This is just the latest example over the years of City Hall favoring wealthy, connected corporations with taxpayer subsidies and special treatment.

Port KC CEO Jon Stephens framed the incentives as a “small, supportive element” aimed at ensuring Kansas City retains high-quality jobs. The project promises to add 150 jobs with an average salary of $126,000 while retaining 600 current employees. Yet no precise value for the tax exemptions was disclosed. Its not clear if PortKC attached performance requirements to the deal, but Friestad indicates there was no such discussion of it among the commissioners when the subsidies were approved.

Readers may recall Stephens backed subsidies for an independent baseball team in Kansas back when the team couldn’t pay its utilities. If nothing else, he is consistent in his apparent desire to redirect taxpayer money to private corporate interests

Such a deal is nothing new for JE Dunn. The company received a lucrative incentive package when building its headquarters in 2009. That project fell under the East Village tax-increment financing plan, redirecting $19 million in public funds for a parking garage, demolitions, and blight removal.

This latest deal follows a familiar script in which major corporations, including Cerner, H&R Block, Burns & McDonnell, and Commerce Bank have secured public funding for their private office projects. Research has indicated for years that such incentives do not significantly impact corporate decisions on location.

Port KC has repeatedly played a central role in funneling public dollars into private hands. Its recent involvement with JE Dunn reflects a long history of negotiating deals that often leave taxpayers holding the bag, such as the millions each year taxpayers must fork over to cover bond payments on the Power & Light District owned and operated by Cordish Company. (Stephens is a former manager of that project.)

As Kansas City grapples with persistent infrastructure needs, ballooning public debt, and limited funding for essential services, its continued reliance on subsidies for corporate renovations raises questions about priorities. For now, Kansas Citians can only watch as the city’s public funds are diverted to underwrite private gains.

The post KC’s Corporate Welfare: JE Dunn’s HQ Renovation Gets Public Support appeared first on Show-Me Institute.

If Cerner fails to live up to the promises that made it Missouri’s top recipient of taxpayer subsidies according to Good Jobs First, what are the consequences? Did the issuing agencies insist on clawbacks? Were subsidies issued on a performance basis? Or did taxpayers’ representatives just believe what they were told and not insist that Cerner actually deliver on its promises? If experience is any indication, it’s likely the latter.

Now we have an answer. According to a story in the Kansas City Business Journal, the Kansas City Council requested a report from the Tax Increment Financing Commission on the status of the Cerner development, now owned by Oracle. According to the author:

Cerner pledged 15,000 new jobs ahead of its TIF plan’s 2013 approval, and 16,000 with revisions through 2018. A Bloomberg report in April found Oracle Health had 40% of that count, or 6,400 employees, designated in Missouri, where the Innovations Campus is its lone metro location. However, the commission’s report did not discuss the campus’ job creation or retention, as its redevelopment terms do not have binding job thresholds.

The job creation promises were not binding. Our representatives, including members of the city council and the mayor, just took the company at its word. And what’s more, they didn’t even ask for any guaranty. We apparently just handed Cerner the money. Kansas City leaders should have set up measurable markers and demanded Cerner meet them lest it lose the subsidies and potentially face additional penalties.

As my colleagues here can attest, researching public policy will make you a skeptic. Often, one needs to resist becoming a cynic. But rarely—though maybe not as rare as we’d hope—you find out the truth is as bad or worse than you feared. This is one such occasion.

The post Apparently, Failing to Meet Promises Is Not a Violation of K.C. Subsidies Regime appeared first on Show-Me Institute.

In 2014, Cerner received the largest economic development project subsidy in the state’s history. The company pledged to add 16,000 *new* jobs in Kansas City in exchange for substantial taxpayer subsidies to construct its new headquarters. However, by 2019, Cerner had only managed to expand its workforce to 14,000 total, and not all the jobs were in Kansas City proper. Cerner fell short of its promise. Now, under Oracle’s ownership, the local employee headcount has been nearly halved to a mere 6,400. This is far from the 26,000 jobs—the 16,000 new plus the 10,000 Cerner had at the time—that were supposed to be in place by this year.

The issue runs deeper than just the numbers; it’s more about the impact on the local economy and the trust that was placed in these corporations. The Kansas City region was promised significant economic growth and job creation. Taxpayers delivered, but Cerner, and now Oracle, have failed to keep their promises.

