Page 489 – Show-Me Institute

Budget Action In Search Of A Crisis

Posted on July 16, 2013May 5, 2026 by Patrick Ishmael

Three weeks ago, Missouri Gov. Jay Nixon announced that he would withhold slightly more than $400 million from the state’s 2014 budget. His action was supposedly due to the “significant costs” of the Broad-Based Tax Relief Act (BBTRA), which he recently vetoed and the legislature may try to override this fall. The governor’s full restriction list is here. It includes more than $66 million carved from the Department of Elementary and Secondary Education, more than $43 million from the Department of Higher Education, and more than $17 million from the state park system. The governor has also sought out a road map to eliminate 1,000 state positions if the tax cut is resurrected.

It seems the governor wants as many people to know about, and feel, these cutbacks as possible. However, the budget facts paint a far less dire picture than the one the governor has sketched out, and to which he is presumably reacting. As the Associated Press‘s David Lieb noted:

. . . Nixon announced more than $400 million of spending restrictions for education, building projects and other government services, even though Missouri began its fiscal year July 1 with a cash balance of around $450 million.

The state apparently has more money in the bank than Nixon has set aside from the budget to supposedly avert a budget deficit. And that’s before we even start talking about the BBTRA, which the governor claims is the driving factor behind his cutbacks. Indeed, with all impacts on the budget included, the fiscal note on the cost of the BBTRA suggests the tax cut would decrease state revenue by about $200 million in 2014 — which is far short of the $400 million the governor withheld.

The state’s education system and other programs are the ones that get hit hard because of the withholding, for seemingly no good reason. The money in the bank doesn’t justify it, and the price tag of the tax cut doesn’t justify it. I’m not so sure Missouri’s schools appreciate their funding being held hostage in the governor’s fight with the legislature, especially when the facts don’t justify the cutbacks.

‘This Is What Airports Do,’ Part 2

Posted on July 15, 2013May 5, 2026 by Patrick Tuohey

The chart below documents the estimated amount of tax dollars lost because of Kansas City International Airport (MCI) acting like a private property developer.

We know that government departments such as the airport do not pay taxes. This is also true for tenants on airport land. According to Karbank Real Estate Co., which competes against the taxpayer-subsidized airport, the assessed value of the Blount International facility on airport land is slightly more than $7 million, or one-third the appraised value. As a result, the affected tax districts have lost almost $650,000 in annual tax revenue. The Park Hill School District alone is denied $380,000; Kansas City proper loses slightly more than $107,000; Mid-Continent library loses $22,000.

Of course reading this, you might think that officials in Platte County — the county in which the airport is located — are up in arms about this deal because they are losing thousands of tax dollars to an airport that undercuts private taxpaying developers. But you’d be wrong. The Platte County Economic Development Council not only supports the airport in the past deal, but also in the current plan for a new terminal. Heck, Alicia Stephens, executive director of the Platte County EDC, supports the new terminal project and the mayor appointed her to the Airport Task Force!

But don’t worry about Stephens losing her job for supporting deals that cost Platte County dearly. Her boss, the chairman of the Platte County EDC, is none other than Mark Van Loh — the head of the Kansas City Aviation Department, whose developments are robbing Platte County of tax dollars.

Reasonable people are left with two compelling questions: How can Stephens credibly serve on a task force in which she will be asked to pass judgment on a proposal by her boss? And why does Platte County tolerate its EDC chairman having such a clear and significant conflict of interest?

Here is a table Karbank compiled that provides a breakdown of tax revenue NOT being paid on property that the airport developed:

TAX DISTRICT	LEVY PER $100	TOTAL

State Blind Pension Fund	0.0300	$2,105
County	0.0200	$1,403
Health	0.0800	$5,613
Board of Services for Handicapped	0.1299	$9,114
Mental Health	0.1000	$7,016
Mid-Continent Library	0.3200	$22,451
Senior Citizen Levy	0.0500	$3,508
Park Hill School District	5.4133	$379,797
Platte City Special Road District	0.2150	$15,084
Kansas City	1.5294	$107,303
Kansas City Community College	0.2329	$16,340
M&M Replacement Tax	0.3600	$25,258
Kansas City Traffic Way	0.2500	$17,540
Kansas City Parkway	0.5000	$35,080

TOTAL		$647,612

Not satisfied with giving away the house on rent and taxes, the Aviation Department signed a lease agreement that stipulated, (emphasis added):

In the event that ad valorem real property taxes are assessed against the Premises, the bonus value of this Lease, the Infrastructure Improvements or any component of the Premises or the leasehold estate created by this Lease (“Taxes”) and paid by Lessee, City shall either pay Lessee an amount equal to such Taxes or credit such amount against Rent owed to City by Lessee.

In other words, Kansas City is on the hook for any taxes owed on the property should the abatement end. And it might. Karbank is suing the airport over the matter, alleging that the agreement, which they claim is effectively 100 percent abatement in perpetuity, is unconstitutional. Whatever the results of the lawsuit, MCI needs to act like an airport, not Donald Trump.

