David Stokes, Elias Tsapelas, and Avery Frank join host Zach Lawhorn to outline what a responsible plan to eliminate Missouri’s income tax should include, from revenue triggers and spending restraint to rethinking other taxes. They also break down St. Louis County’s Bill 182 expanding prevailing wage and DBE mandates, Independence’s proposed TIF package for a new Wally’s gas station and what it says about corporate welfare, Missouri’s early literacy crisis and reforms like a universal third grade reading screener, mandatory retention, and banning three cueing, and what they are watching next on prefiled tax bills, data center policy, and rising property tax bills across the state.

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Timestamps

00:00 Introduction to Missouri’s Income Tax Elimination Plan
02:52 Strategies for Reducing Income Tax Reliance
05:19 Understanding Missouri’s Tax System
08:26 The Importance of Competitive Tax Policies
10:53 St. Louis County’s Prevailing Wage Bill Discussion
13:45 Economic Implications of Tax Subsidies
16:24 Independence’s Wally’s Gas Station Development
19:28 The Flaws in Tax Increment Financing
20:20 Addressing Early Literacy in Missouri
27:54 Looking Ahead: Legislative Priorities

Produced by Show-Me Opportunity

The post Eliminating Missouri’s Income Tax, Subsidies for Gas Stations, and Early Literacy Reform appeared first on Show-Me Institute.

Almost certainly. (And I’m only adding the “almost” because it is being litigated over and you never know how it will turn out.)

This isn’t the first time grocery stores have been targeted by special taxing districts simply because developers want the significant money they generate. In Wentzville, a Schnucks store was forcibly included in a CID that was used to help fund a Walmart development. If that sounds insane, it is. One grocery company, Schnucks, was forced to levy a special tax against its will to benefit one of its main competitors.

In St. Louis, an existing CID board tried to expand the CID’s boundaries to include another  Schnucks, primarily to get access to all of the money it generated. Schnucks opposed that one, too, and good for the company. As the company explained in a letter to elected officials:

It is our position that addressing the problem goes beyond additional cleaning, and we would encourage the City to tap into funds available to address these issues, rather than institute an additional tax on citizens who are buying their needed groceries for their families.

Grocery stores are not large ATMs with food in them that special taxing districts can extort whenever they feel like it. Good for Hy-Vee for fighting back in Lee’s Summit, and good for Schnucks to have opposed these ideas previously. Special taxing districts like CIDs and TDDs are, in the vast majority of cases, nothing more than vehicles for corporate welfare. They are bad enough even when all the property owners agree. But compelling grocery chains to participate in them against the will of the stores is just the sour cherry on top.

The post Hy-Vee Wants to Give the Heave-Ho to a CID appeared first on Show-Me Institute.

Port districts exist, in theory, to build and manage port facilities along rivers. When they actually focus on that job, I have no complaints. But in reality, many of the port districts are focused on other things, such as granting tax subsidies or engaging in government corruption. (The latter is less common, thankfully.)

The City of St. Louis’s port authority legitimately operates port facilities along the Mississippi. However, it is also substantially engaged in the granting of tax subsidies, usually for businesses that have absolutely nothing to do with rivers or shipping. For example, the port authority passed a one-cent special “port” sales tax for the St. Louis soccer team to be charged at the soccer stadium that the team gets to keep for its own purposes. (The soccer team has stated that it will use those funds to fix groundwater issues, so I guess it’s at least related to water.)

That was the city’s first “port” sales tax. Now there is a hotel, retail, and condo redevelopment downtown that also wants in on the game. The Jefferson Arms redevelopment has also requested a “port” sales tax of one percent. This is on top of the tax-increment financing subsidy it has already received, as well as the state and federal historic tax credits it got, and the community improvement district and transportation development district extra sales taxes it has applied for and will likely receive. Could it be that the developer wants to socialize the risk and cost, while privatizing the profit?

But a strange thing happened when the developer and its consultants tried to get the sales tax approved by the port authority. The port board said, “Wait, not just yet.” (Trust me, I wish I could say it said “no,” but the vote was tabled, not defeated.)

