The North Side “Grant” Program is a Racket

Posted on by David Stokes

The St. Louis Post-Dispatch is attempting to get more information on the St. Louis Development Corporation’s (SLDC) North St. Louis Small Business & Non-Profit Grant Program. The City of St. Louis is refusing to share information on the application process after questions have been raised about the overall grant process. My colleague, Patrick Tuohey, addressed those issues here.

I am confident that the media will get that information, and I am as interested as anyone to learn more. But let’s be honest here–what we already know about the program makes it clear that this “grant” program smells like a racket. Let’s look at what this program is giving away as part of this $32 million “grant” program.

A former state representative is getting $1.5 million to expand her consulting company to create more affordable housing and grow the economy by two—that’s right, two—new jobs.

A former mayor is getting two grants for a total of $125,000 to expand and improve the bar he owns in the city.

Sweetie Pie’s restaurant is getting $1.5 million to expand operations, despite some recent problems with management and operations at the restaurant.

Non-profits are included too, and perhaps that is more understandable, but one non-profit that was only created after the program was announced last year is in line for over $700,000. Surprisingly, the director of that non-profit is connected to a politically influential family. I know, you’re shocked . . .

The list goes on. When the program was announced, officials claimed it was a way to invest in North St. Louis. But it isn’t investing in infrastructure or things that can benefit the public. The program simply seems to be a way to give away tax dollars to North Side businesses. That’s it. There is no way this should be legal.

You don’t have to take my word for it. Consider the comments of one business owner who, admittedly, did not receive funding:

“The whole process has just been problematic from day one,” said Tameka Stigers, who applied unsuccessfully for a grant to expand her hair salon, Locs of Glory, on Delmar Boulevard and has been rallying other disgruntled business owners to lobby SLDC for reconsideration. “It’s a genuine money grab from the city to give the money to their friends.” [emphasis added]

I couldn’t have said it better myself. We will have more to come on this issue, I assure you.

Outsourcing Is Good

Posted on by David Stokes

In government outsourcing, governments contract with private-sector firms to have them perform certain services. Outsourcing is not as big of a step as privatization, because the government still owns the asset and is responsible for the service. It just pays a private company (sometime a non-profit) to perform the service being outsourced. St. Louis County government is considering outsourcing the facilities maintenance operations of county buildings to a private company. I think that is great, and I hope the county does it.

There are many successful examples of outsourcing in local government in Missouri. A lot of my work at the Institute has focused on park and recreation outsourcing, so those are the examples I’ll give. Privatizing park services is obviously unpopular with residents, as few wish to sell their parks. But outsourcing park operations is more common than people may realize.

In 2021, the St. Louis suburb of Des Peres outsourced the management and lifeguard services for its swimming facilities to Midwest Pool Management (MPM). Des Peres estimated it would save between $60,000 and $80,000 per year by outsourcing the operations.  MPM operates aquatic centers for numerous cities in the St. Louis region, as well as the Springs at Tiffany Hills in Kansas City. Other recreational facilities that are ripe for contracting and outsourcing management of include (actual examples in parenthesis): tennis centers (Shaw tennis center in Clayton), ice rinks (Steinberg rink in St. Louis City), golf courses (many locations, including Forest Park in the City of St. Louis ), and restaurant facilities within parks (Creve Coeur Lakehouse restaurant in St. Louis County).

Assets such as municipal golf courses, skating rinks, and tennis centers can be primarily funded by user fees instead of general taxes. Instead of spending tax dollars to operate these amenities, cities can enhance revenue and focus on core services by outsourcing recreational assets to companies that specialize in those areas. For example, the City of St. Louis received $402,260 in 2021 in lease payments from private operators to operate the golf courses in Forest Park (page 21 in link document).  Similarly, St. Louis leased out its Forest Park ice rink for $45,000 per year to a private operator. These arrangements provide better services for customers and a better result for taxpayers. In every example I’ve given above, local government still owns and is ultimately responsible for the asset.

According to the primary survey on this subject, about 25 percent of local governments outsource their facilities management operations. So, while it may not be standard, it isn’t rare. St. Louis County has a responsibility to negotiate hard for the taxpayers and be sure the contract isn’t too long. While the article on the deal makes it seem that the county is paying more in outsourcing, the numbers in it don’t include the long-term pension and health-care costs for government employees, and that is where savings from outsourcing really come in. As one guide on this topic put it:

Outsourcing can mitigate the long-term structural challenges faced by governments with regard to health care and retirement benefits.

In this particular instance, the county is simply having trouble filling these jobs as it is, so this outsourcing example is as much out of necessity as a choice. (It is hard for the county just to give its facilities employees a raise without giving all county employees larger raises, and that would really hit taxpayers hard.)