Just like the Power & Light District, and the proposed downtown stadium, the Cerner project reveals the misplaced faith in economic development incentives. Time and again, we see that these incentives often fail to deliver. Instead, they serve as generous gifts to corporations, paid for by taxpayers, with little to no accountability.

The Cerner deal has been an abject failure. All city and state leaders who cheered this project should be held to account.

Current and future Kansas City leaders must learn from these missteps. They must scrutinize these large-scale economic development projects more rigorously and demand transparency and accountability. Tax incentives and subsidies, if issued at all, should include meaningful and measurable outcomes, strict legal standards for what constitutes a new job, and oversight from a clearly defined agency that will monitor the subsidy recipient over time. Holding corporations accountable for their promises will not only protect taxpayers; it may reduce the demand for subsidies in the first place.

The April 2 stadium outcome showed that voters demand more details and accountability from those who seek public funds. Leaders must provide them.

The post Kansas City Must Learn Lessons from Cerner Failure appeared first on Show-Me Institute.

The Kingsway Commercial Tax Increment Redevelopment Plan involves developing multiple projects where the Central West End meets Delmar Boulevard. But perhaps more importantly, a big chunk of funding for these projects would come via a tax-increment financing (TIF) district that would raise $6.2 million. This project will also be financed by a mixture of state and federal tax credits. There are additional plans to create a community improvement district (adding to Missouri’s growing special taxing district problem).

These economic development tools would help to finance this project at the expense of taxpayers; they give developers cash, reduce their tax burdens, and could increase sales taxes in the area. North of the “Delmar Divide” is generally a low-income area, so should we really be redistributing tax dollars from low-income residents to developers instead of using these dollars for public services? Especially when other publicly funded ventures like the Cerner headquarters in Kansas City or the Loop Trolley right down the street from this project haven’t delivered on their promises?

While I’m sure most can appreciate the “bridging the gap” intention of this project, TIF is a flawed economic development tool that often gives no benefit to taxpayers. TIF requires that an area be blighted (for which Missouri has a very broad definition), and that the development would not happen without the public funding. With the thriving Central West End neighborhood just steps from this development, it’s hard to believe that development in this area would not occur without millions of public dollars. Moreover, even if this area were blighted, does it really need these perks for the next 23 years? Is diverting tax dollars to a private development project really the best way to develop this area of St. Louis?

The post Fixing the “Delmar Divide” with a TIF? appeared first on Show-Me Institute.

Measuring the success of economic development packages is challenging because it’s almost impossible to tell if any growth is actually due to the incentive package. Economic growth may have occurred without the incentivized project and new projects can happen without incentives. Research suggests that 75 percent of incentivized firms would have made the same location choice even without the incentive.

On top of that, the incentivized investments don’t always pay off. Tesla plans to build a large factory that could employ up to 7,000 people, but we’ve seen companies fail to live up to promises before (such as with Cerner in Kansas City). There’s really no guarantee that new jobs or infrastructure will come to the city as promised. Even if the jobs or infrastructure do arrive, it still might not be a net positive for the city, given the cost of the incentives. One study found that the costs and benefits of incentive packages are typically the same.

As I’ve previously pointed out, it’s probably not the best time to be giving out incentive packages. Government budgets are expected to be extremely tight due to COVID-19 and the resulting economic shutdown. Why should new, big businesses receive tax breaks while the citizens and businesses suffering through this pandemic in Joplin are left with their full tax burden?

With no guaranteed benefit and potential budget issues looming, offering $1 billion in incentives doesn’t seem like a great idea, and it definitely doesn’t seem like a good deal for Joplin’s citizens.

The post An Incentive Package for Tesla May Not Benefit Joplin appeared first on Show-Me Institute.

At the time of the subsidy application in late 2014, Cerner claimed it had just over 10,000 employees in Kansas City alone. In Exhibit 4B of its application for tax-increment financing (TIF) it promised to create 15,659 “permanent jobs to be CREATED IN Kansas City” as a result of the new headquarters building [emphasis in original]. And Cerner claimed it would accomplish this in 10 years.