‘This Is What Airports Do,’ Part 1

Posted on July 12, 2013May 5, 2026 by Patrick Tuohey

As part of Kansas City officials’ effort to convince voters that we need a new airport terminal, Mayor Sly James appointed a task force. At the Airport Terminal Advisory Group’s June 18 meeting, Kansas City Aviation Department Administrator Mark Van Loh gave a presentation about airport operations.

During his talk, Van Loh mentioned that the airport hired a company called Trammel Crow Co. to develop a portion of the land not used for aviation and that the airport now has a tenant, Blount International. According to Van Loh, Blount moved to Kansas City from Colorado. “This is what airports do,” he said, to increase their revenue.

It may be what airports do, but it is having very negative effects on the Kansas City area. First, Blount International did not move into the airport space from Colorado. It moved there from the East Bottoms, where it had, for decades, rented considerable space from Karbank Real Estate Company LLP, a successful Kansas City-based property developer.

This is a bad deal for the region in at least two ways. As the Aviation Department is part of city government, it can develop property at a small fraction of the cost that private companies pay. It does not have to conduct the myriad of impact assessments such as traffic impact fees and platting fees, as do private companies, nor does it have to pay things such as city utility taxes. The government can therefore undercut private businesses and charge much less for rent. The city’s tenants pay no taxes, which depresses the market rates, which in turn decreases values across the city, having a huge negative effect on property values city-wide and certainly to the airport sub-market.

The Aviation Department has made it clear that it will continue to operate as a property developer and landlord to offset its own deficits. In effect, the airport is cannibalizing the city’s tax base and creating hardships for private developers.

Kansas City Charter Changes

Posted on July 12, 2013May 5, 2026 by David Stokes

Kansas City is going through a charter review process. The Show-Me Institute recently submitted testimony about the charter. My points are simple: keep the mayoral veto, do not expand the size of the current city council (at least not by much — going from 13 to 14 would not matter), and, most importantly, make the at-large officials truly at-large. Having at-large officials represent districts at the same time reduces the benefits of at-large elections in the first place. That primary benefit is that every decision an at-large official makes has both benefits and costs to the same group of people. In wards, a.k.a. districts, many events can have concentrated benefits but dispersed costs. That leads to greater spending levels as ward officials consistently seek to secure more benefits for their individual wards.

Some groups want to get rid of the at-large system entirely in the name of greater minority representation. The thinking is that more, and thereby, smaller, wards, will make it easier for concentrated minority groups to elect members of that group to the city council. Leaving aside the assumption that only a person from a certain group can represent that certain group, there is some basic truth to those arguments. It probably would make it easier to elect more minority politicians in an all-ward system. But it does not have to be that way.At the recent hearing of the Kansas City Charter Review Commission, supporters of more wards offered a chart to back up their points.

However, from their own chart, the example of Cincinnati demonstrates that their arguments are shaky. Cincinnati has an all at-large system that has resulted in more minority members of its city council than would be expected from simple population totals.

Demographics are important, but they are not destiny. At-large systems can effectively represent minority citizens just as well as ward systems can.

KCI’s Overly Optimistic Estimates – Part 1

Posted on July 11, 2013May 5, 2026 by Joseph Miller

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.

MCI’s passenger traffic peaked at 6 million in 2000, when the airport still handled 1 million transfers per year. This subsequent decline in passengers is the result of airline consolidation and transfer centralization in large hubs. It is affecting all airports, not just Kansas City’s. The airlines’ strategy has meant that fewer airlines operate out of MCI than any time in the last two decades. This trend is unlikely to reverse, making a repeat of the growth rate in the 1990s an unlikely scenario.

According to the planning documents for the new terminal, the Aviation Department claims that takeoffs and landings will increase at 1 percent per year. In reality, the number of aircraft operating out of MCI fell and then stayed flat in the last decade, with little evidence of any future increase, much less at a rate greater than 1 percent. As airlines focus on filling every flight to capacity, they require fewer flights per passenger. If we assume that passenger growth remains low or flat, total flights will grow even slower.

Gas Taxes And Tolls Are A Better Way To Fund Missouri Transportation

Posted on July 11, 2013May 5, 2026 by David Stokes

As first run by the Columbia Missourian:

Missouri needs to invest more in transportation infrastructure. Our
state has long been a critical transportation junction. However, the way
we pay for that investment is important. We should not pay for a
necessary investment via inappropriate taxes any more than we should use
efficient taxes to pay for unnecessary public services (e.g., tourist
taxes paying for sports stadiums).

In the recent Missouri legislative session, there was a major proposal to fund new transportation investment by enacting a general transportation sales tax. This is a perfect example of doing the right thing the wrong way. A sales tax is a poor way to fund statewide transportation needs. General taxes should fund things that are, well, general (e.g., public safety). Everyone benefits from public safety and it would be extremely difficult — and unethical — to fund it via specific taxes or fees. It would be absurd to levy a tax on someone for calling 9-1-1, and it would be immoral to tax people living in higher-crime areas more for safety than other people.

