The Upcoming Senior Property Tax Freeze Vote in Boone County

Posted on by David Stokes

A version of the following commentary appeared in The Columbia Missourian.

Several years ago, my colleagues and I were debating what the worst possible tax policy change could be. (I work at a think tank, so conversations like this are normal.) We settled on “exempting lottery winnings from income taxes.” While it may not be quite as bad, the ongoing proposals before Missouri counties to freeze the property taxes for senior citizens are similarly misguided attempts at tax reform. Boone County is the first county to put this question before voters, who will vote on Proposition One on April 2. Hopefully, Boone County voters will see through the sympathetic arguments for the plan and realize that this is very poor public policy.

Last year, state legislation authorized any county to freeze the real property taxes of the primary homes for senior citizens who qualify. Their property taxes will stay at the same amount they are when they become eligible for the plan, which for most people would be when they turn 62. The purpose of the proposal is to help senior citizens stay in their homes as they age, but there are several major problems with this idea.

This proposal is harmful simply because it reduces the property tax base. Unless local governments in Boone County cut services in response to the enactment of this tax freeze for seniors, it will almost certainly lead to higher tax rates on those property owners not eligible for the freeze. Proposition One will be every bit as much of a tax increase on non–senior citizens as it is tax relief for some senior citizens. People who live in homes of similar value with similar public services should pay similar property taxes. The recent college graduates in Columbia who have lived in their home for a year should not pay higher property taxes than their neighbor just because the neighbor has lived there for two decades.

Concerns over reducing the tax base are especially applicable in Boone County, with its substantial amount of university-owned property that is already off the tax rolls.

Passage of this proposal would also lead to the problematic situation in which people vote on property tax increases that they themselves do not pay. The single best aspect of property taxation is that it imposes the costs of local services on the people who use those services, unlike sales or hotel taxes that are exported in part to visitors, shoppers, and others. Instituting a system in which people vote on property taxes they won’t pay breaks that beneficial connection.

For a cautionary tale about the dangers of property tax subsidies, consider California’s famous Proposition 13, which was passed in 1978. Prop. 13 limited the increases in property assessments and taxes for homeowners. The measure has certainly had its intended effect of keeping property taxes low for longtime California homeowners. However, it has also reduced mobility, dramatically increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities between similar properties. This is not what Boone County needs.

According to data from the Federal Reserve, people ages 65 to 74 have the highest net worth of any age group. So why, if we were to pick any age group for tax exemption, would we pick the wealthiest among us? (People over 75 have less wealth than those 65–74 or 55–64, but they have a higher net worth than any age grouping under 55.) We shouldn’t be handing out property-tax exemptions to anyone, whether those exemptions take the form of corporate subsidies, developer abatements, or senior-citizen tax freezes.

Passage of Proposition One would certainly benefit some of Boone County’s senior citizens, but it would alter the county’s property tax and assessment system in a myriad of harmful and biased ways. Property taxes work best when the assessments are accurate, the base is wide, and the rates are low. Proposition One does not move Boone County in that direction.

KC Stadium Tax: The Opportunity Cost

Posted on by Patrick Tuohey

On April 2, 2024, Jackson County voters will be asked to approve a new 3/8 percent sales tax to support improvements to “funding for park improvements consisting of Arrowhead Stadium and its surrounds, and a new Major League Baseball stadium in Jackson County.”

Learn more here.

We Have Met the Neighboring 911 System, and They Could Be Ours, Too (via a Merger)

Posted on by David Stokes

Voters in Perry County will decide next week on whether or not to merge the county’s 911 emergency system with neighboring St. Francois County’s system. More precisely, voters are voting on a ballot proposition to raise the county’s sales tax to both fund 911 system improvements and keep the service local, i.e., no merger. Merging with St. Francois County’s 911 system—which is significantly more technologically advanced than Perry’s—won’t require a tax increase at all.

I discussed this issue in depth in op-eds in the Southeast Missourian and the Perry County Republic-Monitor. The county commissioners in Perry County approved a merger with St. Francois County. Opponents were able to propose the alternative option—a new tax and local control. I find the arguments against the merger to be perplexing. The arguments against the merger (and, yes, I have spoken to people in the county about it) tend to be about losing local knowledge in the current system and losing the county jobs.

You can imagine how I feel about the latter point. Government is not a jobs program. Resisting change in order to keep people on the public payroll is absurd. As this article makes clear, some of people leading the opposition to the merger work for Perry County 911. They are opposed to this merger and in favor of higher taxes specifically to save their own jobs. That may be understandable from their point of view, but only from their personal point of view. While they might be offered a position with St. Francois, nothing is guaranteed in life except death and taxes (appropriately enough). Rejecting a change just to preserve certain people on the public payroll is a terrible argument.