One of the unmet challenges with economic development incentives is that it is difficult to know whether any economic growth is due to the subsidies themselves. Growth, if there is any, may have happened for reasons other than incentives, such as an improving economy overall. As we have noted time and again, the economic literature makes clear that there is little evidence that economic development incentives themselves actually drive any growth.

Five years in, it seems the company is struggling to keep the promise about jobs. Just this week, The Kansas City Star reported that Cerner had 14,000 employees in the Kansas City region (presumably including its Wyandotte County, Kansas location). This is 4,000 more employees than what it reported in 2014. That’s pretty good growth for any company in just a few short years. But it’s nowhere near the 26,000 (a baseline of 10,000 jobs plus the 16,000 additional promised) it should have by 2024.

Maybe Cerner will make a lot of new hires in the next five years, but it needs to bring on at least 12,000 people in Kansas City to make good on its commitment.

If Cerner fails to live up to the promises that made it Missouri’s top recipient of taxpayer subsidies according to Good Jobs First, what are the consequences? Did the issuing agencies insist on clawbacks? Were subsidies issued on a performance basis? Or did taxpayers’ representatives just believe what they were told and not insist that Cerner actually deliver on its promises? If experience is any indication, it’s likely the latter.

The post Where Are Those Jobs, Cerner? appeared first on Show-Me Institute.

We’ve built a new entertainment district along with several luxury apartment high-rises, corporate headquarters buildings, and hotels—including an 800-room convention hotel. We’re trying to build a new single-terminal airport, revive the 18th and Vine Jazz District, and expand the streetcar. There is also talk of building along the riverfront, possibly including a new sports stadium!

But along with building structures, we’re also building a reputation—and not a good one.

Perhaps you have also heard about a years-long, nation-leading spike in homicides, an underperforming Kansas City Public School District, and a nonexistent affordable housing policy. Maybe you’ve read about blighted structures on the East Side collapsing under their own weight. You may be aware that the police department has about 10 percent fewer uniformed officers than it did before the homicide rate jumped.

These things are related. Our leaders are falling over themselves to offer generous tax incentives to everyone from Amazon to Burns & McDonnell to Cerner while city services are being starved of tax revenue because those companies are no longer paying. Recently, both the Kansas City Library and Mid-Continent Public Library turned to taxpayers to make up for funds lost to such subsidies. Sometimes service providers like the Community Mental Health Fund are less able to help those in need.

Like a crazed Christmas shopper, we’ve paid for much of this development spree armed with credit and questionable judgment. Kansas City’s leaders were warned about high levels of debt in 2012 in the Citizen’s Commission on Municipal Revenue. But since then our debt per capita has only risen, and last year city leaders sought and were granted 40 more years of debt.

If you’re looking for a metaphor from the season, it might be that we’re hanging a lot of shiny ornaments on a dry, dying Christmas tree.

Proponents argue that without generous subsidies, wealthy corporations could not afford to build their luxurious headquarters buildings. Beyond the question of why taxpayers should support such things, the research from around the country tells quite another story. A 2018 study from The Upjohn Institute for Employment Research concludes in part, “for at least 75 percent of incented firms, the firm would have made a similar location/expansion/retention decision without the incentive.”

Another cost of these burdensome baubles on our community Christmas tree is they make it harder for us to keep the tree itself alive and healthy. Consider the time and attention spent on the new airport terminal or the convention hotel that might have been used addressing housing policy or the homicide rate.

We are diverting money and seeing no real gain. So why do city leaders keep doing it?

One reason might be explained by another Christmas metaphor: gift giving. A Show-Me Institute study of tax-increment financing (TIF) projects in Kansas City from 2002 through 2018 found that developers’ campaign contributions to city council and mayoral candidates increased in the years leading up to their TIF applications and then dropped off in the years after TIF was awarded. This finding suggests a TIF-for-tat arrangement between developers and city leaders, and it could help explain why an economic development policy universally decried as suspect remains popular—and increasingly so—in Kansas City.

The final days of a year are often a time to take stock and reflect. As Kansas City prepares for local elections, we need to focus more on the real issues affecting our municipal tree—crime, infrastructure, education, and debt—and less on the distracting and ultimately unsuccessful policies of economic development subsidies.

The post Kansas City’s Christmas Tree appeared first on Show-Me Institute.