Highways are different. A dedicated and targeted tax, namely, the gas tax, can properly fund highways. Besides the gas tax, many other states further pay for highways and bridges with tolling. There is nothing improper or complicated about having the people who use transportation assets pay for them directly. I believe the new Route 47 bridge in Washington is one project that tolls instead of taxes should have funded . Tolling is an excellent way to fund the projects we need because tolling does a great job of making funders separate “needs” from “wants.”

Reports of the demise of gas tax efficiency are overstated. In time, we will have to adjust the gas tax and vehicle registration system to make sure that drivers of high gas mileage vehicles such as hybrids are paying for their road usage. That said, the most efficient way (other than tolls) to pay for roads now and for the next decade is through gas taxes, not general sales taxes.

People who walk to work, live on the family farm, or have short commutes should not pay the same for highway improvements as truckers and long-distance commuters. That is precisely what would result from a statewide transportation sales tax increase. Not everyone has the same transportation needs, and not everyone should be forced to pay the same thing for it.

David Stokes is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Quick Reaction To Yesterday’s Medicaid Hearing In Independence

Posted on July 11, 2013May 5, 2026 by Patrick Ishmael

Yesterday, the (take a breath) Missouri Interim Committee on Citizens and Legislators Working Group on Medicaid Eligibility and Reform (exhale) met in Independence to discuss the state of Medicaid and what should be done to fix it. The time set aside for the hearing was similarly long — nine hours — but the meeting ended up concluding after only three hours of testimony. I have expressed my strong reservations about expanding Medicaid under the Affordable Care Act (ACA) in the past, and as you might expect, nothing that I heard at today’s hearing has changed that perspective.

It was remarkable, however, to hear the “hospitals’ case” for Medicaid expansion repeated before this state-level committee, which includes their own budget concerns related to cuts made by the Affordable Care Act. Why is this so remarkable? Because the hospitals supported the ACA, which would have substantively forced states to expand Medicaid rather than opt-into it, until the Supreme Court nixed that provision last year. In the version of the law that hospitals supported, Missouri’s government would have been an afterthought because the hospitals’ deal for the state’s tax dollars was substantively made with the federal government, not the Show-Me State. Now, hospitals are appealing to Missouri to give them the state tax dollars that . . . the federal government promised them.

There are lots of great people in the health care industry, but when hospitals, as institutions, put themselves out as public servants disconnected from the politics of their predicament, it’s important to remind folks that’s simply not the case.

School Transfers, Follow The Money

Posted on July 11, 2013May 5, 2026 by James V. Shuls

Following the advice of the Missouri Department of Elementary and Secondary Education (DESE), the Riverview Gardens and Normandy school districts each chose one school district to which they will provide transportation for students transferring from the two failing districts. Normandy plans to send buses to the Francis Howell School District in Saint Charles County and Riverview Gardens will bus students to Mehlville, on the opposite side of Saint Louis County. Suffice it to say, the announcements have gone over like a lead balloon, especially in Riverview Gardens.

According to the St. Louis Post-Dispatch, one Riverview Gardens parent claimed, “What they’re trying to do is keep us in this district rather than let us go where we want to put our kids. I think they are trying to pull a fast one.” That parent stated what I’m sure many parents are thinking. I try not to assign motives to the actions of others but instead try to look at the facts. Doing that, it seems quite clear why these districts were chosen: they are cheaper. This means Riverview Gardens and Normandy will pay less in tuition.

In the table below, I present the total enrollment and current operating expenditures for all of the school districts in Saint Louis County, as well as Francis Howell and the St. Charles School District. The two failing districts are highlighted the same color as the district to which they chose to provide transportation. The data are from 2012 and were obtained from the DESE website.

It is no secret that money was among the primary considerations; Riverview Gardens Superintendent Scott Spurgeon said as much. The real question is, should the decision even have been made in this fashion? That is, should the school determine where they are going to provide transportation, or should they provide transportation to the school that most of their students would like to attend?

Unreal: Governor Nixon Vetoes Volunteer Health Services Act

Posted on July 10, 2013May 5, 2026 by Patrick Ishmael

Awful, and done the day before a holiday weekend, when fewer people would be watching. The VHSA would have let medical professionals from other states provide their care for free to Missouri’s neediest: charity whose delivery is complicated by current state law. Americans, to say nothing of highly trained American medical professionals, should be able to provide charitable care to their fellow Americans in Missouri free of undue burdens and restrictions. It is an amazing contrast that the governor wants to expand Medicaid, which will cost the state billions of dollars to deliver care of dubious value, and yet spikes care that private individuals would render free of charge. Apparently this is a big government solutions-only administration.

The governor’s veto is an affront to the poor and those who would serve them. They deserve better.

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