Page 493 – Show-Me Institute

CID Lives

Posted on June 13, 2013May 5, 2026 by David Stokes

If your future dream involves a shopping excursion to the Crossroads Art District in Kansas City, it may cost you a little bit more thanks to a proposed Community Improvement District (CID) for the area. CIDs are another example of the alphabet soup of special taxing districts in Missouri. Sing it with me:

“Is this a CID? Or is this an EEZ? Or is this a TDD? I thought it was old KC? Or just another subsidy…”

On the ladder of subsidies, CIDs are at the lower end of noxiousness. Nonetheless, as someone else (I don’t recall whom or where) said (paraphrasing here), “CIDs represent an admission that local government has failed in basic responsibilities.” Stepping into a void left by poor public services with new private activity is one thing. Stepping into the void with new, additional taxes and rules is quite another.

Along with all the other special taxing districts and subsidies, CIDs represent a constant growth in the public sector to do basic things that used to be better delineated between public or private responsibilities.

Police protection? Public. Better driveways to your own store? Private. Pretty flowers to beautify your shopping center? Private. Now we have turned these latter areas into semi-public responsibilities supported by tax dollars, be they TIF, TDD, or whatever.

I am pleased to read that there may yet be some serious opposition to the Crossroads CID proposal, as reported by Tony’s Kansas City. It should be far more difficult than it is to get these special districts established. Sometimes CIDs can focus on legitimately public interests, and you can argue that is the case here. (If it stays focused on security.) But often these types of districts easily morph into taxpayer-funded expense accounts for businesses that lack the proper oversight of tax dollars (like the Lake Lotawana CID). And the more you have of them, the harder it is to monitor all of them.

I hope the residents and business owners of the Crossroads district think long and hard about this latest tax proposal. I think their goals can be accomplished through private action (like the education campaign they have been waging) instead of new taxes.

Conventional Fears

Posted on June 12, 2013May 5, 2026 by Kacie Barnes (Galbraith)

Let’s be honest. We all like new stuff.

So I can understand why Jefferson City officials are planning a fancy new conference center. But as we have said in the past, the government is not the best suited to plan development. There are two proposals for the project; both companies have told Jeff City officials that the government’s request for a facility with 30,000 square feet of exhibit space and an accompanying 200-room hotel is not realistic in this market.

The city has promised $9 million in lodging tax revenue to support construction, and is discussing the details of an operating subsidy.

The News Tribune editorial board has fears, writing, “Worst-case scenarios revolve around a money-losing conference center that must be vacated or infused with a perpetual subsidy of city tax dollars.” This is a real fear.

A Brookings Institution study found that the convention marketplace in the U.S. has been declining for quite some time. Yet, localities have continued to compete with each other for convention business by investing in new construction and expanding existing facilities. The study notes that many conference centers, including those in Saint Louis and Washington, D.C., have operated at a loss.

Why are Jefferson City officials so eager to invest in something for which they have not demonstrated a need? If developers who stand to gain from subsidies are telling the government that their plans will not be profitable — the government should listen.

Lee’s Summit And The Road Not Taken

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

The Lee’s Summit City Council voted overwhelmingly to end its consideration of Enhanced Enterprise Zones (EEZs). This is a good thing, and it is a credit to the members of the City Council who were intellectually supple enough to reconsider something that as recently as two months ago seemed a fait accompli. It is also a great credit to activists and residents who attended meetings and hearings about the matter — making sure city leaders knew their concerns.

The Show-Me Institute testified before the City Council in April that EEZs are as effective at creating jobs and economic growth as doing nothing. The data simply doesn’t support EEZ supporters’ claims. In fact, when questioned at a subsequent informational meeting, the consultant the city hired had to admit that numbers showing the success of EEZs don’t take into account what the growth may have been without EEZs. Basically, the whole program is built on the logical fallacy knows as Post Hoc Ergo Propter Hoc — after, therefore, because of.

Figures showing how many other places in Missouri have adopted EEZs did not sway residents. They were skeptical of claims of growth as a result of EEZs, and they were hostile to the claims that blight would do no harm. They wanted none of it.

Lee’s Summit has a lot going for it. As we wrote in our guest commentary in the Lee’s Summit Journal:

In 2006 and again in 2010, Money Magazine cited Lee’s Summit as one of the 100 Best Cities in the United States. The Lee’s Summit Chamber of Commerce boasts on its website: “Lee’s Summit is an ideal place to live and work, providing a desirable lifestyle that everyone can enjoy — high-quality, affordable housing in safe neighborhoods endowed with fine schools and excellent health care facilities.”

Governing a city is difficult, and my guess is that it’s even harder than it need be because everyone is trying to second-guess the free market to get ahead. City officials don’t want to just create jobs, they want to create the right kind of jobs, whatever that means. But the truest path to success in Lee’s Summit and elsewhere is to do less. Keep taxes low for everyone, streamline the bureaucracy, and let the free market thrive.