Local governments should privatize, outsource, or share services with other governments as much as they can. Residents, taxpayers, and voters (most people are all three, of course) all benefit from it.

Rising Concerns about St. Louis’s Teacher Pension Fund

Posted on by James V. Shuls

KSDK recently ran a report on a topic familiar to Show-Me Institute readers: teacher pensions. The report, titled “Growing pension liabilities threaten St. Louis Public Schools’ financial future,” notes that the “school district’s pension liability grew by a staggering $100 million last year.”

If only someone had warned them about this years ago. Oh, that’s right . . . we did.

The topic of public-employee pension reform has long been important to Show-Me Institute writers. Back in 2013, for example, Andrew Biggs wrote Public Employee Pensions in Missouri: A Looming Crisis. The report did not specifically analyze St. Louis’s teacher pension fund, but the point about the pending crisis applied nonetheless.

When we call attention to impending problems, we are often called alarmists. I have twice had teacher groups circulate action alerts warning members not to respond to my requests for information regarding pensions. It was so bad we actually recorded a podcast telling people we were not trying to take away their pensions. The pushback we received led me to ask, “can we have meaningful dialogue on pension reform?”

So—what changed?

Now, it is the educators themselves raising the alarm. In the KSDK report, Byron Clemens, with the American Federation of Teachers in St. Louis, and his brother, state representative Doug Clemens (D-72nd District), are both quoted on the matter. They highlight how the underfunding of pension systems is harming retirees.

Unfortunately, the Clemens brothers do not call for significant pension reform. They see the symptoms of the problem, but rather than address the structural issues that got us to this point they seem to argue for policies that would only treat the symptoms.

St. Louis’s pension system is underfunded because of the program’s design. Missouri needs to explore new options, such as defined-contribution and hybrid plans, to provide retirees a safe and secure retirement.

A Report Card on DESE’s Report Card

Posted on by James V. Shuls

A new report from the Center for Reinventing Public Education (CRPE) has evaluated each state’s report card system for public schools. The report, State Secrets: How Transparent Are State School Report Cards About the Effects of COVID?, gives each state a letter grade based on the ease of finding longitudinal data on school performance. Missouri earned a B grade, despite some data, such as student growth measures, not being available. The grading scale, it seems, might have been a bit generous. The comments for Missouri read:

  • Bare bones design—mostly just large tables of data with no explanation.
  • The report card shows data for indicators that are not appropriate given the school level (e.g., graduation rates shown for elementary schools as a large table full of asterisks.)
  • Allows side-by-side year selection, but data presentation is unclear.

Interestingly, the website’s overall usability seems to not have factored into the grade. Missouri was one of 11 states whose website usability was rated as “poor.”

While I might quibble with the letter grades assigned by CRPE, the analysis and recommendations seem on point. For example, the authors recommend enhancing usability and increasing transparency. These are two issues the Show-Me Institute analysts have long argued for.

With a new commissioner in town, now is the time for the state board of education and the commissioner to make data accessibility and transparency a key goal of the department. Missourians have a right to know how their schools are performing.

STL Should Come Clean About Leadership Conflicts

Posted on by Patrick Tuohey

A recent investigation into grant allocations in St. Louis raises serious questions about transparency and conflicts of interest. The city awarded millions in federal housing funds to projects connected to family members of a powerful local politician. Yet, city officials have refused to release detailed information about these grants, citing privacy concerns and ongoing reviews.

This stonewalling is troubling. Transparency is fundamental to good governance. As residents, we deserve to know where and how our tax dollars are spent, particularly when public funds benefit the relatives of city officials. The city’s response—offering vague explanations while withholding records—only deepens the suspicion that something is being hidden.

It’s not enough to claim there are checks and balances in place. History shows that, without public oversight, those checks can be woefully inadequate. City leaders should be proactive in clearing up any appearance of impropriety. If the grants are above board, there should be no issue with releasing detailed information.

This issue echoes the broader problem of cronyism in public spending. Whether it’s sweetheart deals to developers or insider grant allocations, we’ve seen too many instances of public resources being funneled to those with the right connections. These practices erode trust and damage the city’s credibility.

Public officials must recognize that transparency is not optional—it’s a duty.

The Role of American Institutions in Shaping Culture with Crosby Kemper III

Posted on by James V. Shuls

James V. Shuls speaks with Crosby Kemper III, former director of the Institute of Museum and Library Services, former executive director of the Kansas City Public Library, and co-founder and former chairman of the Show-Me Institute, about the role of American institutions in shaping culture. They explore the impact of libraries, museums, and other cultural pillars on society, the ways in which these institutions influence public discourse and community engagement, the challenges they face in an evolving cultural landscape, and more.