As Commissioner William Kay Jr. noted at the hearing: “If all three districts are approved, the Jefferson Arms building would have the highest sales tax rate in the city at 12.67%. We’ve got the CID, we’ve got the TDD—the tax rate right now will be 11.67%,” Kay said. “That’s the high mark for the city. I do not think the port authority needs to get into the business of subsidizing these projects.”

Let me reiterate: the Jefferson Arms project has nothing to do with a port. The use of port authorities to create one more tax subsidy opportunity in St. Louis, Kansas City, or anywhere else is terrible public policy. It’s great to see one agency say “not yet.” Hopefully, that “not yet” becomes a “no” in the future, both for this instance and many other subsidy proposals around the state.

Furthermore, the state legislature should remove the ability of port districts to issue tax subsidies or institute new sales taxes. Ports should be funded with user fees to the largest extent possible, and should not be another tool in the corporate welfare toolbox.

The post Denied Entrance at the Port of Call appeared first on Show-Me Institute.

Spoiler alert: It’s taxpayers. Taxpayers foot the bill.

The scale of these data centers is staggering. As Friestad reports, the energy demand from these facilities is equivalent to 100 Walmarts or 40 hospitals​. Their massive electricity needs—driven in part by artificial intelligence—have led Evergy, the regional utility provider, to plan two new natural gas plants and expand renewable energy production by 3,000 megawatts over the next decade​.

While Evergy insists that existing customers won’t subsidize these projects, some experts aren’t convinced. The Missouri Office of Public Counsel warns that the increased demand could drive up energy prices across the region​. Even if Evergy builds enough capacity, ratepayers may still bear the costs of maintaining infrastructure that primarily benefits tech giants.

Kansas City approved up to $8.2 billion in tax incentives for Meta alone, a package more than three times the city’s annual budget​. Google has also secured generous tax benefits, though the full scope is still unclear​.

These incentives were pitched as a way to boost local schools and communities. But as Friestad’s reporting shows, and as regular readers of this blog have come to expect, the expected windfalls have been slow to materialize. The Smithville School District, which was promised rising tax revenues, has instead seen a fraction of what was projected. In 2024, Meta paid just $86,839 in property taxes to the district—far short of the more than $1 million in annual payments initially forecast​. Construction delays and city permitting issues have further postponed expected revenues.

The pieces highlight an important debate: Did Kansas City need to offer such massive subsidies at all? Economic development officials argue that data centers wouldn’t come without them, but others suggest that factors like cheap land, energy access, and infrastructure play a much bigger role​.

A broader trend is at play. At least 36 states now offer incentives for data centers, creating a nationwide bidding war​. Critics like Good Jobs First director Greg LeRoy argue that these subsidies often do little to sway a company’s decision, while shifting tax burdens onto residents​.

And while data centers bring major investments, they don’t create many full-time jobs—typically around 100 per facility, despite requiring billions in public support​.

As they have with entertainment districts, hotels, and sports stadia, Kansas City leaders are making a massive bet on data centers, banking on future economic gains. But as the Kansas City Business Journal’s reporting makes clear, the immediate costs are real, and the benefits remain uncertain. Will the promised revenues materialize? Will taxpayers ultimately bear the burden of subsidizing these projects?

The people of Kansas City should demand answers. If policymakers want to keep handing out billions in incentives, they owe the public clear, transparent explanations of when—and if—the promised returns will actually arrive.

The post Kansas City’s Data Center Boom: Another Costly Gamble appeared first on Show-Me Institute.

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.

It is, alas, same as it ever was. Cordish Cos. is again pushing Kansas City for more taxpayer-funded subsidies. This time, it’s for its $156 million, 24-story Four Light luxury apartment tower. And it is already laying the groundwork for a fifth (Four Light would be the fourth luxury apartment for Cordish Cos.). The catch? Cordish Cos. wants to declare part of the Power & Light District an “undeveloped industrial area” to qualify for incentives—an absurd claim for property it controls.

These developer handouts are draining the city of the resources it needs to provide basic public services. This isn’t about revitalizing a struggling neighborhood—it’s about maximizing profits for wealthy and well-connected developers at the public’s expense.

Kansas City needs to end this cycle. If Cordish believes there’s demand for Four Light, let it fund it privately. If the city thinks there is too much regulation or taxation, leaders should reduce it for everyone, not a select few.

The post K.C. Subsidies Stop Making Sense 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 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.

