Page 92 – Show-Me Institute

St. Louis: Come for the Tax Subsidies, Depart When You Can

Posted on February 15, 2023January 13, 2026 by David Stokes

In 2010, the very large Polsinelli Law Firm received millions in tax incentives to help it “decide” to keep its office in downtown St. Louis. The exact amount of the subsidy is unknown, but as of 2016 its total value was reported as being around $3 million. So, in other words, lots of money.

Clearly, since government economic development officials are so good at picking winners and losers, this subsidy has accomplished its goals and now the firm is operating without any tax subsidy and thriving in downtown St. Louis, right?

Not quite. Polsinelli announced two months ago that it is moving its local office to Clayton. No subsidy is required for this move (to the best of my knowledge). Polsinelli will be moving to the Centene Building, which is itself an argument for the uselessness of tax incentives.

Polsinelli has every right to move wherever it wants and I wish the firm the best. But as the City of St. Louis, Chesterfield, Crestwood, and more continue to dive headfirst into the tax subsidy well, the Polsinelli example is a perfect illustration that economic development based on tax incentives does not work. It just doesn’t. Politicians and economic development officials cannot predict the future. Their decisions are biased by political interests, or worse. The incentives for politicians and economic development officials bias them toward ribbon cuttings and campaign boasts at the expense of long-term thinking.

Yet we continue to prime this empty pump with new plans and programs every year, despite the repeated failure of the process. Economic development officials boast loudly of their few successes (which really just means the subsidies weren’t needed in the first place) while ignoring their many, many failures. It’s almost as if actual economic development isn’t their main goal in the first place.

Statewide Trends and the “Teacher Shortage”

Posted on February 14, 2023January 13, 2026 by Avery Frank

The Department of Elementary and Secondary Education (DESE) recently released demographic and faculty data for 2022. Given the current headlines about alleged teacher shortages and teacher salary issues, understanding the current education demographic trends is essential.

Stories about the teacher shortage conjure images of overwhelmed teachers across Missouri struggling to manage overflowing classrooms and a growing student population. If you never looked at the statewide numbers and only at media headlines, you might think the sky was falling. A few examples: “The Profession that Prepares People for all Other Professions is Diminishing (in Missouri),” “Teachers in Missouri are Not Returning to the Classroom,” and “A Look at the Local Impact of the Teacher Shortage Crisis (in Missouri).”

While the statewide trends are relatively minor, they still directly contradict the idea that teachers across the state are in short supply. The figures below depict statewide trends.

Student enrollment numbers have bounced back a bit from the COVID-19 dip and currently sit at 863,000. Nevertheless, prior to the pandemic, enrollment had been falling every year since 2013, and the 2022 number is still not close to the 2020 enrollment figure of 879,000. Conversely, teacher FTE (full-time equivalent) rose during the pandemic, and actually increased by a greater percentage (0.78%) than enrollment (0.41%) in 2022.

Even with the first positive enrollment growth since 2013, the student enrolled to teacher ratio still decreased from 12.29 to 12.26. The national student enrolled to teacher ratio has been decreasing for a long time, from 27 in 1951, to 20 in 1976, and to 16 in 2000. In 2020, the national ratio was 15.2, almost 3 whole students higher than Missouri’s total.

If the student-to-teacher ratio is so low, why are schools feeling the heat? The answer: there is a shortage of teachers to fill specific positions, not a shortage of teachers in general.

Five districts account for 50 percent of teacher vacancies in Missouri, and many of these vacancies are in a few subject areas—including special education, English-language learning (ELL), and mathematics. Allowing school districts to pay teachers more to fill these high-need vacancies—pay differentiation—is something I have discussed before, and could help solve this problem. Luckily, House Bill (HB) 190 is currently progressing through the Missouri Legislature, and it would allow for pay differentiation in our state.

There are districts in Missouri with needs for specific teachers. But that does not mean the whole state has a teacher crisis, and the data make it clear that Missouri is not facing any systemic teacher crisis. It is unfortunate that some Missourians may be getting the wrong impression from some inaccurate headlines, and one would hope that going forward we can have a debate that takes the actual facts into consideration.

St. Louis Should Eliminate Its Economic Development Agencies

Posted on February 13, 2023January 13, 2026 by David Stokes

A version of this commentary appeared in the St. Louis Business Journal.

In July 2010, Missouri politicians joined the state’s economic development agency to announce the awarding of $17 million in state tax incentives, along with $39 million in local tax subsidies, to the Mamtek project in Moberly. The project called for making artificial sweetener using a process that would start in China and finish at a new plant in Moberly, creating 600 local jobs here. There was just one problem—it was all a scam.

