Page 476 – Show-Me Institute

$16 Million For Two Blocks?

Posted on September 19, 2013May 5, 2026 by David Stokes

Should Missouri and St. Louis taxpayers provide more than $16.5 million in tax subsidies to move Laclede Gas two blocks from 720 Olive to the General American building on Market? Read the TIF application.

Transcript:

We’re standing here at the Laclede Gas building at 720 Olive in downtown St. Louis. The main tenant here is planning on moving two blocks south to the vacant General American building. There’s nothing wrong with that. It happens all the time in any big city. The catch is that city and state taxpayers are going to subsidies that move with over sixteen-and-a-half million dollars. That’s other people’s money to help a company move two blocks.

The economic evidence is strong that local earnings taxes harm cities more than property taxes do (see: Local Revenue Hills: Evidence from Four U.S. Cities, New Evidence of the Effects of City Earnings Taxes on Growth, How an Earnings Tax Harms Cities Like Saint Louis and Kansas City, and Triumph of the City). So why exactly is the city giving up the less harmful tax in order to keep more of the more harmful tax?

Sixteen-and-a-half million dollars in subsidies. 2 Blocks. Lower taxes for some and higher taxes for everyone else. Economic Development, if you can call it that, in the St. Louis region is insane.

This subsidy will not grow the economy of St. Louis city or our region. One empty building becomes full while a full building loses its main tenant. If the city’s doing this because it’s concerned about losing the earnings taxes of the Laclede Gas employees, perhaps the city should get serious about removing the earnings tax instead of hollowing out its property tax base.

For the Show-Me Institute, I’m David Stokes.

MCI’s Cost Per Enplanement (Terminal Financing – Part 4)

Posted on September 18, 2013May 5, 2026 by Patrick Tuohey

During the Sept. 10 Kansas City Airport Terminal Advisory Group meeting, panelists discussed airport financing. In a slide show presentation, Aviation Department Chief Financial Officer John Green indicated that with their key assumptions, cost per enplanement (CPE, or cost per passenger) will grow from the current $5.25 to between $14.36 and $18.70 in 2022 if the single terminal is built.

As my colleague Joe Miller wrote several weeks ago:

Having a high cost per passenger can mean fewer passengers, as the marginal leisure traveler chooses not to fly for vacation and businesses decide to economize on airline tickets. This, in turn, reduces airline profits and constricts service, which further pushes up CPE. This is precisely why that measure is a major point in airport bond ratings, and why MCI [Kansas City International Airport] currently advertises the fact that its CPE is only $5. The Star seems to assume that $19 per passenger, far above the median CPE for peer airports, will have no effect on MCI’s bond ratings or competitiveness.

Now it appears the Aviation Department is also assuming that tripling the CPE will have no effect. While it may be unknown how a high cost per passenger impacts ticket cost, it likely does influence whether an airline chooses to fly out of an airport. Isn’t that the whole point, making MCI more attractive to airlines?

For more about this topic, read here and here.

Free Rides In The Zoo Museum Taxing District?

Posted on September 17, 2013May 5, 2026 by Haleigh Albers

Show-Me Institute Intern, Haleigh Albers, talks about the demographic changes in the St. Louis area that impact the St. Louis Zoo-Museum Taxing District. As the population of the region has grown, the population living within the Tax District has decreased reducing the tax base. Are visitors from the wider region to the St. Louis Zoo free-riding on that diminished tax base?

Read more about this in Haleigh’s op-ed.

Is The Zoo-Museum District An Outdated And Unfair Tax?

Posted on September 17, 2013May 5, 2026 by Allison Davis

The Saint Louis Zoo is a great place for families to spend a summer day. Many people like that the zoo does not charge admission, but few visitors know how the zoo is funded. When told that a property tax in Saint Louis City and Saint Louis County pays for the zoo, some visitors were surprised. Residents of Chicago and Tennessee said the free admission is nice. However, two citizens of Saint Louis City think it is unfair that residents of surrounding counties can visit the zoo for free.

