bar that not many hospitals in the area are able to clear (see graphic above).
Of course, not everyone pays the price that hospitals charge, and some hospitals in the region do offer lower or more “fair” prices. But what shouldn’t get lost in this discussion is that assembling a report like this that includes pricing data for every hospital in the St. Louis region would have been nearly impossible if not for the federal price transparency rules that went into effect in 2021.
I’ve written several times over the past year about the benefits of price transparency in the healthcare sector and suggested that Missouri should go further than the feds to maximize transparency. As of early 2023, fewer than half of Missouri’s hospitals were in full compliance with the federal transparency requirements years after the rules went into effect. Unfortunately, even fewer were posting their data in a format that was consumer friendly for patients to access and understand.
Even though the report’s authors were able to navigate their way through the federal data to generate findings for the St. Louis region, the process is still too difficult to expect the average Missouri patient to do the same. That’s why Missouri should, in addition to establishing its own price transparency requirements, follow the leads of many other states in creating its own web-based tool to make it easy for every patient to learn the prices of the care they’d like to receive prior to receiving it.
None of this is to say that simply requiring hospitals to publish their prices will be enough to immediately drive down costs, or entirely fix our broken healthcare system, but it’s an essential step toward making healthcare more consumer friendly.
Given that a coalition of businesses paid for this report, employers clearly want to be able to compare prices between providers, and that is something patients should be able to do as well. Hopefully, Missouri’s general assembly agrees, and lawmakers decide to make hospital price transparency a priority when they return to Jefferson City in 2025.