It may seem unfair of me to criticize a government agency for falling victim to a criminal conspiracy, albeit one that really wasn’t that sophisticated, but government economic development agencies are a catch-22 for taxpayers. When they do a bad job—as they did in Mamtek—they waste our tax money. As with the St. Louis Marketplace or the Olde Towne Plaza in Ballwin, we can list plenty of private business projects government had no reason to get involved in but did, to the detriment of taxpayers. But we can only wish they always did a bad job. It’s when they do their jobs right that taxpayers and average citizens really get burned.

When economic development officials do their jobs right, all they are really doing is subsidizing economic activity that likely would have happened anyway for the benefit of politically connected companies. As the old joke goes, economic development officials are great at creating jobs for other economic development officials. For everyone else, not so much. For all their skillful use of political buzzwords and claiming credit when none is deserved, it remains true that “government is a bad venture capitalist,” to quote President Obama’s economic advisor, Larry Summers. Summers was being polite. Government, in the form of local, state, and federal economic development agencies, is a terrible venture capitalist. It’s not that government officials don’t get their bets right often enough; it’s that they actively get them wrong because economic development officials are heavily influenced by the political incentives to reward supporters of the politicians who employ them. A short-term political payoff is more important than long-term success.

St. Louis Mayor Tishaura Jones came into office two years ago pledging to make changes to the city’s economic development process. To a small degree, her administration has reduced the subsidies it is giving out to companies, and for that she deserves credit. But they also figured out a way to somehow make a bad process even worse by imposing an “economic justice” imperative on it. So now, instead of listening to development officials fabricate how their corporate welfare led to jobs, growth, and so on, we get the additional pleasure of hearing how tax subsidies lead to more “equity.” Death can’t come fast enough.

Economist Dick Netzer mocked the exaggerated claims of success made by economic development officials when he wrote, “Who needs oil wells, when a state can be another Kuwait just by increasing the budget of a tiny agency?” Claims of subsidy successes often border on the absurd. The author once heard a Clay County economic development official claim that “All of the growth” in the town of Liberty—a fast growing, suburban community north of Kansas City, the likes of which have been growing across the nation for decades—was due to a tax-increment financing (TIF) package they passed. Chesterfield officials talk about the Valley TIF there in much the same way, as if suburbanization hadn’t existed until Missouri’s TIF law was passed in the late 1980s.

The self-aggrandizement of the economic development industry would be understandable if the system worked, but it doesn’t. The East-West Gateway Council of Governments (EWG) did a major study of TIF and other subsidies a decade ago and concluded that they created one job for every $370,000 in tax subsidies. That is a terrible return on the subsidy, as EWG stated. Economists Alan Peters and Peter Fisher studied tax incentives closely and concluded that they work about 10 percent of the time and are simply a waste of money the other 90 percent. They added that, like the Clay County officials mentioned above, economic development officials often credit all new employment and growth to tax subsidies. Yet our region continues to pass out tax subsidies like other people’s candy, evidenced by the atrocious decision of the St. Louis County TIF commission to approve $300 million in subsidies for the “blighted” part of Chesterfield just last month.

If we really wanted to help our community grow, residents of the St. Louis-area could get no better gift than the elimination of state and local economic development agencies. They are a blight on capitalism and an actively harmful influence on the civic and economic life of our state.

ROFR Makes Me ROFL

Posted on February 13, 2023January 13, 2026 by David Stokes

To paraphrase General Douglas MacArthur, bad public policy ideas never die, they just get reintroduced in the next legislative session.

One such very bad policy idea is right of first refusal, which grants major Missouri utilities the automatic right to win all bids on new electric construction lines if they so choose. You may want to read that again. It doesn’t just give major utilities the right to bid on all projects—that goes without saying. It gives them the right to win any project they want, no matter what any other utility or construction company may bid. The idea here is to funnel projects to Missouri companies and “protect” Missouri jobs at the expense of out-of-state competitors. If you think this raises prices on consumers, as any grade school economics textbook would predict, it does. Significantly.

My former Show-Me Institute colleague Jakob Puckett wrote about this issue last year. The same bills have been introduced again this session, so we shall return to Jakob’s arguments from last year:

Wouldn’t it be better for the legislature to propose subjecting transmission lines to competitive bidding, rather than shielding them from it? Since transmission costs are ultimately passed on to customers, it’s customers who bear the brunt, or receive the benefit, of cost-inflating or cost-saving policies.

Missouri will need more electric transmission lines built in the coming years. To build those lines at the lowest possible cost, Missouri needs more free-market activity in transmission projects, not less.