While the fairness of this tax is a worthy topic of debate, Haleigh Albers, an intern at the Show-Me Institute, said she is more concerned about the sustainability of this tax. The population of the tax district (Saint Louis City plus Saint Louis County) has been decreasing steadily over the past few decades, meaning that fewer and fewer taxpayers are supporting the zoo.

Not only is the population of the taxing district shrinking but — more importantly — the population also is getting smaller relative to the greater Saint Louis area. Haleigh writes:

At the time the Zoo-Museum District tax was levied on Saint Louis City and Saint Louis County, the residential taxpayers accounted for 62 percent of the population of the greater Saint Louis area. The majority of the typical Zoo-Museum District customers were contributing to its funding. Conversely, in 2010, Saint Louis City and Saint Louis County consisted of only 47 percent of the metro area. Therefore, less than half of the expected patrons were funding the District.

KCI’s Overly Optimistic Estimates – Part 2

Posted on September 17, 2013May 5, 2026 by Patrick Tuohey

At the Sept. 10 Kansas City Airport Terminal Advisory Group meeting, airport Chief Financial Officer John Green presented a financial analysis which included as part of the Key Assumptions for Projections (page 5) a 2 percent growth in passenger enplanements (the number of people boarding the plane).

But recent passenger numbers fly in the face of that. In 2012, total enplanements were down 4 percent from 2011. And 2013 numbers so far are down more than 3 percent from 2012. I recall Green saying to the advisory group that the Aviation Department predicts a growth in passenger traffic of 2.8 percent for 2013. So far, that appears to be wildly optimistic. Way back on July 11, the Show-Me Institute’s Joe Miller wrote:

The determination of some Kansas City officials to construct a new $1.2 billion terminal at Kansas City International Airport (MCI) is based on optimistic projections. Not only do their projections fly in the face of aviation industry trends in the last decade, they don’t even conform with the airport’s own 2012 financial report.

The Kansas City Aviation Department originally used 2006 baseline estimates to justify new terminal specifications. Back then, they predicted 2.8 percent growth in enplanements (the number of people boarding the airplane) from 2006 onward. But they were wrong, and eventually had to revise the projected growth down to 1.9 percent. The growth of passengers in the last decade has fallen even further, to 0.01 percent. This slide in growth started before the financial crisis. Even including the booming 1990s, total growth averaged a meager 1.9 percent from 1991 to 2012.

Those aren’t the only optimistic numbers among the key assumptions. The Aviation Department appears to have lowballed its 3 percent estimation of escalation, a euphemism for cost overruns. According to a February 2009 report from the Airports Council International – North America aimed specifically at estimating airports’ capital development costs, escalation has averaged 7 percent and has been as high as 11 percent.

Recent construction cost escalation has clearly impacted airport development costs. ACI-NA surveyed respondents about their experiences with increasing construction costs. As shown in Table 2, nearly 60 percent of all respondents to this question reported an increase of greater than five percent for development projects recently bid or re-estimated, with an average of 7% increases for the 45 reporting airports; over one-fifth reported an above 10 percent increase. These increases are well above the general inflation rate of 2.8 per cent. FAA also reported in its latest NPIAS report that “construction costs have increased approximately 11 percent” for the past two years, “due in large part to increases in materials and labor.”

Green took pains to state that these assumptions, which amount to predicting the future, are difficult to make. No one doubts this. In some cases, the estimates are conservative, such as an assumption that the interest rate will be 6 percent. But on important matters such as passenger traffic and cost overruns, the people of Kansas City are likely skeptical, and right to be.

Playing The MSIP Game

Posted on September 16, 2013May 5, 2026 by James V. Shuls

At the Show-Me Institute’s Policy Breakfast last week, Normandy School District Superintendent Ty McNichols stated that his district would begin playing “The MSIP game.” For a great overview of what this entails, check out Dale Singer’s latest article. MSIP stands for the Missouri School Improvement Program. It is the system the Missouri Department of Elementary and Secondary Education (DESE) uses to accredit public schools. Though they don’t say it explicitly, McNichols’ comment and Singer’s article display the major problem with MSIP and other forms of test-based accountability — they distort the actions of teachers and school leaders.