The report indicates that the total value of all corporate welfare in Missouri is a whopping $5.8 billion. That makes the Show-Me state the 10th-most subsidized in the union. Missouri subsidizes business to a greater extent than all of its neighboring states except Kentucky. (We even beat out Illinois!)

Of the top five corporations in Missouri that receive corporate welfare money, three are headquartered in Kansas City: Cerner, H&R Block, and DST Systems. They account for $2.3 billion in subsidies, about 40 percent of Missouri’s total.

Little wonder, then, that Kansas City—a high tax city—must borrow money to provide basic services such as dangerous structure teardown or infrastructure maintenance—we’ve given boatloads of our tax revenue away to wealthy corporations. Perhaps it’s time policymakers change direction; after all, for all the business Missouri residents subsidize, we’re still one of the slowest-growing states in the union. 

The post Kansas City, King of Corporate Welfare appeared first on Show-Me Institute.

Back when City leaders referred to themselves as “geniuses,” City Hall was handing out subsidies to everyone. H&R Block kicked off the feeding frenzy with their downtown office building, followed by the financially disastrous Power & Light District deal that has taxpayers footing the bond payments. In recent years taxpayers have chipped in for wealthy corporate headquarters for Burns & McDonnell and Cerner, and subsidized luxury high-rise apartment buildings. Even The Star itself has received a tax abatement. Once taxpayers and parents raised an objection to a subsidy for architectural firm BNIM to build in a hip part of town, the Council considered some reforms. Mayor Sly James would have none of it and complained that “we may as well put up a sign that says Kansas City is once again closed for business.”

Obviously, James is wrong. As Kansas City contemplated subsidizing a Hyatt hotel downtown, Marriott was building two on their own dime a few blocks away. The owners of Ward Parkway Mall are building a restaurant plaza without any subsidies. And now we learn of this proposed 13-story, 257-unit apartment building just west of Country Club Plaza. This is great news, not just because someone wants to invest in Kansas City, but because they are willing to invest their own money rather than seek taxpayer subsidies.

As Show-Me Institute writers have pointed out for years, not only do subsidies starve cities, counties, schools, and libraries of the revenue they need to provide basic services, subsidies also pervert developers’ incentive structure. And all this for projects that research shows likely would have been built anyway.

Real private investment—without taxpayer subsidies—is a true sign of economic health. City leaders need to put the brakes on handing out subsidies and let more private investment come.

The post Development Can Happen without Subsidies appeared first on Show-Me Institute.

Trump has said some traditionally infrastructure-y words when he talks about this. “We’re talking about a very large-scale infrastructure bill,” the president-elect said in a long-ranging interview with the New York Times published Wednesday. “… [a]nd we’re going to make sure it is spent on infrastructure and roads and highways.” A proposal to privatize infrastructure projects released by Trump’s economic advisors describes the “complex network of airports, bridges, highways, ports, tunnels, and waterways” that underpins private sector growth.

Bliss worries that Trump will be more inclined toward “major new property development,” rather than infrastructure. She even cites Paul Krugman’s column, where such spending is often boosted, in The New York Times where he writes,

And we already know enough about [Trump’s] infrastructure plan to suggest, strongly, that it’s basically fraudulent, that it would enrich a few well-connected people at taxpayers’ expense while doing very little to cure our investment shortfall. Progressives should not associate themselves with this exercise in crony capitalism.

The President Elect’s infrastructure plan may or may not amount to crony capitalism. As my colleague Patrick Ishmael recently wrote, the Carrier deal in Indiana invites the accusation. Yet this is exactly the sort of crony capitalism that progressives seem to love in Kansas City and St. Louis. Recall that we’ve redirected hundreds of millions of tax revenue into property developments for wealthy corporations such as Cordish, Burns & McDonnell, Cerner, and H&R Block.

Meanwhile, important infrastructure spending (read: roads, bridges, sewers, etc.) is squeezed, because the city cannot afford it. We’ve heard that the city wants to borrow $800 million for such spending—but we have as much detail about where that money will go as Trump has given on his plans. Hopefully, those funds won’t go toward  “fraudulent” infrastructure projects instead of those truly necessary for the public good.