The local knowledge argument is also strange. Believe it or not, advanced GPS systems are better at emergency location and coordination than someone’s “local” knowledge. Can you only hire people in the future who can demonstrate they have lived in Perry County their entire lives and have sufficient “local” knowledge?

911 system merging is a great opportunity to use advanced technology to improve public services and lower costs throughout Missouri. There are many examples of such mergers around the state. I hope they take advantage of it in Perry County.

KC Stadium Tax Debate with Patrick Tuohey, Sly James and Jim Rowland

Posted on by Patrick Tuohey

On March 27, Sports Radio 810 WHB in Kansas City hosted a roundtable with Senior Fellow at the Show-Me Institute Patrick Tuohey, former KC Mayor Sly James, and Executive Director of the Jackson County Jim Rowland to discuss the upcoming vote on a new 3/8 percent sales tax to support “funding for park improvements consisting of Arrowhead Stadium and its surrounds, and a new Major League Baseball stadium in Jackson County.”

How Will the Four-day School Week Progress in Light of SB 727?

Posted on by Avery Frank

The enormous 167-page education bill, Senate Bill (SB) 727, recently passed out of the Missouri Senate and is heading to the House. There are a number of reforms in the Senate’s proposal, including:

–  Education savings account (ESA) expansion

–  Charter school expansion

–  New voting procedures for moving to a four-day school week

–  Re-establishment of required minimum days of instruction in certain school districts

–  Aid bonus for districts that meet new minimum-day requirements

 –  Reworking of how students are counted for the funding formula

–  Creation of a new evidence-based home reading program

–  Increase in teacher salaries

–  Ability to implement pay differentiation for certain hard-to-staff teachers

–  Creation of a scholarship program targeting hard-to-staff subject areas and schools

My colleagues and I will delve into the various reforms in the days and weeks ahead, but here the focus will be on the new procedures and requirements relating to the four-day school week (4dsw).

First, this bill would establish a new voting procedure for larger districts that want to use a 4dsw schedule.

Under the new procedures in the bill, the district school board must pass the measure to implement a 4dsw. Then, the school board–approved proposal will go to a vote by the public. The vote would take place at the next date available for public elections. If a majority of votes are in favor, the 4dsw will be established.

However, this provision is limited, as this requirement only applies to school districts located wholly or partially in a county with a charter form of government, or located wholly or partially in a city with more than 30,000 inhabitants.

Essentially, this provision would be limited to school districts in or partially in St. Louis, Kansas City, Jefferson County, Clay County, St. Charles County, St. Joseph, Springfield, Columbia, Joplin, Jefferson City, and Cape Girardeau. According to my analysis of the bill language, only around 100 school districts and charter schools (about 20% of districts and charters) will be subject to this voting provision.

This voting measure would likely better represent parental preferences, but why are smaller communities excluded from this new policy? Additionally, without open enrollment or greater educational choice policies in Missouri, there will still be numerous families trapped in a 4dsw district despite preferring a different schedule.

This bill also includes reforms regarding the minimum number of school days for districts. Back in 2018, SB 743 changed instructional time requirements in Missouri. At that time, public schools were required to be in session a minimum of 174 days and 1,044 hours a year—but with SB 743, the requirement became only 1,044 hours with no required number of days. Following this change (which took effect in the 2019–20 school year), the number of 4dsw districts in Missouri shot up from 34 to 62, and has since increased to 173 in 2023–2024, according to my own calculations.

SB 727 would re-establish a minimum number of required days in a school year (the 1,044 hour minimum will also remain in place):

  • 169 days for five-day school week districts
  • 142 days for four-day school week districts

This provision is also limited. The minimum number of days requirement, as with the voting provision, will only apply to school districts in the larger cities and counties mentioned above. Of those roughly 100 districts, only five use a 4dsw, and all already meet the 142-day minimum requirement. In fact, around 87% of all 4dsw districts in 2022–2023 had 142 or more instructional days. (It should be noted that the 169-day limit for 5dsw districts is still rather low—over 30 states have a minimum of 180 days or more. Not a single district or charter school in Missouri reached 180 instructional days in 2022–2023, outside of two charter Pre-K programs.)

While smaller districts may not be subject to the minimum day requirement, SB 727 has a separate provision that incentivizes creating more school days in a different way.