The post St. Louis Should Eliminate Its Economic Development Agencies appeared first on Show-Me Institute.

The 2023 Blueprint: Moving Missouri Forward presents 16 policy ideas aimed at moving Missouri forward to a brighter future. The Blueprint covers a broad range of issues—from education to health care, from occupational licensing to corporate welfare, and from tax policy to government transparency. Our expert policy team has thoroughly researched and analyzed the problems facing our state today, and their work informs the policy solutions that follow. We believe that with the right policies Missouri could lead the nation in wealth, quality education, and a vibrant and flourishing civil society.

Click here to download a .pdf file of the document, or click here to read it online.

The post 2023 Missouri Blueprint: Moving Missouri Forward appeared first on Show-Me Institute.

Analysis of what companies actually do, as opposed to what they say they require, tells a different story. Shockingly—I know this is going to stun many of you—those same companies often don’t need the subsidies as much as they claim. Here is an article that discusses one study out of Texas:

Nathan Jensen, a University of Texas at Austin professor, analyzed businesses’ applications for school property tax relief. His findings suggest that just 15 percent of participating firms needed the incentives in order to make an investment in Texas. Furthermore, many of the other firms were uncharacteristically open that incentives were not a necessity.

Just fifteen percent. And sure, Amazon received substantial subsidies when it decided to build its sought-after second headquarters in Virginia, but it received far fewer subsidies there than had been offered by other states.

Which brings us to Clayton, Missouri and Centene. Several years ago, the City of Clayton passed an enormous incentive package for Centene as part of its major expansion plans within the city. From a St. Louis Post-Dispatch story on the topic:

Clayton and state officials signed off on a sizeable incentives package: $75 million worth of property and personal tax abatement over 20 years in Clayton and tens of millions more in state incentives, most of which would be dependent on the number of jobs Centene would add in the region.

Not surprisingly, “ . . . Centene said then that it could not build the project without public subsidies.”

But that was 2016, when it was time for asking. Now it’s 2022, and it’s time for doing. And Centene has changed its mind. The company is not going to build many of the parts of the proposal that justified the tax incentives, including a civic auditorium in downtown Clayton (emphasis added):

“A civic auditorium is no longer in Centene’s plans regardless of any incentives to proceed,” the company said in a statement to the Post-Dispatch.

Centene almost certainly didn’t need the tax subsidies in the first place, and it threw in the civic auditorium promise as a political victory for the local politicians who like to delude themselves as to their own importance in creating downtown Clayton.

As long as Clayton holds firm and takes back the subsidies now, fairness demands we give the city some credit here. But the precedent has been moved further along by the subsidies Clayton gave out in 2016, and that part of the damage has already been done—all over tax subsidies that were likely not needed in the first place.

The post Centene Says the Quiet Part Out Loud appeared first on Show-Me Institute.

Like most special taxing districts in Missouri, the Buc-ee’s CID will use public funds for private infrastructure. The new sales tax rate at Buc-ee’s will only benefit the company itself—the tax dollars collected at the gas station will mostly go toward constructing the building, access road, and parking lot. From its first day of operation, corporate welfare will support the business one Springfield resident referred to as “a beaver Walmart.”

Most residents of Springfield will have no say in this matter. The city drew the boundaries of the CID in such a way that all voters are excluded—only the city council got to vote on this. Show-Me Institute Director of Municipal Policy David Stokes called this “tax gerrymandering” in his testimony on this issue. In addition, four out of the five members of the Buc-ee’s CID board are listed as “Owner Representatives,” leaving only one seat for a citizen to provide a public perspective. Even once the CID is in effect, most of Buc-ee’s customers will likely have no idea about the extra hit to their wallets, since the CID Act doesn’t require any posting of added sales taxes.

Years of writing and research from Institute analysts on CIDs prove that proposals such as these are nothing new. Private developers use the public’s money to subsidize corporate interests with almost no public input. This process with special taxing districts has played out countless times before, both in Greene County and around our great state. You can see for yourself just how widespread CIDs are in Missouri by following the link to this interactive map from the Missouri Department of Revenue. Hopefully Springfield, and cities across the state, will soon learn that this isn’t a mistake worth repeating.

The post More of the Same in Springfield’s New Buc-ee’s CID appeared first on Show-Me Institute.

