Missouri Tax Credit Estimates FY 2012 and FY 2013
Best Bet To Save Soulard Market? Privatization
 The Soulard Farmers Market. |
Last month, Saint Louis City officials unveiled a plan to spend up to $18 million renovating the historic city-owned and managed Soulard Farmers Market. The city plans to partially rely on revenues from a proposed tax hike for funding. However, there is an alternative to a multi-million dollar taxpayer-funded makeover: privatization.
When nearly 40 farmers’ markets (see page 4) markets popped up across Saint Louis, including four markets within a 3-mile radius of the Soulard Market, and Walmart and Target began carrying fresh groceries, Soulard Market did not adapt. Its prices are higher than Walmart, it misses out on Sunday shoppers because it is closed, its structures are a mess, and it faces a branding problem as a nearly farmer-less farmers’ market, where “very few vendors grow what they sell.”
The market faces daunting odds: it has operated at a loss for most of its recent history and another downtown farmers’ market was cancelled last year due to a lack of interest. While the city’s plan makes strides in responding to evolving shopper preferences, it targets a symptom instead of the disease, doing so at the cost of millions in taxpayer dollars for another potential redevelopment failure.
The benefits from privatization could be numerous. The property, which is protected under historic ordinances and could potentially be further protected through historic preservation easements, would provide revenue to the city or allow slightly lower tax rates if it was sold. Private ownership would create a stronger profit motive because owners would be personally invested in the market. Owners/lessees, not taxpayers, would assume the risk of development. Even if the proposed plan is perfect, privatization would be beneficial to increase competition.
Currently, public planners are tip-toeing around vendors more concerned with maintaining their status quo of privilege (from a time “years ago when rules were a little more lax or when variances were allowed”) than promoting the long-term success of the market. The St. Louis Post-Dispatch describes the vendors’ reluctance to bring competition to the market:
[Vendors] worry that new vendors could drive them from their turf and scare away customers who rely on the market . . .They . . . worry that any reconfiguration of the market could change dynamics that have fallen into place over decades of doing business.
What vendors miss here is that the “dynamics that have fallen into place” are a major reason the market has become a ghost of its former self. Maintaining long-standing vendor-shopper relationships and character is important, even for a private market, yet respect for culture does not preclude dramatic change. But tell that to the vendors:
“I know what makes my place click,” [a vendor] said. “If they [re-situate] everything, it would throw off everyone’s business. Why don’t you just build this fantasy market across the street and see who stays in business longer?”
These fantasy markets are a reality. Others are doing what the Soulard Market does, but better. The proposed plan is a short-term gamble to solve a long-term problem. The best long-term bet for the market is private ownership and management.
As for who will stay in business longer, vendor Lenard Chartrand is not revealing any secrets when he when he says, “The market has to change or it will die.”
Some ‘Windfall’: Would It Actually Cost Missouri Nearly $800 Million To Expand Medicaid?
Since the U.S. Supreme Court ruled that the Affordable Care Act’s Medicaid expansion could not be forced on the states, there has been a lot of talk about whether Missouri should opt into the expanded Medicaid program anyway. The St. Louis Post-Dispatch describes the state-to-federal funding arrangement as a “windfall” because, they say, the state would “only” have to pony up $431 million to get $8 billion in federal funding.
But would it really cost the state $431 million?
The source of the Post-Dispatch‘s figure is a Kaiser Family Foundation report, published in May 2010. The document lists the costs and federal benefits that would come to each state when the state joined the expanded Medicaid program. And they list two participation scenarios: first, a “standard” scenario, where participation in the program is moderate, and an “enhanced” scenario where, as they put it, there would be a “more aggressive outreach and enrollment campaign by federal and state governments as well as key stakeholders including community based organizations and providers that would promote more robust participation” in the expansion. Would the government aggressively market the expansion? Almost certainly, and the feds already have aggressively promoted other parts of the ACA (to wit: “The agency [Health and Human Services] also is launching a more aggressive marketing campaign . . .”)
Long story short, things could get a lot more expensive for Missouri to participate in Medicaid than the Post-Dispatch‘s report would indicate. Kaiser’s “standard” participation scenario indeed predicts that Missouri would have to pick up $431 million in new spending. But, if the program’s participation rate is higher, the state could be stuck with somewhere around $773 million in new spending. And that is just for the years 2014-19. Legislators can count on at least an extra $100 million to $150 million each year after that to pay for the expansion, and possibly much, much more if participation rates are higher.
And where, exactly, would all of that money come from? You, of course, through higher taxes and/or reduced state services elsewhere. And that is completely neglecting the fact that Missourians would not be getting a “windfall” of federal dollars. Taxpayers are the government. We would be paying ourselves. If participation in Missouri’s Medicaid program rises, the cost to the federal government will increase, meaning not only will taxpayers be spending more money through the state, but they will have to spend more money through the feds, as well.