The bill states that any district that provided 169 school days or more will be remitted an amount equal to 1% of its annual state aid entitlement for fiscal years 2026 and 2027, and 2% for 2028 and onward. All monies from this additional aid must be used exclusively to increase teacher salaries. If a district does not meet the 169-day minimum, it is not punished, but it does not receive the extra money. This provision appears to be an attempt to incentivize a five-day school week schedule.

In a recently published literature review that I authored with James Shuls, we noted that districts justify their move to a 4dsw based on district finances or teacher retention and recruitment. Using numbers from the 2022–2023 school year and assumptions based on what the SB 727 fiscal note includes, I found that a 1% aid bonus would equate to an average of around $24,000 for districts that used a 4dsw in the 2022–2023 school year and a 2% aid bonus would equate to an average of around $48,000. On average, a 2% aid bonus for 4dsw districts would be equivalent to around 0.6% of a 4dsw district’s total expenses—not a huge sum to incentivize a major schedule change.

(For 5dsw districts, the average 2% aid bonus is around $173,000—equating to an average 0.5% of their expenses. It should also be noted that these calculations are based on 532 of the 553 districts and charters).

In 2022–2023, around 466 school districts and charters did not have 169 instructional days or more. About 30 districts and charters had 168 days of instruction, and about 110 districts and charters had 164 to 167 days of instruction. SB 727 will most likely move all of these districts to 169 days and incentivize other 5dsw districts to increase instructional days. If the goal of this part of the bill is to increase the number of days most Missouri students are in school, SB 727 could accomplish this.

However, if the goal of this part of the bill is to begin moving the 173 4dsw districts back to a 5dsw, this provision will probably be ineffective. It is too little money for too big a change, and many districts may argue that the savings they receive from using a 4dsw is higher than the aid they could receive. The fiscal note for this bill estimates that the state could end up paying districts $75 million via these bonuses. If there’s extra money lying around, wouldn’t it be better to spend it on something else, such as increasing funding for the ESA program?

With talks of more districts potentially moving to a 4dsw in the 2024–2025 school year, it will be interesting to see if the 4dsw will continue to rapidly grow in Missouri. For now, it does not appear that SB 727 creates any significant incentive to buck that trend.

Fact Checking That Stadium Tax Event

Posted on by Patrick Tuohey

Proponents of the new stadium tax in Jackson County, which the Royals would use to build a new downtown stadium in Kansas City, made some questionable assertions at a recent panel discussion at the Kansas City Library.

I wrote previously about Mayor Sly James’s assertion that “there’s more flights all the time” from KCI Airport (there aren’t). There are three more claims that I want to address.

  • James referenced a study of the 49ers’ Levi Stadium that concluded the stadium had all sorts of positive economic benefits. Unfortunately for the mayor, this study has already been debunked by journalists and economists who have reviewed it.
  • James said that we’d see the community benefits agreement (a contract between developers and community organizations for a project) “tomorrow.” That was on Tuesday, March 19. What was actually produced amounts to a “press release” according to one Kansas City Star As of this writing, March 26, the Royals have still not finalized an actual agreement.
  • Sarah Tourville, representing the Royals, denied responsibility for the April 2 vote: “We didn’t put it on the ballot, they [county officials] chose to put it on the ballot.” That’s misleading. Of course county legislators are the only ones who can put a measure before the voters. But recall that the Jackson County Executive initially vetoed the legislation, claiming that the county needed more time to negotiate agreements. Several legislators indicated they would support his veto. But the Royals campaign ran ads urging voters to contact their legislators and urge a veto override. Two legislators then changed their position and the veto was overridden—one of them noted the “escalating political pressure—and the measure was then placed on the April 2 ballot. The April 2 election is premature. Not only do we not have the community benefits agreement in place, we also don’t know the state and city contributions, and we also don’t have rigorous cost estimates or lease agreements. All of this information should be available for voters to make an informed decision.

What we do know is that public funds aren’t necessary for owners to build whatever they want and that stadia don’t drive economic development.

Pot Taxes Can Help Municipal Kettles Get into the Black

Posted on by David Stokes

A version of the following commentary appeared in the Springfield News-Leader.

When Missouri voters approved the ballot initiative legalizing marijuana in 2022, one part of the plan authorized cities and counties to enact a three-percent tax on marijuana sales in their communities (once again upon voter approval). Many cities proposed such taxes in 2023, but several cities in the greater Springfield-area waited until 2024 to consider it, including Nixa, Republic, and Rogersville.. The argument in favor of voters approving the tax is straightforward enough, but the debate over what to do with the new tax revenue is more complex.