When it comes to EEZs, Lee’s Summit has chosen the road less traveled, and that will make all the difference.

Missouri House Bill 253…Vetoed! (Part II)

Posted on June 11, 2013May 5, 2026 by Michael Rathbone

Let’s make one thing clear: The state is required to have a balanced budget. If revenues do not meet current expenditure levels, then there will have to be cuts to the budget in order to match revenues. Governor Nixon fears that HB 253 will force deep cuts that will affect vital services. Governor Nixon’s fears are overstated.

First, there are revenue triggers in the bill that would prevent the full tax cut from taking affect if revenues did not grow. Governor Nixon warns that if the Marketplace Fairness Act is enacted and the top rates drop by one-half percent, then state revenues will suffer. If this did occur; however, then the rest of the individual and corporate tax cuts would be stopped and only the business tax deductions would continue.

Second, the state is looking to have a $300 million surplus at the end of the year, which means it currently has more than enough revenue to fund its current operations. Now whether we have a surplus next year depends on what the state plans to spend and the state of Missouri’s economy. However, right now, Missouri has a cushion to absorb a decline in revenue.

Third, the Governor’s analysis (at least in the veto message), does not consider the dynamic effects for lowering the tax rates. According to a paper by Mathias Trabandt and Harald Uhlig, increased economic efficiency can make up for some of the revenue lost due to a tax cut. I’m not saying this tax cut will pay for itself, but the economic research by Trabandt and Uhlig suggest that it is not unreasonable to suggest that the loss in revenue will not be as large as opponents fear.

It is also important to note that if the state kept to tight expenditure limits for future years, like increasing spending only by inflation and population growth, then it would be easier to live with diminished revenues. For example, the Show-Me Institute published a policy study by Stephen Moore and Richard Vedder on how Missouri could eliminate the income tax entirely by 2020 if it adhered to these expenditure limits.

Governor Nixon’s veto will hurt Missouri in the long run and I’m sure Kansas is grateful for his actions. However, the reasons behind Governor Nixon’s veto are flawed and if Missouri is to remain competitive, it needs measures like HB 253 to become law.

With Fee Hikes Pending And A Tax Cut Vetoed, Could The 2013 Legislature End Up…Raising Your Taxes?

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

This weekend, David Lieb, of the Associated Press, wrote an erudite post-mortem of the recently concluded Missouri legislative session. In particular, he noted that if Missouri Gov. Jay Nixon’s tax cut veto stands, the legislature will find itself in the strange position of having increased the size of government through fees. The fees would affect a variety of services, including the cost of traffic tickets, propane, driver’s licenses, and municipal ordinance violations. But the net effect, assuming no tax relief, is clear enough (emphasis mine):

Nixon, a Democrat, has not publicly commented about the fee-increasing bills. But he already has vetoed the Republican-backed bill that would have gradually cut Missouri’s income taxes by hundreds of millions of dollars annually. Republicans could try to override that veto. But if they fail, and Nixon accepts the fee increases, the result of the 2013 session could be one that few Republicans envisioned: A government that takes more, not less, money from its citizens.

Ensuring that, where reasonable, the costs of government services are associated with the users of the services is typically a laudable objective. Not every cost of every state service should be distributed evenly to all taxpayers. Yet, if the net effect of a year’s legislation is not just higher state fees but higher costs to taxpayers generally, then we are headed in precisely the wrong public policy direction.

And that’s where things stand today; if the tax cut veto is not overridden and the fees become law, that may end up being what the legislature “achieved” in 2013. Legislators who supported the fee increases but opposed, and may oppose again, the tax cut, may have some explaining to do back in their districts. Stay tuned.

Dismantling The Post-Dispatch’s Piece About Education (Part 4 of 4)

Posted on June 9, 2013May 5, 2026 by James V. Shuls

The St. Louis Post-Dispatch editorial board recently issued an opinion piece riddled with errors, faulty assumptions, and half-truths. This post is the fourth of four posts (part 1, part 2, and part 3 ) that aims to point out where the editorial board got it wrong.

Fallacy 4: State-by-state comparisons need not adjust for the cost of living

Teachers in Missouri are among the worst paid in the nation, right? That is what the editorial board of the Post-Dispatch would have you believe. As evidence, they link to a piece in The Atlantic, which lists the 10 best and 10 worst states in terms of teacher salaries. Missouri ranks 3rd on the 10 worst list.

As with almost everything else written in the editorial piece, there is a huge problem with this comparison — the cost of living.

The average teacher salary listed for Missouri is $46,411. This seems much lower than the $72,708 salary listed for New York or the $69,434 salary listed for California. Of course, it costs much more to live in those places.