Policy debate on infrastructure is welcome, as is skepticism toward government spending. But if you want to be critical of fraudulent public programs that appear only to enrich the well-connected, you don’t need to travel to Washington to find it—or even leave Kansas City.

The post Kansas City and “Fraudulent” Crony Capitalism appeared first on Show-Me Institute.

The Show-Me Institute stands arm-in-arm with those decrying the decades of neglect suffered by the East Side. In fact, we authored the chapter that exposed the fact that city economic development policy favors wealthy developers in the Urban League’s “2015 State of Black Kansas City.” Kansas City leaders have for years turned a blind eye to the economic decline suffered by our urban core. Worse still, city leaders have actively pursued development policies that diverted important resources away from schools and libraries in that same community.

Just as Kansas City’s shameful past of red-lining and block-busting a generation ago aided and abetted racial segregation, subsidies for today’s wealthy developers have diverted property taxes away from important city services on the East Side and toward the millionaires and billionaires at Burns & McDonnell, Cerner, and VanTrust.

Kansas City has so hollowed out its tax base through these diversions that the city must borrow money to provide basic services like tearing down dangerous buildings and repairing roads. While Kansas City suffers a two-year spike in homicides, our cash-strapped police force has fewer uniformed officers than it had in 2011.

Desperate for the basic services that the city government should be providing, communities on the East Side have resorted to community improvement districts (CIDs). The Independence Avenue CID charges a one-percent sales tax in order to provide security and beautification—things residents feel they cannot get from the police or the parks department. As a result, families living in the urban core are paying a higher tax rate on food just to feel safe while they shop.

Vernon Howard Jr., senior pastor of St. Mark Union Church, was correct when he told the Star, “City, county, state and federal jurisdictions have not, to date, focused upon the inner city with the kind of zeal, investment, intentionality and creativity as have been vested within mostly white and wealthier neighborhoods and communities.”

I empathize with East Side leaders, but their solution may only make matters worse. Adding another sales tax means poorer residents will be forced to pay more out of their pockets to get services they should already be getting for their earnings taxes, property taxes, (already high) sales taxes, COMBAT taxes, and all the rest.

If Kansas City is to thrive, it needs to dramatically overhaul its taxing and spending policies. We need to limit our profligate spending on touristy frou-frou and focus on providing services quickly, efficiently, and compassionately; we need to stop subsidizing wealthy corporations and luxury high-rises; and we must focus on developing the things that make Kansas City great—rather than merely mimicking Portland or Denver or Dallas. Because as jobs and population numbers attest, we are losing that game.

The post The Consequences of Bad Policy appeared first on Show-Me Institute.

The Mid-Continent Library system spends just short of $44 million each year. As far as we at the Show-Me Institute can tell, they appear to be managing their budgets well. The library itself makes an additional point:

In addition, tax incentives and abatements by local government have impacted the revenue that would generally result from the growth of the Library’s tax base. The Library’s budget has been essentially flat for the past 8 years.

It appears that the cost of those tax incentives and abatements given to private developers—which we’ve discussed elsewhere–amounts to about $7 million a year in lost income to the library. The levy will replace that lost income.

We don’t have a view on whether voters should approve the levy increase, but it is clear that municipal handouts to wealthy corporations such as Cerner and Burns & McDonnell are not free. (To add insult to injury, these same corporations won’t have to pay this increased rate, either.) A levy increase such as this, which seeks to recoup diverted funds, can rightly be described as a TIF tax.

The post The TIF Tax appeared first on Show-Me Institute.

A spokesman for the Show-Me Institute—funded in large part by St. Louis multimillionaire Rex Sinquefield, an ardent earnings tax foe—said this week that the city should stop offering tax incentives and tighten its fiscal belt. The spokesman’s claim: These subsidies are “north of $100 million a year.”

Add all of the city’s investments in economic development — through the earnings, sales and property taxes as well as direct public subsidies for projects—and it’s $77.6 million of diverted revenue this fiscal year.

That’s a big number. But it’s not close to being “north” of $100 million.

We at the Show-Me Institute have been telling this to people since we first got the numbers from the city's own finance department in February 2015. Those documents, available via the link at the bottom of this post, show that the subsidies for fiscal year 2014 are $93 million, and do not include the subsidies for Burns & McDonnell and Cerner. The latter subsidy, which the Star unequivocally endorsed, might be the biggest tax diversion in the history of the state of Missouri.