In 1977, the Chicago Sun Times newspaper bought a bar. They didn’t just buy it to serve people drinks. They bought it—under a fake name—for the purpose of loading it up with video and audio recording equipment to expose the rampant political corruption in Chicago. For months, as the bar went through the standard process of getting permits, licenses, and so on, the operators recorded the unending stream of bribe requests, kickback demands, and more that were (and arguably still are) commonplace in Chicago.

Even though news of corruption in Chicago was hardly earth-shattering, the series of stories released in 1978 caused a sensation. Rarely had the political cancer been so clearly documented via media, and the constant brazenness of the corruption startled the people of Chicago, who until then may have thought they’d seen everything.

Which leads us to last week’s news about the federal indictments of three St. Louis City aldermen on corruption charges. I may work at a think tank, but I know a little about bribery attempts. Back in 2001, I got a first-hand look at an attempted bribe for then-County Councilman John Campisi. He had just finished a meeting with a taxicab operator who, as he departed, left a brown paper bag on the Councilman’s desk. Suspicious, Campisi asked me (at the time a council aide) to come to his office so that we would both be present when someone (me) opened the bag. Sure enough, the bag had a bribe in it. The next year, that taxicab operator, another councilman who had arranged the meeting, and a few other county employees involved in the racket were convicted of bribery. That was the biggest scandal Clayton had seen until Steve Stenger decided to turn the 9th floor of the county building into a live-action RICO performance.

A part of me is delighted with the bribery charges. I have spent years decrying (including in the pages of this newspaper) the abuse of precisely the two things that appear to be at the heart of the corruption charges: tax abatements and the city land bank. Rest assured, I am going to update my talking points on these two issues, and trust me when I say that audiences pay a lot more attention when the lead is “politicians take bribes” than when the lead is “studies show . . .”

But on a more serious note, a much larger part of me is angry and depressed over the allegations. While everyone is innocent until proven guilty, the main question I ask is not about the guilt or innocence of these three politicians, but whether we have a system that enables corruption in St. Louis and the rest of our state (paging Tom Pendergast, please). I have to think the answer is a very dispiriting “yes, we do.” The ease with which tax subsidies, abatements, and so on can be handed out has long made them susceptible to this risk.

The tax subsidy rot is not limited to the minnows. Never forget that, for all Governor Eric Greitens’s flaws and self-inflicted wounds, the tax-credit industry apparently mobilized a political hit squad for him after he had the audacity to kill their golden goose in the low-income housing tax credit program. And while large-scale developers around the state may be smart enough to ensure their payments to elected officials are done as perfectly legal political donations instead of unreported cash-in-a-bag, one strongly suspects that the abuse of tax-increment financing (TIF), special taxing districts, and other forms of corporate welfare is greased by the legal version of just what got the three aldermen indicted. I have no doubt that some of the people at St. Louis’s country club bars who are most appalled by bribery charges in the city are standing next in line to get their own special tax credits or floodplain TIF deals.

The stench of corruption, both now and in the past, carries with it very real harms for our region. So back to Chicago: Studies have shown (see, I can’t avoid that phrase) that corruption costs Illinois $550 million a year. That represents the cost of not only the direct bribery, but, much more so, the decreased economic growth and lost investment that result from the fear of corruption. Ask yourself: would you think twice about investing in Mexico now? Of course you would. The endemic violence and corruption would make any rational person think twice. The same thing is true for cities and states known for corruption in our own country. Under Steve Stenger, some bidders undoubtedly thought twice about bidding on St. Louis County projects, knowing as they did that a winning bid was not going to be finalized until the county executive received a large campaign donation. Accounts of corruption in the City of St. Louis give residents and investors one more reason to keep themselves and their money out of the city. That’s the last thing the city needs right now, but that’s what it has.

As is often said, when the business of buying and selling is controlled by the legislature, the first thing to be bought and sold will be the legislators. Good government types (of which I am one), must do more than simply call for “electing better people.” We need to remove the incentives and opportunities for corruption. In the latest instance in the city, we should respond by completely eliminating the ability of politicians to dole out tax subsidies, credits, and abatements. Gambling addicts shouldn’t hang out in casinos and hope they aren’t tempted. The problem of corruption in our community will continue until we reduce the involvement in government in our daily lives and shrink the number of things that can corrupt politicians in the first place.

