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Finally, The Numbers: TOD Problems (Part 3 of 3)

Posted on December 27, 2012May 5, 2026 by Kacie Barnes (Galbraith)

Simply put, Transit-Oriented Development (TOD) is an expensive way to create any visible signs of economic improvement. But it is kind of like growing carrots. You have no idea how those carrots are doing while they grow underground. The new fertilizer that your neighbor swears by seems to be doing the trick, and their pretty green tops shot up so fast. Then you pull one out of the ground to find this weird, oblong, mutated claw-shaped thing that kind of resembles a carrot.

You still got a carrot, but it definitely was not what you were expecting. Believe it or not, government-subsidized economic development programs often end up with the same result. It may seem like these new Transit-Oriented Developments will create jobs and attract new investment to the area. And you might see some new stores pop up and think, “Wow, this is progress.”

But what is underneath? In the Saint Louis area, governments provided about $2 billion of economic development incentives for retail development from 1990 to 2007. Over this time, only 5,400 retail jobs were added to the region. You might say, “That is better than no jobs, Kacie, stop being such a Debbie Downer.” But the East-West Gateway Council of Governments released a report that estimates each one of these jobs costing about $370,000 each.

That is insane! If you knew the real cost before these types of projects were put into place, would you still support them?

We Like the ‘burbs: TOD Problems (Part 2 of 3)

Posted on December 26, 2012May 5, 2026 by Kacie Barnes (Galbraith)

If I could create something that would decrease poverty, raise incomes, provide more jobs, or lower gas prices, I would. But these are the types of problems that we cannot fix in the same way that we would fix a broken chair leg or leaky faucet. Russell Roberts, an economics professor at George Mason University, notes that “we want to change outcomes without consequences with the ease of adjusting the thermostat on the wall of our house.” He explains that the economy cannot be controlled in the same way. The economy is “the product of human action but not of human design,” he said.

New Transit-Oriented Development (TOD) in Saint Louis is a tool the government uses as an attempt to design where and how we live. They want to make more people ride the Metro, reduce car trips, and increase economic development in the area. There is nothing wrong with wanting economic development, but the government cannot see into the future. I used to work for the government, so trust me — they know just as much as you or I do. They cannot prove that Transit-Oriented Development will achieve their goals.

Just because the government creates shops and housing around a Metro station, it does not mean that more people will want to ride the Metro. Those who already used the Metro will continue to ride it, but those of us who prefer to drive our cars will continue to drive our cars.

Surveys suggest that four out of five Americans prefer a home with a yard as opposed to living near shops, transit, or jobs. It is a waste of resources to create TODs because they simply are not capable of achieving the intended goals. If the government really wants us to ride the Metro, they will have to do something more drastic, such as shutting down all the roads, or making it illegal to drive. But I think it is safe to say those things will not happen.

Problems With Transit-Oriented Development (Part 1 of 3)

Posted on December 24, 2012May 5, 2026 by Kacie Barnes (Galbraith)

Many people believe that the government can give us things for free.

I recently attended a public meeting about proposed new development around five Saint Louis/Illinois Metro stations (Transit-Oriented Development, or TOD). The speaker discussed how we can have anything we want — new grocery stores, Walmarts, restaurants, you name it. One guy raised his hand to ask a wise question. He wondered whether an increase in taxes will pay for these projects.

You could see the minor panic on the speaker’s face when he had to talk about how we would pay for such a thing. He indicated that the funding would come from many sources, and we likely could receive money from above. Oh right, money falling from the sky, I have seen that happen from time to time.

What he meant, of course, is the likelihood of receiving contributions from other levels of government to help pay for these projects. And people at the meeting were nodding their heads as if they were saying, “OK, good, so I am not paying for this.” Wrong! Just because you are not writing a check directly to these projects does not mean that you are not paying for it. Almost all of us (taxpayers) pay for the federally subsidized projects that occur all over the country.

It is a problem to disassociate ourselves with government because it does not help us achieve the best outcomes. If we think that someone else is picking up the tab for these projects, we are more likely to support superfluous developments. It is like someone telling you that you can have a new BMW for free, and they mention something about monthly payments that start a year from now. But the car is just so nice that you tune that part out because you now have a slick new ride.

We need to be more aware of the ways that government spends our money. It can help us make wiser choices about the development of our communities, and it can empower us to realize when we do not want the government to be involved.

David Stokes on KZRG

Posted on December 21, 2012May 5, 2026 by David Stokes

David Stokes breaks down the Tax Increment
Financing District proposal before the City of Joplin.

MUST READ: The Minority Report From The Tax Credit Review Commission

Posted on December 20, 2012May 5, 2026 by Patrick Ishmael

As Show-Me Policy Assistant Kacie Galbraith noted last week, I was not high on the idea of reconstituting the Missouri Tax Credit Review Commission (TCRC) this year because I assumed the commission would, at best, reaffirm its previous findings. I said at the time that “[w]hat I want to see is leadership on the issue from our elected officials, not a cycle of committee meetings where nothing gets done.”

In fact, the TCRC’s new recommendations actually kick the tax credit reform can even further down the road, presenting an even less ambitious reform proposal than it did in 2010. Among other things, the TCRC recommended higher caps than it did just two years ago on giant fiscal violators such as the Historic Preservation Tax Credit program. Missouri’s tax credit disease has become worse over the last two years. In response, the TCRC has recommended . . . dialing down the reform dosage from its previous reform prescription.

What a disappointment.

That does not mean that nothing worthwhile came from the TCRC, or at least, despite it. Based in part on commission member Craig Van Matre’s early draft report, eight commission members also produced a blistering minority report. That report actually cites free-market luminaries such as Frederick Hayek and Henry Hazlitt for intellectual support and takes a rhetorical hammer to the state’s tax credit woes. That report is embedded below.

