Page 563 – Show-Me Institute

The Main Street Trolley: A Slow Motion Train Wreck

Posted on March 26, 2012May 5, 2026 by Patrick Ishmael

If City Hall has its way, Kansas City will have a $100 million streetcar on Main Street in the not-too-distant future, but fiscal discipline and good sense should bring the project to a full stop.

Earlier this month, the Kansas City Council unanimously approved legislation that would establish a special trolley zone following a proposed streetcar route along Main. New sales and property taxes in the new district would fund the majority of the trolley project. People living in the district will likely vote on those proposed taxes, but residents will not necessarily be the ones bearing the brunt of that tax burden, at least not directly.

Rather, businesses and property owners, many of whom who do not live in the area where their businesses are located, would pay the price. Crown Center Redevelopment President Bill Lucas, whose property sits at the southern-most edge of the proposed line, cautioned that if built as planned, the streetcar’s tax proposal would raise hotel taxes in the district to the second-highest rate in the country. The Kansas City Star’s Yael Abouhalkah noted just last week that Kansas City’s tax burden and debt servicing obligations are among the worst in the region. Is a Main Street train worth digging those holes deeper?

Moreover, if hotel taxes spike, as Lucas suggests, it would be an ironic, albeit not altogether unexpected, twist for a political class captivated by serial centralized development plans. Early last year, city officials pushed the idea of building a new convention center hotel to help link the languishing Bartle Hall to the languishing Power & Light District, thereby driving up consumer traffic for the trio. At the time, I called the proposal Kansas City’s “Hotel California” – an unnecessary fiscal boondoggle that, if built, taxpayers would not soon escape. Why would the city pursue a trolley project funded with a tax that could make the city’s hotel project even less competitive, not to mention hurt the hotels that already serve the downtown area?

But even if the trolley project is taken only on its own merits, the prospects and track record for a streetcar in Kansas City are decidedly poor. Last month, we found out that another city-subsidized entertainment-oriented transit line – the KC Strip – which serves many of the same areas that the trolley would serve, fell behind on its loan payments due to lack of ridership.

Appropriately, the Strip’s buses are painted like trolleys.

A $100 million plan that local businesses do not want to pay for? A $100 million plan that would spike hotel taxes and could undermine a proposed city-backed hotel building project meant to link an underused city-owned convention center to an underused city-subsidized entertainment complex? A $100 million plan that in large part replicates a cheaper transit option, that the city subsidizes, which is already failing?

What could possibly go wrong?

When the people who presumably stand to benefit from the trolley do not want to pay for it, no one should be paying for it. Not only is the city out of sync with the people who would be paying the proposed taxes; it is out of sync with even its own projects and development objectives.

The trolley is just the latest big idea in a long line of irresponsible municipal projects that city officials have proposed, and it may end up being the last straw for a go-go city-directed development culture that has hemorrhaged taxpayer money for years. Stop the train. We want to get off.

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

Previewing Day One Of Health Care Reform Oral Arguments

Posted on March 25, 2012May 5, 2026 by Patrick Ishmael

Beginning on Monday, the U.S. Supreme Court will hear oral arguments on the Patient Protection and Affordable Care Act (PPACA,) also known as “ObamaCare.” In all, six hours over three days have been allotted for the parties to make their cases for and against the law. A marathon hearing schedule like this is not unprecedented, but it is not typical, either.

Each day will focus on a different aspect of the law being challenged. The order of oral arguments, according to the Washington Post, is as follows:

Monday: The Anti-Injunction Act (AIA)

Tuesday: The individual mandate

Wednesday: Severability, Medicaid expansion

The first session will deal with whether the penalty for not obtaining health insurance is a tax. Under the Anti-Injunction Act, the government typically must levy a tax before it can be challenged. If the Court finds that the PPACA penalty is in fact a tax, the earliest anyone could challenge it would be after it is imposed, which would be 2015 — the year after the mandate goes into effect. Such a ruling might frustrate PPACA supporters and opponents alike, as the law would remain in limbo for several more years, or until Congress changes the law.