The post Corruption Allegations: Disappointing but Hardly Surprising appeared first on Show-Me Institute.

A version of this op-ed was published in the Columbia Missourian.

Missouri and Kansas are no strangers to border conflict. No, we’re not talking about the chaos that inspired ‘The Outlaw Josey Wales.’ The fear today is over cross-border job poachers. However, that doesn’t justify giving Fidelity Security Life Insurance $12.7 million just to stay in Kansas City. No one gets a gold medal in a race to the bottom — but politicians will waste endless taxpayer dollars trying to tell you that they’re ‘winning.’

The post The Kansas-Missouri Border War Isn’t Over appeared first on Show-Me Institute.

Special taxing districts are generally defined as public entities that are created to do one thing only, such as a street light district, as opposed to general districts such as cities or counties. Obviously, the latter get much more attention than the former. We discuss Kansas City far more than we discuss the Cape Girardeau–Bollinger County Joint Recreational Lake Authority.

What does this debate in Florida have to do with Missouri? Well, we actually have an enormous number of special taxing districts in Missouri, although none as large and all-encompassing as Reedy Creek in Orlando. Special taxing districts fall into two broad categories in Missouri: ones that perform a single public service, such as fire, ambulance, street light, and road districts, and ones that essentially funnel corporate welfare to various private entities under the guise of public improvements. The latter are primarily Community Improvement Districts (CIDs) and Transportation Development Districts (TDDs).

The latter two are also the ones expanding most rapidly in Missouri. Right now, there is a debate in Jefferson County about the Bear Ridge Community Improvement District, which is essentially a taxing district that, according to my sources in Jefferson County, will fund infrastructure improvements for a new subdivision. What’s wrong with that? Well, until very recently developers would fund these improvements themselves and recoup their investment and profit upon sales of the homes, rental of the office buildings, etc. Now, developers have figured out that they can transfer many of these costs to taxing entities, based on either property or sales taxes, and use these public tax dollars for what are essentially private services.

Missouri Auditors from both parties have documented the abuses and mismanagement that inevitably come with so many tiny taxing districts with hardly any oversight. Show-Me Institute analysts have covered this issue for years. There is at least one bill before the legislature this session that has needed changes to many special taxing districts. Hopefully, the dispute at Disney World can help shine some light on special taxing districts in Missouri.

Why? Because we need reform, too.

The post Special Taxing District Don’t Stop Coming appeared first on Show-Me Institute.

My conclusion was simple: AOC was right to oppose the tax giveaway.

The question of whether, or to what extent, incentives are necessary isn’t just an issue in the case of Amazon, either, and research into the incentives that include or imply “but for” language—“but for the incentive, the project won’t happen”—[is] helpful here. For example, a study by the W.E. Upjohn Institute published last year reveals that the vast majority of businesses that receive tax incentives under a “but-for” rubric likely would have pursued their projects even without the incentive. . . .

This failure of stewardship from governments across the country costs state and local taxpayers billions of dollars annually. That affects not only government services, including roads and education, but also a government’s ability to reduce taxes for everyone, if it so desired. The city of Kansas City, Missouri, where I’m from, redirects $90 million annually from its budget through tax incentives, but that doesn’t include the additional $42.5 million those decisions redirect from the city’s public schools and other taxing districts, who rely on these tax streams but have relatively little say in their diversions.

When a government incentive package is worth billions of dollars, it has truly reached the outer frontier of questionable economic interventions. At $3 billion, New York’s Amazon package was prodigious, but what if I told you last year Kansas City put together an incentive package worth up to $8.2 billion for a nondescript data center development? What if I told you the state of Missouri was also kicking in potentially millions of dollars?

And what if I told you that last week, Facebook—I mean, “Meta”—accepted their offers?

The data center, set to open in 2024, will support up to 100 permanent jobs and is the first of its kind in Missouri. During construction, the job will bring in an additional 1,300 jobs. . . .

The $800 [million] facility will come to Golden Plains Technology Park, a 5.5-million-square-foot land development in Kansas City’s Northland.