It really would have been something if the TCRC had adopted the minority report rather than retrenched the tax credit status quo. Sadly, the body on the whole took the tax credit debate in precisely the wrong direction.

Tax Subsidies For The Wealthy

Posted on December 20, 2012May 5, 2026 by David Stokes

Tax Increment Financing is one of the most common forms of local government corporate welfare. Here in Saint Louis, developers are attempting to use it in one of the most vibrant and economically healthy neighborhoods. A new high-rise apartment and Whole Foods grocery would be wonderful, but it should not involve taxpayer subsidy.

Tax Rates DO Matter

Posted on December 19, 2012May 5, 2026 by Michael Rathbone

Driving to work today, I was listening to 101Espn (the station I listen to when I am not listening to Show-Me Institute Policy Analyst David Stokes on McGraw) and heard an ad about the tax advantages of buying cars in Illinois versus Missouri. The ad even urged the listeners to go online and check the tax savings available if they buy their new car in Illinois.

This ad exists because of a loophole allowing Missouri drivers to buy cars out-of-state without paying a local sales tax. Now, I am not really a fan of tax loopholes. My displeasure borders on rage. However, the key point here is that taxes affect people’s decisions. We have seen that low excise taxes on gas, cigarettes, and alcohol in Missouri encourage people to buy these products in Missouri.

If it is worth buying ads to promote the fact that you will not pay a local sales tax if you buy a car in Illinois, then the tax advantages of moving an entire business to a new jurisdiction can be even more pronounced. That is why the Kansas tax cuts matter. By eliminating its tax on pass-through entities, Kansas made itself more attractive to businesses looking to gain any advantage it can in a competitive marketplace.

Missouri does not have to stand idly by while its neighbors continue to make themselves more attractive to businesses. In a forthcoming essay, Patrick Ishmael and I lay out the need for the state to eliminate the tax on pass-through entities.

A zero local sales tax liability matters so much that a car dealership believes that it is worth purchasing ads. How much are competitive tax rates worth to the entire state? If Missouri wants to compete, it should have a tax structure that allows it to do so.

It Is Time to Reform Medicaid, Not Expand It

Posted on December 18, 2012May 5, 2026 by Andrew B. Wilson

If someone who is sinking deeper and deeper into debt comes to you with an offer of “free money,” you would be best advised to:

A. take the money and run,
B. say thanks, but no thanks, or
C. call the police.

Confronted with the question of whether to accept a multi-billion dollar offer of “free money” from Uncle Sam to expand the state’s Medicaid program, Missouri Gov. Jay Nixon, a Democrat, has advocated the take-the-money-and-run approach. He called it “the smart thing to do,” and “the right thing to do.”

According to Nixon, it would be “dumb” for Missouri, or any other state, to turn down a use-it-or-lose-it infusion of federal cash, and it would be “wrong” for state officials to wave aside money for extending health insurance to the uninsured. On the first point, the Obama administration has agreed to pay a very high share (90-plus percent) of new Medicaid costs in all states. And on the second, it acts as if cost were no object.

This is an unsound argument — and bad public policy. Let’s hope that most states reject it — as Missouri, with large Republican majorities in both houses of the state legislature, almost certainly will.

It is astounding that the administration is contemplating a major expansion in a troubled entitlement program when the nation faces the threat (with the so-called fiscal cliff) of a financial panic and another deep recession.

According to a new study from the Kaiser Commission on Medicaid and the Uninsured, the loosened eligibility for Medicaid under the Affordable Care Act (a.k.a. ObamaCare) will cost in the neighborhood of $1 trillion over the next decade.

For the past several years, the federal government has been borrowing about 40 cents out of every dollar it spends. That is like adding $400 of credit card debt for every $1,000 you spend. So where is the new money coming from to expand Medicaid coverage to a projected 17 million people?

Like a spendthrift who refuses to mend his ways, the Obama administration wants to go on spending money it does not have: If necessary, taking out new credit cards to pay off the old. This is the same tactic that has brought Greece and several other European nations to the brink of bankruptcy.

Instead of acting as enablers of fiscal profligacy, Missouri and other states should say “no” to the Medicaid expansion. They should also say “no” to the creation of state health insurance exchanges to implement ObamaCare. These exchanges would require the states to accept costly mandates and complicated rules restricting competition and choice in health care.

Finally, Medicaid should be reformed, not expanded.

Medicaid costs have been the fastest-growing part of state budgets for more than a decade. In Missouri, Medicaid expenditures jumped from $3.4 billion, or 22 percent, of the state’s total expenditures in fiscal 2000, to 36 percent, or $8.2 billion, in fiscal 2012. Despite the increased outlays, complaints are growing on the part of patients and doctors. Poor patients often have a hard time finding doctors. And doctors say they have little incentive to stay in the program because of reduced reimbursement rates and administrative headaches.

The states should explore better ways of providing catastrophic health insurance for those without coverage. And they should be smart enough to know that the offer of “free money” usually means a one-way ticket to financial ruin.

Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Checking the Books: Safeguarding Missouri’s Money

Posted on December 18, 2012May 5, 2026 by Tom Schweich

On December 6, Missouri State Auditor Tom Schweich stopped by the Show-Me Institute’s office in the Central West End of Saint Louis to discuss his work and his office for a packed-house crowd. Among the topics Schweich discussed: how his office has saved taxpayer money, and how much; the state auditor’s office’s new rapid response team; Auditor Schweich’s personal bio and how he came from practicing law, to international law enforcement, to returning to Missouri to become State Auditor; and Auditor Schweich’s favorite part of his current position — helping small towns throughout the state find their financial footing.