Both the government and the states now agree that the penalty is not a tax, and although it is not especially likely that the Court will conclude that the AIA would prevent the Court from reviewing the law at this time, it still could happen. Moreover, the AIA issue, despite its questionable merits, does have a certain appeal. If the Court wants to avoid a highly-charged election-year ruling, this issue would provide a handy escape hatch for the Court.

Oops! Sorry About Demolishing Your Property

Posted on March 23, 2012May 5, 2026 by Audrey Spalding

Albert Munoz, who works as a mechanic and a construction worker, bought a 2-story building in Kansas City, Kan., in the hopes of rehabbing the property. According to Fox 4 Kansas City, Munoz invested more than $400,000 in the building in the hopes of turning the upstairs into apartments and the downstairs into space for his business.

However, in February 2011, Wyandotte County and a wrecking company destroyed the property. Munoz is suing for damages.

The story seems like a shocking outlier. But, just months ago, there was a similar demolition east across the state line, in Missouri.

Show-Me Daily readers may already be familiar with the Jackson County Land Trust, the government entity that deals with vacant land in Kansas City. State legislators have criticized the Land Trust for not selling much property. But, in at least one case, the Land Trust sold a property to a buyer, only to have to deal with the consequences when Kansas City accidentally demolished the property.

During its January 2012 meeting, the Land Trust noted that:

. . . an elderly non-English speaking gentleman purchased 3914 E. 46^th Street from Land Trust. Unbeknownst to the buyer, about 30 days subsequent to his purchase, the city demolished the structure on the property. . . . the buyer is interested in 3227 Garfield as a potential alternative and that the buyer may be approaching Land Trust for resolution.

Sadly, when local government gets enthusiastic about demolishing properties in an attempt to mitigate “blight,” property owners can lose their homes. An example in Montgomery, Ala., provides another cautionary tale. There, homes were bulldozed for ordinance violations. To add insult to injury, property owners were then billed for the cost of the demolition.

Is it too much to ask for local government to do a little more due diligence before knocking down someone’s property?

Does Missouri Really Need Another Tax Credit Program?

Posted on March 23, 2012May 5, 2026 by Bruce Stahl

Missouri is one step closer to having another tax credit program, the angel investment incentive tax credit. This tax credit program has some rather concerning features. For instance, certain industries are automatically excluded from consideration (business consultants and insurance companies, to name two). And for those businesses not excluded from the tax credit, the government must still find that they have “a reasonable chance of success.” Since when is the government good at determining what will be successful?

But wait, there is more. This tax credit has the potential for $6 million in new tax credits each year, which means that Missouri revenue could fall by as much. An amount of $6 million might sound insignificant, but this year, Missouri’s 60-plus tax credit programs are expected to dig an $835 million hole in state revenue. That $6 million figure is just less than half the average redemptions per tax credit program. Combined, these programs add up. Could this tax credit be the proverbial straw that breaks the Missouri budget?

Reminder: Health Care ‘Reform’ Law Raises Costs On Young People

Posted on March 23, 2012May 5, 2026 by Patrick Ishmael

Next week, the United States Supreme Court will hear oral arguments on the Patient Protection and Affordable Care Act (PPACA,) the huge health care overhaul that Congress passed two years ago this month. One of the main talking points in favor of the legislation at the time was that it would improve the economy. However, as the Washington Examiner reports, the White House implicitly backed off that claim this week. Indeed, evidence from the Congressional Budget Office suggests the law will actually reduce employment, not increase it.

PPACA’s negative economic effects only compound the problems of a slow recovery in which young people in particular are hurting financially. The official unemployment rate in the United States is 8.3 percent, but for people ages 16-25, it is almost double that, at 16.5 percent. The Wall Street Journal describes the situation as “Generation Jobless,” and while college graduates have better opportunities than non-college graduates, they are still making less and saving less than if they had graduated in better economic times. There is no doubt that people of all ages are suffering, but unemployment during some of the most important wealth-building years could be disastrous when today’s young adults are ready to retire — both personally and for the country.