Tax incentives are always a dicey proposition because they substitute government decision making for the market. But tax incentives for data centers are especially dicey because the number of permanent jobs they generate is almost always paltry, with the “cost per job” of these packages often landing over $1 million. Although the final accepted package remains to be published, the KC Meta data center project seems likely to far exceed that already absurd baseline of cost per job.

Economic development policy that is determined by the number of ribbons that get to be cut and hard hats that get to be donned by politicians is inherently fraught with perverse incentives that force every other taxpayer to carry the weight of government on behalf of an increasingly select group of developers and corporations. Local government should be reducing taxes on everyone rather than just for some of the wealthiest companies in the world, especially in an era of historic inflation.

That Facebook gets priority over every other individual and company in Missouri is infuriating—but unfortunately, it is not surprising.

The post So Meta: New KC Data Center Heavy on Tax Incentives, Light on Jobs appeared first on Show-Me Institute.

It is important to learn from one’s mistakes, and when it comes to special taxing districts in the Springfield area, there are plenty of mistakes to learn from. Special taxing districts (SDs) are tax districts established to support one specific function or program, such as a school district. In recent years, however, most new SDs have been nothing more than vehicles for corporate welfare, and their use in Springfield has been anything but an example of good government.

Springfield is now considering a gift basket of new tax subsidies for the Sports Town youth sports complex. This included the recent city council approval of a new community improvement district (CID) to use tax dollars to subsidize the private development. First, the city gerrymandered a map to make sure the new CID didn’t include any voters to get around the voting requirements. Next, city leaders decided to give the developers $2 million in upfront subsidies even though the city’s own guidelines recommend against doing exactly that. The upfront subsidy by the city means that all Springfield taxpayers are paying for this project, not just the ones who may use the facility.

Remaining on this expensive list is a request by the developers for $4 million more subsidies from federal stimulus funds. Shockingly, the developers have decided that their project qualifies for federal funding. Maybe it’s for the sewers, or for tourism, or perhaps this project will help fight the COVID pandemic. Youth sports may be infrastructure now. Whatever the feeble excuse is, the lure of “free” federal money is strong. If a private development such as SGF Sports (the company behind Sports Town) cannot succeed without multiple subsidy programs, it’s not the job of taxpayers to ensure it goes forward.

With such a large subsidy upfront, Springfield is basically trying to be a real estate developer. The city should have learned from Greene County that government real estate speculation is a bad idea. That county previously subsidized the private Jamestown development by creating a neighborhood improvement district (NID) to pay off bonds the county issued in support of the proposal. It assumed the future taxes from the NID would suffice to pay off the bonds. It assumed wrong. When the Jamestown project failed, Greene County taxpayers were on the hook for the unpaid debt. Springfield should have learned from this costly mistake.

This SGF Sports CID would be the 17th CID in Greene County, most of them in Springfield, along with at least four more transportation development districts (TDDs). Despite the public-sounding names, many CIDs and TDDs consist of just a few parcels of property with sales taxes imposed on the public for the private benefit of one property owner. These tax dollars are often used for essentially private purposes, such as retail parking lots or landscaping.

How have these other SDs worked out in Springfield? Not very well. Missouri state auditor Nicole Galloway specifically cited Springfield’s HyVee store CID for improperly collecting almost a quarter million dollars of tax money. Galloway also identified Springfield’s College Station TDD downtown for multiple abuses, including failures to notify shoppers of the tax. Based on research on SDs generally in Missouri, the other SDs are likely functioning as corporate welfare schemes here in the Queen City of the Ozarks.

Springfield is a vibrant, growing community that does not need to rely on tax subsidies to boost its economy. If Springfield wants to help all businesses succeed rather than just a select few, it should work with Greene County to lower its commercial property tax surcharge rate, which is high compared to those of other Missouri communities. The CID for Sports Town was not necessary, and $4 million more from federal funds would be an even worse decision. The evidence is clear that these subsidy programs produce more financial mismanagement than economic growth. Springfield should learn from its history and stop repeating the same mistakes.

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This new business, which has just opened in West St. Louis County and has already received millions of dollars in state and county tax subsidies, is all set to go with a plan to increase profits. Is it going to focus on customer service? Hiring a better sales team? Increasing business efficiency? Apparently not. It is going to focus right away on hiring lobbyists and getting the Missouri Legislature to pass a new, special state tax incentive program for its industry. From the article (emphasis added):

Gateway Studios in August hired Bardgett and four lobbyists from his firm. Kerr said the company is hoping to win support for an incentive program tailored to the music production industry. Pennsylvania has its own program for the industry, which helps draw production companies and acts to the state.