Listen on Apple Podcasts 

Listen on SoundCloud

Produced by Show-Me Opportunity

Jackson County Assessment Facts, Part Four

Posted on by David Stokes

Ongoing sagas, for movies at least, often get worse over time. Look at the Star Wars series. Three of the greatest films ever, followed by a depressing array of follow-ups ranging from terrible to maybe passable. Same with the Police Academy “comedies.”

Like these other ongoing sagas, Jackson County’s assessment practices have been getting worse, though they were never great to being with. As bad as the situation was in 2019 and earlier, in 2023 it hit bottom.

The Missouri State Tax Commission (STC) has taken the unprecedented step of ordering Jackson County to essentially ditch the 2023 reassessment and move every change in assessed valuation (AV) that was over a 15 percent increase down to 15 percent. The total AV increase for Jackson County was almost 25 percent, which is enormous. Obviously, if the total increase was 25 percent, a substantial number of individual properties had to go up more than that 15 percent number. (The 15 percent level is key because that is where additional taxpayer notification laws come into play.)

This change lowers the assessed valuation for tens of thousands of properties and involves hundreds of millions in AV. According to Jackson County, the total amount of tax revenue disputed here for various local governments is $117 million. (The AV would be significantly higher than the tax revenues.)

Jackson County has been underassessed for decades. Jackson County has been attempting to correct that in recent years (under direction from the STC), and that is a good thing. More accurate assessments don’t have to lead to higher taxes, except in the Kansas City 33 school district, but’s that another issue. However, Jackson County officials seem to think that their attempts to correct prior errors somehow exempt them from following the current laws. As a county official admits in the just-filed lawsuit against the STC order :

This filing is not just about the legalities—it’s about safeguarding the resources that support our schools, public safety and community programs. [emphasis mine]

Fortunately for taxpayers, good intent does not exempt you from following the laws in reassessment. As the STC order states, the Jackson County assessors made all sorts of mistakes in 2023:

9. The Commission finds and determines that in conducting its biennial reassessment for 2023, Jackson County assessing officials failed to give proper notice to property owners and failed to perform physical inspections as required by Section 137.115 RSMo. where the assessed valuation of residential real property increased by more than fifteen percent since the last assessment, resulting in mistaken or erroneous assessments and taxes that were mistakenly or erroneously levied or paid in 2023 . . .

The STC order goes into more detail on a number of failures by the assessor’s office.

The order may well impose a major burden on taxing agencies in Jackson County that must now redo their valuations and property tax rates. But just because it’s a major burden doesn’t mean taxpayers should have to accept having their rights violated.

I hope the Jackson County lawsuit fails and the STC order is upheld. The county assessor should not be allowed to ignore the very clear rules—rules that every other county assessor had managed to follow in recent years—that protect the rights of property owners. This may be a mess in Jackson County, but it is a mess of the county’s own creation.

Politicizing Charity Is Dangerous

Posted on by David Stokes

This November, Platte County voters will decide on whether to implement a quarter-cent sales tax in the county to support a new community children’s services fund. The tax was placed on a ballot last week by a judge after the election board, for reasons that are unclear, hesitated to put the item on the ballot.

Everyone is for this, right? I mean, who can be against supporting kids?

I’m all for supporting kids. I have three of them. What I don’t support is abusing the political process to turn voluntary charitable giving into mandated taxation and taking the wonderful aims of philanthropy and politicizing them.

The two charitable agencies that gathered these petition signatures and are supporting this tax do great work for kids. Those two agencies, Synergy Services and Beacon Mental Health, are also going to benefit from this tax, and will almost certainly seek grants from it. (Both agencies have received funding from the Jackson or Clay county children’s services funds.) There is nothing wrong with that, but let’s not pretend that these charities have no self-interest in this process.

The county board that will be created to distribute the funds to the various non-profits will likely have very little oversight, and that has been a real issue on boards like this before, especially in Lafayette County. The last thing Platte County—or any county—needs is another minor taxing body with limited oversight.

While I am not a doctor or counselor, I also think it is worth questioning the new assumption that more mental-health therapy is always good. Undoubtedly, many kids need mental-health services and some kids in Platte County would benefit from these expanded programs. But Abigail Shrier’s bestselling book, Bad Therapy, details some of the pitfalls of this approach. From a Commentary review of the book:

“With unprecedented help from mental health experts, we have raised the loneliest, most anxious, depressed, pessimistic, helpless, and fearful generation on record,” Shrier writes. Moreover, “as treatments for anxiety and depression have become more sophisticated and more readily available, adolescent anxiety and depression have ballooned.”

This tax vote may seem like an easy “yes” vote in Platte County. I hope the voters think long and hard about it first.

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