“Pigouvian” taxes are taxes levied on certain goods to address their negative effects. They are common and include special taxes in Missouri on items like cigarettes, alcohol, and pool tables (yes, really, pool tables). Tobacco and alcohol consumption impose certain costs on society, and the extra tax revenue can be used to fund services to address those negative effects, like lung cancer research and drunk-driving enforcement. In addition, the taxes make the item more expensive, thereby reducing consumption. Elsewhere, for example, gas taxes may be quite high not only to fund roads but also to encourage public transit. Marijuana legalization will indisputably have some negative societal effects, and the three-percent local sales tax on it can help fund services like municipal police efforts to mitigate those negative impacts. Also, life is not a Cheech and Chong movie—dare to dream that it were! —and cheap pot really doesn’t do anyone much good. I generally support neither new nor high taxes, but the argument in favor of these new local marijuana taxes is strong.

What to do with the money is a more difficult issue. There are two questions: Should the revenue be dedicated to certain uses or sent to the general fund? And should it serve as new revenue or be used to cut taxes elsewhere? Directing taxes into the general fund gives local officials more flexibility to address local needs, but earmarking taxes improves both voter and elected-official decision-making and accountability. In some cases, as with cigarettes, the harms to society are easy to determine. Accordingly, the choice to earmark tobacco taxes to health-related fields, as we generally do in Missouri, is defensible. Legal marijuana, however, will be more like alcohol, with costs and harms to society spreading across a variety of sectors. Should the new sales tax revenues go to policing? Health care? Family services? Who knows? This is why alcohol taxes generally are not earmarked in our state, nor should local marijuana taxes be in these three cities. (However, focusing at least some of the new marijuana taxes on policy services would make sense.)

Politicians will try, as is their wont, to treat the new marijuana tax revenue as manna from heaven. Voters should demand more from them as we approach the elections. A new marijuana tax should not just be an opportunity to raise more revenue. It should also be an opportunity to replace other, more economically harmful taxes. Republic, in particular, has a high local sales tax at 3.125 percent, and perhaps the marijuana tax could be used to lower or eliminate other sales taxes.

Marijuana taxes are an opportunity to improve both the current budgets and the long-term tax environment for cities and counties. Voters in Nixa, Republic, Rogersville and anywhere else with a marijuana tax on the ballot should demand a plan that does both.

Yes, Mr. Mayor, There Are Fewer Flights from KCI

Posted on by Patrick Tuohey

At the March 19 panel discussion of the new stadium sales tax hosted by Kansas City PBS and the Kansas City library (available online here), former mayor Sly James interjected a complete non-sequitur. He said, in an attempt to impugn my analysis of the stadium tax: “There were a lot of things said about the airport, too. One of the things that Mr. Tuohey said about the airport was that it would be fewer flights, the exact opposite has happened. There’s more flights all the time.”

I have not written anything about the Kansas City airport in years, and I doubt I would have ever predicted flight numbers. I responded in the moment that I was writing about the number of gates at the new airport. But after the event Mayor James insisted I had written such a thing. I thanked him for reading the Show-Me Institute blog and didn’t think of it again.

The very next night, I was speaking to a community group in south Kansas City about the stadium tax. In the parking lot after the event, the representative of the Royals also mentioned my KCI flight prediction when I was speaking with him—which had not come up in the meeting.

Why are members of the Royals campaign sharing Show-Me Institute blog posts from 8 years ago? And which posts? There are many. (Here is a summary of the airport debate from 2017.) Were they referring to my post from 2017 pointing out that The Kansas City Star editorial board incorrectly asserted that a new airport will guarantee more flights? Or maybe it was the one from 2016 in which I wrote:

To sum it up, the airlines (and common sense) say that building an expensive new terminal will not increase demand for air travel. Quite the contrary, the higher costs to airlines and passengers may mean fewer flights.

Neither the former mayor nor the Royals representative mentioned a specific post, but it doesn’t matter. According to the Kansas City Aviation Department’s 2023 Annual Report, there were 5,195,871 enplanements (the number of people boarding the plane) in 2023. Compared to 5,951,776 in 2019, that represents about a 14 percent drop.

What about flights? Again, using Kansas City Aviation Department data, in January 2020, right before the beginning of the pandemic, the airport saw 8,606 carrier flights in and out of the old terminals. In January 2024, there were 8,138 carrier flights. That amounts to a 10 percent drop. The change between December 2019 and December 2023 is less dramatic, but still down a half percent. Mind you, this is after the International Air Transport Association (IATA) claimed in October 2023 that air travel demand is back to pre-pandemic levels.

Claiming that flights are up at KCI is incorrect. Even if the number of flights had increased, there is a lot more at play than just a new terminal. But then, these are the same guys who argue downtown baseball has positive economic impacts. It doesn’t.

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