Page 519 – Show-Me Institute

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.

The Name’s Bond . . . Building Bond

Posted on December 18, 2012May 5, 2026 by Michael Rathbone

After paying off the mortgage on your house, would you then take out another mortgage as part of a jobs program? The St. Louis Post Dispatch recently published an editorial calling for the state to do something just like that. Legislators are discussing a bond issue and the Post-Dispatch is urging the state to issue another series of bonds in order to create more jobs. For those not in the know, a bond is simply a loan from investors to a company or state. Like any loan, it must be repaid with interest.

I am not categorically against a state or other governing entity issuing bonds for worthwhile spending on infrastructure, but putting the state in debt just to launch a public works program looks like a mini version of the American Recovery and Reinvestment Act of 2009 (i.e., the Stimulus), which really covered itself in glory. To be fair, the Stimulus was not entirely composed of infrastructure spending, but infrastructure spending was a significant part of it.

There are other reasons to be wary of a state issuing debt, as Chris Edwards from the Cato Institute explains:

. . . debt financing is more costly than current tax financing because of the interest expenses and related charges.

The most important reason that voters should hesitate to approve bonds is that the country already faces huge government liabilities. At the state level, pension and health benefit plans for retired workers have funding shortfalls of about $2 trillion.

Again, there may be good reasons for the state to issue bonds. Transportation and higher education infrastructure are both legitimate uses of public dollars. However, before putting the state further into debt, it is important that these potential bond issuances are thoroughly examined to see which projects they would be financing.

I will write more about these potential bonds in future posts. I can see myself and others at the Show-Me Institute supporting some type of bond issuance, but I hope the primary plan is not that they will serve as some sort of jobs program.

As Expected, Kansas City’s Mail-In Streetcar Vote Wins

Posted on December 17, 2012May 5, 2026 by Patrick Ishmael

We knew this was going to happen, but let’s put this in perspective. About 550 people voted by mail on a measure to raise taxes by at least $100 million in Kansas City’s newly created streetcar district. Of those 550 people, about 350 voted for the taxes. The vote means that each “yes” vote essentially imposed about $300,000 in new taxes on property owners and shoppers along the streetcar’s route over the next couple decades, and that is a low estimate.

So, “Merry Christmas,” shop owners. You will be paying for a giant boondoggle of a toy train for the foreseeable future.

Downtown Kansas City voters gave an “all aboard” OK to streetcars in election results announced Wednesday.

Voters approved, 351 to 198, a 1-cent sales tax increase, and 344 to 206 property tax increases to help pay for a $100 million, two-mile streetcar system. It will run from River Market to Union Station, primarily on Main Street.

The tax increases, authorized for 25 years, will apply only within the defined boundaries of a downtown streetcar district. That covers roughly River Market, the Central Business District, the Crossroads and Crown Center.

Show-Me Institute Chairman Crosby Kemper was interviewed on Fox 4 last week, and his concerns about the manner of the vote and the potential for cost overruns are very much warranted here.

The outcome of the vote is an unfortunate, but expected, result. Regardless, there is reason to believe this story is not over quite yet. Stay tuned.