Unfortunately, PPACA only worsens the situation because it raises taxes. Yesterday, Americans for Tax Reform highlighted the (at least) four tax hikes contained in PPACA which hurt young people. The first two are especially troubling to me: the “excise tax,” for not buying a government-approved insurance plan; and the “medicine cabinet tax,” which prevents people from using flex accounts and Health Savings Accounts to pay for non-prescription, over-the-counter medicine. The former penalizes people for not purchasing a government-approved health insurance plan; the latter reduces choice and flexibility with one’s personal health dollars.

Young people are less likely to draw deeply on prescription medication benefits or other health care services than older and less healthy policyholders. The result? The government forces young people to pay for insurance plans that they do not need and will not use, and prevents them from taking full advantage of HSAs — health care dollars they would control and manage as part of their own personal budgets. Essentially, the government is forcing young people to subsidize the health care of others during some of their most economically fragile years.

That is bad policy and bad news for young people. PPACA may be marketed as “reform,” but it harms young people, who already are hurting economically, by raising costs and reducing choice.

Props To Sen. Crowell For Speaking Out Against Budget Gimmicks

Posted on March 23, 2012May 5, 2026 by Audrey Spalding

Today, the Missouri House of Representatives approved a $24 billion state budget. What remains to be seen is whether that budget will pass the Senate.

Sen. Jason Crowell (R-Dist. 27) made waves when he spoke out on Wednesday against gimmicks that legislators are using to avoid tough budgetary decisions. The Columbia Missourian reports that Crowell blocked a vote that would extend the amount of time the legislature has to replenish the state’s “rainy day fund.”

Crowell also argued that the proposed state budget counts on uncertain sources of revenue ($70 million that is estimated to be received from delinquent taxpayers), and one-time sources of funding (a $40 million settlement that the state has not yet received).

In a very passionate speech, Crowell stressed the need for tax credit reform, something he has called for repeatedly. Crowell has sponsored several bills to subject tax credits to the appropriations process. Tax credits currently are not subject to appropriations, meaning that tax credit money (which has consistently been more than $500 million in recent years), comes straight out of state coffers, without consideration of whether the state can afford the expense.

During the hearing, Crowell asked Sen. Kurt Schaefer (R-Dist. 19), the budget chairman, “When are you going to pick Mizzou over Jeff Smith? That’s what this is all about, Senator.”

Crowell was referring to a developer who the St. Louis Post-Dispatch editorial board has called out for benefiting greatly from the state’s Low Income Housing Tax Credit, and alluding to the cuts that have been made to state higher education. These are the kinds of trade-offs that could be considered if tax credits were subject to appropriations; instead, legislators continue to passively give priority to tax credits.

Indeed, St. Louis Public Radio reports that Crowell promised to filibuster uses of one-time funding unless serious overhauls of the tax credit system, prison spending, and state pensions are considered.

Good luck.

Hope Yet On TIF, Part Two

Posted on March 22, 2012May 5, 2026 by David Stokes

Last night, Julia Dolan (who is an Ellisville resident) and I attended the Ellisville City Council meeting where they were supposed to vote on the Ellisville TIF (tax increment financing) proposal that the Saint Louis County TIF Commission rejected. A late amendment to the proposal delayed the vote for two weeks, but officials properly held the public hearing portion, which was exciting.

So many people showed up that the fire marshal prevented several people from entering. I was there to testify and I had to stand outside until my name was called due to the crowd. (At which point I was allowed in, gave my testimony, and had to go back outside.) By our estimate, 10 people spoke on this issue and nine were opposed to the TIF proposal. There were several score more people who did not speak. But judging by audience reactions, a large majority of them were opposed to the TIF plan as well. The residents who spoke against the project did a terrific job. It really seems that Saint Louisans might be waking up to the TIF scam that cities, developers, and planners have been putting over on us for two decades. Not all cities, not all developers, and not all planners, of course, but a good number of each.