Rather than focus on the pressing needs of their students, test-based accountability systems encourage school officials to focus on ways to improve their score on the evaluation. Just after No Child Left Behind passed, education scholar Dan Goldhaber predicted that the new accountability system would encourage “a focus on those students who are just below the benchmark. Students far below the benchmark may be seen as ‘lost causes,’ and therefore not a good place to focus efforts.” Goldhaber was right. In many districts, including the one where my wife taught, much of the focus was on these “bubble kids.”

MSIP 5, the latest edition, attempts to address this and includes points for growth, not just achievement. Still, the system is subject to the same type of gaming. There is no doubt every district in the state will soon be playing the “MSIP game.”

So what is the alternative? Should we not have accountability? We should absolutely have accountability. However, the best system of accountability does not come from bureaucrats in the state capitol; it comes from parents demanding excellence from their child’s school.

Critics of school choice often lament that “private schools aren’t held accountable” because they don’t take state tests. What they don’t realize is that choice, not tests, are the best form of school accountability. State evaluation systems encourage schools to focus on the evaluation; choice encourages schools to focus on the student. Unfortunately, few families have school choice.

Panel Discussion of the School Transfer Law

Posted on September 13, 2013May 5, 2026 by Rick Edlund

The school transfer law has created controversy in Saint Louis. The question is, where do we go from here? Show-Me Institute Communications Director Rick Edlund, hosts a panel disccussion with Show-Me Institute Education Policy Analyst James Shuls, Ph.D.; Normandy School District Superintendent Tyrone McNichols, Ed.D.; Kirkwood School District Superintendent Thomas Williams, Ph.D.; and Mehlville School District Superintendent Eric Knost, Ed.D.

Only Round One For Tax Cuts

Posted on September 12, 2013May 5, 2026 by Michael Rathbone

Yesterday, the Missouri Legislature failed to override Gov. Jay Nixon’s veto of House Bill 253. It is unfortunate that a legislature with one-party super majorities in both houses could not muster the resolve to pass a tax cut bill that, despite the governor’s scare tactics, was relatively minor.

However, the fact that HB 253 did not become law does not mean tax reform is dead. The legislature can always pass another tax cut and hopefully the one they do enact is much more significant than HB 253. The Show-Me Institute has released a paper detailing how the state could eliminate the income tax and another on how to eliminate the corporate income tax without losing any revenue.

The simple fact is that whether Missouri enacts tax cuts or not, it is still competing with other states economically. Kansas knows this. That is why they cut income taxes last year, and despite the doom and gloom predictions from opponents, the state is starting to see positive results. In the Kansas City metro area, all the net new job growth has been on the Kansas side since the tax cut passed. That is why Kansas continues to cut taxes now. The sooner Missouri officials understand that the state needs to remain economically competitive, the better off it will be.

From The Jaws Of Defeat: Volunteer Health Services Act Veto Overridden

Posted on September 12, 2013May 5, 2026 by Patrick Ishmael

It was a wild ride at the Missouri Legislature’s veto session last night, but as far as I can tell, only one veto was both sustained and (ultimately) overridden — and that was the Volunteer Health Services Act (VHSA), which I’ve discussed many, many times before. The law allows out-of-state medical professionals to more freely provide charitable care to Missourians. After passing through the Senate on a 25-9 vote, the VHSA fell one excruciating vote short of an override in the House, 108-53. It then disappeared but was reconsidered as the last bill of the night, this time passing the House 109-52 and becoming the 10th and final veto override of the session.

A big congratulations to everyone who worked so hard on this bill. It was a roller coaster of a process, but in the end, this ride ended as a great victory for Missourians in need.

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