The state-based protectionism here is really something. While you frequently see such types of anti-market, anti-consumer protectionism at the national level (such as the administration’s ill-conceived plan to require only American-made products in our infrastructure efforts), you rarely see it at the state level. But here we have it. It is bad at the national level (with some exceptions, of course), but at least one can understand where it is coming from. As for this one, I’m at a complete loss. Are we really willing to cast everything aside because a company based in Arkansas that hires workers from Oklahoma might offer the best bid (and thereby save Missourians’ money) for a project near Joplin? (That’s a hypothetical project, for the record.)

As Jakob said, we need more markets in electricity, not less, and these bills power us in completely the wrong direction.

How We Fund Schools with Chad Aldeman

Posted on February 13, 2023January 13, 2026 by Susan Pendergrass

Susan Pendergrass speaks with Chad Aldeman about school funding, teacher pay, pension systems and more.

Chad Aldeman is the Policy Director of the Edunomics Lab at Georgetown University. Prior to joining the Edunomics Lab, Chad worked at Bellwether Education Partners and the U.S. Department of Education. He has published reports on K-12 and higher education accountability systems; school choice; and teacher preparation, teacher evaluations, and teacher compensation. He also served as the founding editor for TeacherPensions.org. His work has been featured in the Washington Post, New York Times, and Wall Street Journal. Chad holds a bachelor’s degree from the University of Iowa and a master’s of public policy degree from the College of William and Mary.

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Produced by Show-Me Opportunity

House Bill 190 and the Teacher Shortage

Posted on February 10, 2023January 13, 2026 by Avery Frank

House Bill (HB) 190 is on the move in the Missouri House of Representatives, as it is now being debated in committee. What is HB 190? It’s a bill that would allow Missouri school districts to pay teachers different amounts if they teach in a “high-need subject area or school.”

If a school has more than a 5% teacher vacancy or is filled with non-fully certified teachers, then it qualifies as a “high-need school.” “High-need subject areas” are defined as subjects in which a district had to leave a position vacant or filled the position with non-fully certified teachers in the previous year. Missouri uses a “single salary schedule,” which sets a salary floor for teachers with a bonus for master’s degree holders. Currently, a district cannot pay a science teacher more than an English teacher with similar experience and degree level—a master’s degree in physics is equivalent to a master’s degree in English.

As an example: under HB 190, a district could offer a new special education teacher (a high-need position in many districts) a salary above the current salary floor to recruit the teacher. Districts are also allowed to raise the salaries of current teachers in high-need subject areas in order to retain them. There are some limitations—HB 190 does not allow a district to demote a different teacher in order to use this enhanced flexibility to recruit or retain a teacher. Districts are limited by their own budgets, they can choose to offer these high salaries, but they must make space to do so without lowering other teachers’ salaries.

The broader debate on this topic is about an alleged teacher shortage in Missouri. But the problem is not quite that simple, or quite that broad. Missouri is having trouble recruiting teachers in specific subject areas, such as special education and mathematics. The problem is also highly concentrated; 5 school districts accounted for almost 50 percent of school vacancies in 2022. Given that Missouri is having trouble attracting teachers for certain high-need areas and schools, it makes sense to allow districts to pay certain teachers more in order to persuade candidates to fill those jobs.

Despite the logic of HB 190, several lawmakers voiced their opposition in a recent committee hearing, claiming it would “pit teacher against teacher” and that the bill would end up “doing a lot more harm to the culture of the district and the staff and schools than good.” These complaints don’t add up. There’s already significant pay differentiation in schools among teachers—veteran teachers make more money, and so do teachers with advanced degrees. Paying teachers in certain subject areas more money is just one additional variable.

This policy might also encourage Missouri teachers to gain additional skills and certifications in order to qualify for higher-paying positions. An English teacher might spend time learning about special education reading to become a teacher in a high-need subject area and receive the corresponding pay increase. This could potentially help schools fill vacancies faster, as it may be easier to promote from within instead of embarking on an external search.

We have a narrow problem in Missouri with hiring specific teachers, and that means we need a targeted solution. Pay differentiation is an idea worth strongly considering, and the objections from critics, at least so far, don’t have much merit. I’m glad to see that the legislature appears to be taking this idea seriously.

Senate Bill 88 and Licensing Restrictions

Posted on February 9, 2023January 13, 2026 by Avery Frank

Show-Me Institute researchers have been vocal proponents of reducing government barriers to workers, including hair braiders, park photographers, and many others, and have written on licensing issues for over a decade. We were also supporters of the recent adoption of an interstate licensing regime, which allows individuals who have had an license in a different state for at least one year to have applicable licensing requirements waived in Missouri. While this was a good start, it allows for an excessively long wait time (up to six months) between when an applicant requests a waiver exempting them from a licensing requirement and when the relevant oversight body must either grant or deny the request. Many applicants simply can’t afford to wait six months before beginning work in their chosen field.