The problem is that the Star's editorial board likely only considered the city’s portion of TIF subsidies. The problem with TIF, however, is that it allows the city to divert money from other taxing jurisdictions such as schools, counties, and libraries. In short, the city is offering subsidies with other people's money.

I would welcome the opportunity to look over the documents the Star used to reach their conclusions. Do they include Cerner and Burns & Mac? Do they include bond payments on the Power & Light District and the Citadel? Do they include earnings tax subsidies given to the Star itself? How about TDDs, CIDs, Chapter 353 property tax abatements, etc? If not, then their calculation of the cost of subsidies is embarrassingly incomplete.

The post Kansas City Star Editorial Board Gets Subsidies Wrong Again appeared first on Show-Me Institute.

Overall, Kansas City redirects $100 to $110 million each year to developers for the various TIF projects in town. That doesn’t include some of the recent ones like Burns & McDonnell, the Kansas City Star, and Cerner. In fact, according to the Washington Post, Cerner is the biggest recipient of taxpayer subsidies in the state of Missouri. Their last subsidy from Kansas City may be the biggest in the city’s history.

When will city leaders decide that we’ve subsidized enough and start trying to reap the rewards of all the previous spending? Given recent news regarding Two Light and the Star, the answer appears to be no time soon.

The post Kansas City’s Debt appeared first on Show-Me Institute.

• Cordish, the company that brought us the Power & Light District then sued to lower their county property taxes, says that the downtown investment has been a success! But apparently the success wasn’t great enough to forgo further subsidies for two more residential buildings.
• The Port Authority in Kansas City recently announced that they will be using public dollars to subsidize the construction of luxury residential condominiums along Kansas City’s riverfront. There is great demand they say, but apparently not enough to avoid the use of public underwriting.
• A Crossroads hotel has received TIF subsidies, and an apartment building in the same area is receiving a property tax abatement and a $1 million exemption in sales taxes.

When will the public subsidies end? How do we know when we’re done? Is there any incentive for developers to say they do not need public subsidies? (The answer to that last question is no.) This is important because every subsidy means less money for city and county services; every abatement means less money for schools, less money for libraries. Right now, at least $93 million of city revenue is redirected each year to these developers. That doesn’t include the new projects for Cordish, Burns & McDonnell, and Cerner. Developers shouldn’t be encouraged to build skyscrapers while digging taxpayers into a hole.

The post Kansas City Builds by Digging Itself into Holes appeared first on Show-Me Institute.

His quip aptly describes a sport popular in Missouri: The one that elected officials play when they use taxpayers’ money to support the growth of selected businesses or industries.

The attempt to single out economic winners through government planning and intervention is a dismal sport that can only end in disappointment and failure. The nutritional value of the object of the hunt may be safely described as zilch. If you eat the uneatable, you will only make yourself sick.

But you wouldn’t know that from the behavior of many of our elected officials of both parties.

Whooping and hollering, they ride to the hounds of corporate welfare—passing out hundreds of millions of dollars every year in targeted tax credits and other subsidies that go mainly to large and deep-pocketed corporations and a supporting cast of lawyers, developers, urban planners, and consultants.

In a recent report, the Mercatus Center at George Mason University identified Missouri as one of nine states that rank as “the corporate welfare kings of America.” According to Mercatus, Missouri has committed to more than $5.2 billion in subsidies to private businesses over the past couple of decades.

So how much good has being a “corporate welfare king” done for the people of Missouri? Has it made our state a magnet for growth and job creation?

Emphatically, not!

Over the last decade and a half, Missouri has lagged every other state in the nation but one in average annual economic growth.

In the 16 years from 1997 through 2013, real gross domestic product in the United States grew at an average annual rate of 2.23 percent. Meanwhile, Missouri grew at an average annual rate of just 1.08 percent—or less than half as fast as the national average. By this measure, Missouri ranked 49th out of the 50 states—just ahead of Michigan at the bottom of the barrel.

There are two things that typically can happen with taxpayer-assisted commercial developments—both bad.