Some “windfall.” Taxpayers and policymakers deserve to know when they are being sold a bill of goods. This is one of those times.
McGraw Milhaven – David Stokes on KTRS
David Stokes has a recurring spot on McGraw Milhaven’s KTRS radio program.
In this appearance, Stokes and the host discuss topics such as cigarette taxation, toll roads, library taxes, and people crossing state lines to save money on cigarettes, gasoline, and alcohol.
McGraw Milhaven – David Stokes on KTRS
David Stokes has a recurring spot on McGraw Milhaven’s KTRS radio program.
Among the topics discussed in this appearance: the Supreme Court decision regarding the Affordable Care Act, the possibility of Saint Louis city and county sharing police resources, Schlafly Brewery’s urban farm proposal (and its tax implications).
McGraw Milhaven – David Stokes on KTRS
David Stokes has a recurring spot on McGraw Milhaven’s KTRS radio program.
Among the topics discussed in this appearance: Auditor Schweich’s report on the Missouri Department of Economic Development, problems with tax credits generally, water pricing during a shortage, imposing water meters on residents of the city of Saint Louis.
Richmond Heights Continues To Ignore A History Of TIF Failures
The Show-Me Institute has written extensively about the negative effects of Tax Increment Financing (TIF), yet cities in Missouri continue to provide us with cases of TIF failure. The city of Richmond Heights, for example, is pursuing plans to redevelop the Hadley Township area just south of Hwy. 40 and east of Hanley Road using TIF to attract potential developers. The real kicker: This will be the fifth attempt in 10 years to redevelop the low-income neighborhood into a commercial area.
Usually when we write to warn cities about the dangers of TIF, we urge them to consider the failures in other cities or other developments. Officials in the city of Richmond Heights need not look past the city’s own history and, in fact, the history of this particular development. Developers have had their eye on the area since the late 1990s, and two of the proposals (from Michelson Commercial Realty in 2006 and United Plaza in 2010) seemed like they might actually get off the ground before collapsing, mostly due to the state of the economy following the 2008 crash. Now, Richmond Heights is at it again, enticing Pace Properties and Menards with promises of substantial amounts of TIF ($27 million and $24 million, respectfully).
The interesting thing about Hadley Township is that it is not an example of TIF having a negative impact on an area because it cost taxpayers millions and showed less-than-impressive returns — though that is exactly what could happen if the current plans move forward. Instead, this is a case of a city dangling TIF like a carrot in front of developers but failing to complete any of the proposals brought forth. This has left homeowners in limbo; many have moved on or let their homes fall into disrepair because of rumors that they will soon be bought and torn down. It seems like a dismal outlook for the area — either taxpayers are on the hook for more than $50 million of the developments or the neighborhood is left in the blighted state it has reached because of the failures of the past decade. There is, however, a third option: Ditch the TIF and encourage private developers to take advantage of the fact that many of the residents are willing to sell. Private developers, not TIF, could provide the solution that the residents of Hadley Township have been seeking for so long.
The Deep Impact of ‘Taxmageddon’ On Missouri
The Heritage Foundation recently released a study illustrating the impact by state and congressional district of the forthcoming “Taxmageddon.” The U.S. economy faces a $494 billion tax increase due to the expiration of several tax cuts, including the Bush tax cuts and payroll tax cuts. Thus, the U.S. faces a massive tax increase on January 1, 2013, unless the law is changed.
The typical family faces a tax increase of $4,138. Low-income workers face an average tax increase of $1,207 while the average retiree faces an $857 increase.
As a whole, Missouri will face an additional $7,858,563,552 in increased taxes, which amounts to $2,634 per tax return. Here is the impact of the upcoming tax hikes on taxpayers in each Congressional District in Missouri:
- Congressional District 1 (Rep. Wm. Lacy Clay): $2,338
- Congressional District 2 (Rep. W. Todd Akin): $4,765
- Congressional District 3 (Rep. Russ Carnahan): $2,981
- Congressional District 4 (Rep. Vicky Hartzler): $2,009
- Congressional District 5 (Rep. Emanuel Cleaver): $2,507
- Congressional District 6 (Rep. Sam Graves): $2,692
- Congressional District 7 (Rep. Billy Long): $2,317
- Congressional District 8 (Rep. Jo Ann Emerson): $1,677
- Congressional District 9 (Rep. Blaine Luetkemeyer): $2,424
The prospect of further tax hikes threaten to weaken an already stagnant economy. Policymakers have a diminishing window of opportunity to stave off these looming tax increases.
A Lose-Lose Decision
The Supreme Court has made their decision regarding the constitutionality of Obamacare. Show-Me Institute Executive Director Brenda Talent explains what this ruling means for all Americans.