The Ellisville City Council has a great opportunity here to listen to their residents, practice solid economics, and reject this proposal. It would be great for their city and great for our region if they did so, and it could lead to major improvements in TIF policy throughout Saint Louis. Sometimes, it just takes one to lead . . .

Since 2005, Jackson County Land Trust Has Sold More Than 1,700 Properties

Posted on March 21, 2012May 5, 2026 by Audrey Spalding

During a hearing of Senate Bill 795, a bill to create a land bank in Kansas City, the sponsor, Missouri Sen. Victor Callahan (D-Dist. 11), told the committee that the Jackson County Land Trust (the entity that currently deals with vacant property in Kansas City) had sold very few properties. Kansas City officials prepared information and distributed it to the committee at the meeting; the information showed that the Land Trust had sold just 97 properties in 2011, 41 properties in 2010, and 31 properties in 2009. These numbers are wrong.

Since 2005, the Land Trust has sold more than 1,700 properties for more than $1.5 million. Due to a data error, Callahan and other legislators were presented with incorrect information that made the Land Trust appear to have sold very few properties in recent years.

The correct sales data, which the Land Trust itself provided, is listed below. You can also download a spreadsheet of all addresses sold (and purchase prices) here:

2011: 200 properties were sold

2010: 137 properties were sold

2009: 154 properties were sold

2008: 181 properties were sold.

A big part of the narrative that is being used to advocate for the land bank legislation in Jefferson City is that the existing Land Trust is not selling enough property.

The truth is that the Land Trust sales rate in recent years is as good as, if not better than, the sales rate of any land bank I have researched — including the longest-standing land banking experiment in the United States, the 40-year-old Saint Louis land bank.

Indeed, the very land bank that proponents hold up as the gold standard of land banking (the Genesee County Land Bank in Michigan) continues to amass property. Where, exactly, is the story of success that land bank proponents hope to replicate in Kansas City?

I will admit it: I just do not understand why legislators are in a rush to create a land bank in Kansas City. Why pass legislation that would create an entity similar to what has a long-term track record of failure in Saint Louis? Why create a land bank that could incur unlimited debt with the power to say “no” to people who want to buy vacant, city property? And, why cast aside the Land Trust, which cannot discriminate when selling property and has a reasonable sales record?

Arch Sales Tax Is An Opportunity For A Regional Bad Idea

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

Too often, the cities and other taxing districts in the greater Saint Louis area act unilaterally in ways that hurt our region. Well, the new sales tax proposal to improve the grounds of the Gateway Arch is a great opportunity for us to do something different. We can do something that hurts our region together, as a region. I guess this is some type of progress.

This new tax is a bad idea for a lot of reasons, many of them that Saint Charles County Executive Steve Ehlmann has explained well here:

He says his constituents shouldn’t pay higher local taxes to help revamp the federally owned monument and the park surrounding it.

I think he is right, and I say this as someone who thinks the residents of Saint Charles County should pay more in other instances. For example, I think the people of Saint Charles and other counties outside of Saint Louis City and County should be given a choice on either imposing the zoo-museum property tax within their areas or have to pay admission fees to visit those attractions.

But this proposal is crazy. It is possible for this tax increase to pass in Saint Louis County and Saint Charles County, but not in Saint Louis City, which would result in tax money being collected only outside of Saint Louis City but spent entirely within the city. The arch may be a wonderful regional asset, but it should be paid for the way other federal properties are – with federal tax dollars, user fees, and in a case like this, charitable donations. If there are not enough federal tax dollars available to pay for it, then user fees and donations can be increased, perhaps creatively — or perhaps the project should just not be done.

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