What Ludwig Von Mises said in 1944 in his famous book Bureaucracy is becoming reality in our state with tax subsides (emphasis again added):

Such executives did not care a whit for the company’s prosperity. They were accustomed to bureaucratic management and they accordingly altered the conduct of the corporation’s business. Why bother about bringing out better and cheaper products if one can rely on support on the part of the government? For them government contracts, more effective tariff protection, and other government favors were the main concern. And they paid for such privileges by contributions to party funds and government propaganda funds and by appointing people sympathetic to the authorities.

The tax subsidies this particular business has already received are bad enough. The idea that a special Missouri state tax incentive would be created to benefit one particular business in Missouri is appalling. There is no evidence that supports the idea that subsidy-focused economic development plans are successful, especially in a growing, thriving area like Chesterfield. Economic development officials and politicians cannot predict the future, and their choices are often based on political favoritism. Furthermore, chasing subsidies often leads businesses to make sub-optimal choices, such as locating in a less productive place to qualify for tax money, or focusing resources on lobbying instead of business improvement (the latter of which, unfortunately, does pay off far too often).

There has been progress made on some fronts in this fight, but creating a new incentive program just because an exciting and hip new business asks for it would be a terrible step backward.

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It’s been said many times that there is nothing as permanent as a temporary government program. While it may be a partisan campaign remark, it contains a simple truth. Each new program generates its own newly entrenched bureaucracy and special interest groups that have an interest in expanding and perpetuating the program. We can see this with big, bold programs, but often that plan to maintain or expand power happens behind the scenes in ways the public never knows about. That is exactly what is happening now with the EEZ program before the Kansas City Economic Development Council, a city advisory committee that makes recommendations regarding tax subsidies.

Kansas City gives away enormous sums in tax subsidies—an estimated $175 million in 2018 alone. The development community and its allies in finance, law, and politics (hereafter the developer-subsidy complex) do not view these subsidies as a program to be used in occasional, necessary instances. Developers view them as their hereditary birthright, to be exploited with all the subtlety of King Henry “asking” if he could have another divorce.

Just as current Kansas City leadership is taking steps to place modest limits on tax subsidies—better known as corporate welfare—the developer community is taking steps to keep the spigot flowing. What steps has the city has taken? The city lowered the maximum property tax abatement developers can receive from 75% to 70% for 10 years, and from 37.5% to 30% for five more years. While this change is commendable, it is hardly a major decrease in subsidies. But try telling that to the developer-subsidy complex.

It’s latest maneuver regards EEZs, an all-too-common business incentive package that is tied to job creation aims. EEZ tax credits have always been focused on jobs and business activity—the explanatory language on Missouri’s website is clear on that—but the development community is now trying to argue that large apartment complexes should also quality for new tax subsidies through the EEZ program. While there is no evidence that EEZs work at growing the economy—the EEZ program was a major part of the failed Waddell and Reed downtown development—they do work (all too well) at shoveling tax dollars to influential developers.

It is important to note that major residential developments like apartment buildings already qualify for plenty of incentive programs: low-income housing tax credits, historic tax credits, the above-mentioned property tax abatements, tax-increment financing, and other programs. What they have not been able to access are EEZ tax subsidies. That, apparently, has to change.

Lawyers for housing developers have been quietly arguing with EDC officials for months that the tax credits and abatements previously reserved, as intended, for businesses that create jobs should also go to housing developments. The EDC officials have resisted, but the developers are now appealing to the city’s lawyers. If the lawyers change the interpretation of the law to include housing—which it has not previously been used for—then all of the progress, modest as it may have been, in reducing the use of tax subsidies in Kansas City will be undone.

No matter how the developer-subsidy complex tries to spin it, this is a naked attempt to take more money away from taxpayers and government bodies, like the school district, and put it into the private hands of developers and their advisors.

Hopefully, someone in Kansas City government will have the courage to say “No” to these demands by the developers. If that happens, we hope it works out better for them than it did for Thomas More.

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