A bill introduced in the Missouri Legislature, Senate Bill 88, would build on improving past successes in the occupational licensing sphere. It would strengthen prior licensing reciprocity legislation by reducing the maximum wait time for oversight bodies to waive requirements from six months to 45 days. This bill would also make it possible for Missouri licensing requirements to be waived for workers in states without such requirements provided they have at least three-years of applicable experience.

Ness Sandoval, a professor from St. Louis University, has written that Missouri is in a demographic winter—more people are dying in Missouri than are being born. Pair this finding with declining student enrollment in the state, one can see the need for Missouri to attract workers from out of state rather than put barriers in their path.

Against the substantial cost of licensing requirements we need to weigh the potential benefits to the quality and safety of products/services, but evidence of such benefits is underwhelming. The Mercatus Center at George Mason University conducted a meta-analysis of 19 different studies in Florida directly related to licensing and product quality. In 16% of these studies, researchers observed positive relationships between licensing and product quality, in 21% they observed a negative relationship, and in 63% they observed no relationship.

The Institute for Justice has identified nine occupations that Missouri licenses but are not licensed by at least 15 states throughout the country. For example, Missouri is one of 22 states that require a license to work as a sign-language interpreter—which entails $442 in fees, 60 credit hours of education, and two exams. Under current statute, if a sign-language interpreter with three years of experience from Kansas, Tennessee, Texas, Oklahoma, Florida, or Ohio wanted to move to Missouri, they would have to spend the time and money to acquire a license before they could work here. The same would be true for an experienced veterinary technician from one of the 15 states that don’t require a license.

Occupational licensing increases costs to consumers, limits competition, and by its nature involves government in the free market. In some cases (e.g., physicians), such costs may be justified in order to ensure the safety of the public. But policymakers should look for ways to limit the burden of licensing to cases in which it is absolutely necessary. Embracing the policies embodied in Senate Bill 88 would be a step in this direction,

On Property Taxation

Posted on February 9, 2023January 13, 2026 by David Stokes

Of all the positions I hold, the one that probably surprises people the most is my opposition to changes to the property tax system that would cap the rate of increase in home values, particularly the proposals that would favor senior citizens over everyone else.

This year in Jefferson City (as with every year) there are numerous proposals to implement such changes.

We have an example of this in California. In 1978, the state passed Proposition 13, which limited the increases in property assessments and taxes (although, to be clear, Proposition 13 went further than the proposed changes in Missouri would). Proposition 13 has certainly had its intended effect of making it easier for California residents to stay in their own homes. However, it has also reduced mobility, dramatically increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities for similar properties with similar services. I would not say that it has been an overall win for the state.

I support changes to our reassessment and tax system that keep assessments accurate while addressing the tax rate aspect of property taxes, as Senate Bill (SB) 711 did in Missouri about fifteen years ago. That bill required real estate tax rates to roll back no matter where the rate was in relation to its voter-approved rate cap, and that was a beneficial change. It is time now to expand the roll back provisions to personal property taxes, county commercial surcharges, and property taxes levied by the Kansas City school district.

A much more radical change I would like to see is an end to reassessments of individual properties. This is a costly and cumbersome process that is not needed in the days of Zillow. We could change the entire process to:

Set home values at sale price (assuming a fair market transaction).
During the biennial reassessments, determine the average increase for an area, such as a county, and raise or lower everyone’s assessed value by that amount, leaving an option for appeals in unusual cases and additional increases for home improvements, etc.
Then—and this is key—roll back everyone’s taxes by the same percentage to offset the assessment increase. This eliminates the unfair tax hit that people whose assessments go up more than average currently face.
Reset values at sale, as happens now.

This proposal doesn’t favor seniors over others, doesn’t lead to dramatic differences in property assessments and taxes for similar homes, and keeps the base broad. As I like to say, assessments should be as accurate as possible and the tax base should be as wide as possible so that the tax rate can be as low as possible for everyone to fund the necessary functions of local government.

As for senior citizens, funding the existing property tax “circuit breaker” program to help low-income seniors stay in their homes with targeted tax refunds is a better way to achieve this goal.

That about sums it up for me.

Education Choice in Rural America with Jason Bedrick

Posted on February 8, 2023January 13, 2026 by Susan Pendergrass

Susan Pendergrass speaks with Jason Bedrick.

Jason Bedrick a research fellow in the Center for Education Policy at The Heritage Foundation, where he focuses on policies that promote education freedom and choice, religious liberty, classical education, and restoring the primary role of families in education.

Read Jason’s full report here: herit.ag/3JMFLDA

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