The first is the support of bad ideas that would never get off the ground without the helping hand of government, such as the now-bankrupt and disbanded Mamtek artificial sweetener plant that was supposed to provide 600 jobs in Moberly. The CEO of Mamtek was recently sentenced to a seven-year prison term.

Second is wholly unnecessary pump priming at taxpayer expense. In our state, Tax Increment Financing (TIF) is commonly used to “induce” powerful companies and their allies in commercial development to do things they would do anyway, such as opening new stores or building more opulent corporate headquarters.

To cite two recent examples of the abuse of TIFs, Kansas City and the state of Missouri are prepared to pick up $1.6 billion out of the $4.3 billion cost of building a brand-new and super-deluxe corporate campus for the Cerner Corporation. If Cerner needs a corporate pleasure dome, it should pay for it on its own nickel.

Another egregious example of a private development that does not require or deserve public assistance through the grant of what amounts to a tax holiday from the property and sales taxes that apply to other businesses is the Whole Foods Market and high-rise apartment complex that is going up in Saint Louis’ trendy Central West End.

If Missouri wants to stimulate growth and job creation, the first step is to put a stop to corporate welfare, including the $400 million in targeted tax credits earmarked for commercial development that the state hands out on an annual basis. And that dictates the next step, which is to return the money to the people who earned it—through cuts in the state income tax.

Brenda Talent is the CEO at the Show-Me Institute.

The post Riding to the Hounds of Corporate Welfare appeared first on Show-Me Institute.

Are you listening, Missouri lawmakers? This is the Ghost of Christmas Past. I am calling on you to mend your ways and adopt a whole new set of economic policies to replace the failed policies of the past two decades.

Yes, my friends, it is time for you to admit that what you have been doing—in spending billions of dollars of taxpayers’ money to subsidize commercial projects for the benefit of big, cash-rich companies such as Boeing, Cerner, Capri Casinos, Wal-Mart, and Whole Foods—has been a ghastly mistake.

In the 16 years from 1997 through 2013, Missouri has trailed every other state in the nation but one in average annual economic growth. Missouri ranked 49th out of the 50 states in growth of state gross domestic product—just ahead of bottom-dwelling Michigan.

And that is despite (or, I would say, because of) the fact that you have turned Missouri into one of the nine states considered the “corporate welfare kings of America.” According to the Mercatus Center at George Mason University, Missouri has committed more than $5.2 billion in state and local subsidies to private businesses over the past two decades. That is more than all but eight other states.

What else can I say to convince you of the urgent need for change? Well, perhaps some specific suggestions would help.

Here are five New Year’s resolutions for making Missouri a better place to live and work and grow a business:

• Stop putting the public sector cart in front of the private sector horse. That is to say, begin with the recognition that all the private sector really needs to create wealth and jobs is competition and freedom of choice. It doesn’t need central planning and controls, which have the opposite effect of stifling individual initiative and economic growth.
• Abolish the Missouri Department of Economic Development (DED) and return the money that the DED passes out in targeted tax credits for economic development (about $400 million a year) to everyone (not just the politically selected few) through broad-based cuts in the state income tax for individuals and businesses.
• Take advantage of a wealth of opportunities across the state to enlarge the private sector and shrink the public sector through privatization. That is what Arnold did recently in selling its publicly owned and operated sewer system to a private contractor for $13.2 million—allowing the city of 20,000 people to pay off $8 million in sewer bonds and devote another $5.2 million to other public improvement. Better yet, under private ownership, the sewer system will go on the tax rolls and help pay for schools and other public services.
• Make greatly increased use of tolls on Hwy. 70 and other major roadways and bridges. Tolls are an extremely efficient tax, and—as a result of new technology—they are readily collectible without toll booths or other inconvenience to people using the roadways. In fact, through variable tolls, the Missouri Department of Transportation could—at minimal cost—guarantee drivers congestion-free traffic flows at all hours of the day on major roadways and bridges.
• Finally, look to what neighboring states are doing in reorienting their tax structures and put Missouri in the forefront of states that are pursuing pro-growth, pro-economic freedom reforms.

In the Christmas spirit, I urge you to make all those changes—knowing that you will wake up shortly wanting to fix the problems that have kept Missouri from reaching its full potential.

Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute.

The post New Year’s Resolutions for Missouri Lawmakers appeared first on Show-Me Institute.