A quick visit to a cost-of-living calculator can help us understand the difference between Missouri’s teacher salaries and those of the highest-paying states.

A salary of $45,000 in Saint Louis, Mo., would be approximately equal to:

$90,246 in Brooklyn, N.Y.

$108,079 in Manhattan, N.Y.

$67,821 in Boston, Mass.

$65,598 in Long Beach, Calif.

$74,242 in San Jose, Calif.

$64,807 in Newark-Elizabeth, N.J.

$61,152 in Hartford, Conn.

$72,810 in Stamford, Conn.

It is disappointing that the Post-Dispatch piece misses the mark on so many levels, because there is room for good debate on these issues.

Because I have spent the past four blog posts explaining where the Post-Dispatch went wrong, I think I should close with an area of agreement. The editors note that the legislature is not meeting its obligation because they are under-funding the foundation formula. To that, I agree.

Sen. Lamping and Rep. Curtman Review the Legislative Session

Posted on June 8, 2013May 5, 2026 by Darin Morley

Missouri State Senator John Lamping and State Representative Paul Curtman review the recently completed legislative session at the Show-Me Institute’s June Policy Breakfast.

Dismantling The Post-Dispatch’s Piece About Education (Part 3 of 4)

Posted on June 8, 2013May 5, 2026 by James V. Shuls

The St. Louis Post-Dispatch editorial board recently issued an opinion piece riddled with errors, faulty assumptions, and half-truths. This post is the third of four posts (part 1, part 2, and part 4) that aims to point out where the editorial board got it wrong.

Fallacy 3: State spending on education can easily be compared between states

In a brazen attempt to insult state policymakers, the St. Louis Post-Dispatch editorial board wrote: “No matter how you slice it, Missouri’s lawmakers value education less than their peers in 39 other states do.” In reality, it does matter how you slice it and you can get the numbers the Post-Dispatch reports ONLY the way they slice it.

As evidence of the legislature’s feeble funding of education, the Post-Dispatch points to a report by the U.S. Census Bureau, which ranks Missouri 40th for the amount of state funds spent on education (Tables 11 and 12).

There’s just one problem with this, the definition of “state” and “local” funds is not consistent across states.

In Missouri, for instance, the funding formula counts local property taxes, the statewide 1 percent sales tax, and various other sources as local dollars. Arkansas ranked eighth in state funding for education, but Arkansas has a mandatory statewide property tax rate. That means all property taxes collected at that rate are considered state dollars, not local dollars.

In a tweet to Missouri House Budget Committee Chairman Rick Stream, the Post-Dispatch’s Tony Messenger defends the paper’s reliance on the state figure. Stream stated that the Post-Dispatch did not consider local dollars in their opinion piece, to which Messenger replied:

@rickstream it is absolutely considered. That is the problem. State has shifted burden to local districts and in effect raised our taxes.

— Tony Messenger (@tonymess) June 6, 2013

This exclusive reliance on the state figure demonstrates a lack of understanding of school funding systems.

Funding schools is a complicated endeavor that is done 50 different ways in the 50 different states. Because of how funding formulas work, you simply cannot easily make a state spending to state spending comparison. Likewise, you should not make the types of claims the Post-Dispatch editorial board made in its piece or Tony Messenger made on Twitter.

Dismantling The Post-Dispatch’s Piece About Education (Part 2 of 4)

Posted on June 7, 2013May 5, 2026 by James V. Shuls

The St. Louis Post-Dispatch editorial board recently issued an opinion piece riddled with errors, faulty assumptions, and half-truths. This post is the second of four posts (part 1, part 3, and part 4) that aims to point out where the editorial board got it wrong.

Fallacy 2: Real spending on Missouri’s education system has been decreasing

The editors of the Post-Dispatch wrote: “Almost every budget in Missouri produces more education dollars than the one the year before. Mostly that’s because of the realities of inflation. If the education budget is measured in constant dollars, the story is entirely different.”

The editorial board is implying that real spending on education has not been increasing. In fact, they say “schools have less buying power nearly every year.”

According to data from the Missouri Department of Elementary and Secondary Education, state and local dollars in 2008 kept pace with inflation in 2009, but dropped off with the recession in 2010. Since then, state and local spending has increased approximately 5 percent. According to the U.S. Bureau of Labor Statistics, state and local spending fell off the pace of inflation by just three-tenths of a percentage point.

So yes, if we look at the facts with blinders on, it does appear that legislators are not keeping pace with inflation.

This, however, is a short-sighted analysis and ignores the long-term reality. From 1992 to 2008, we increased spending on education in Missouri by nearly 40 percent in inflation-adjusted dollars. These data come from the Digest of Education Statistics Table 194.

Real spending on education has taken a slight hit in recent years due to the recession, but over the course of the past 20 years, the state has continually increased education spending.

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