Susan Pendergrass speaks with Aaron Renn, author and consultant, and David Stokes, Director of Municipal Policy at the Show-Me Institute, about the recurring debate over whether the city of St. Louis should rejoin St. Louis County. They explore what city county mergers have actually accomplished in places like Indianapolis, Louisville, Nashville, and Lexington, why a full merger in St. Louis would be extraordinarily difficult to pull off, and whether the benefits would even outweigh the costs. They also discuss St. Louis’s demographic challenges, what the Pittsburgh model might offer as a path forward, the cultural barriers that make it hard to attract and retain people from outside the region, and more.

You can find Aaron’s work here.

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Episode Transcript

Susan Pendergrass (00:05): Welcome back, Aaron Renn, to the podcast. So happy to have you and David Stokes, our own expert on cities and counties and all things municipal. I appreciate you coming on, Aaron. There have been murmurings around St. Louis again on a topic that we have revisited for probably a hundred years: should the city of St. Louis be a separate county from St. Louis County?

Before we get to that, I want to ask you something because I was reading the news this morning, and I know that you’ve written about city county mergers before, like cities that are kind of dying and then either pulling in parts of their closest suburbs to sort of make everything look better, broaden their tax base, make their crime numbers look better. I was reading something you wrote a year or two ago about that, and you said that Louisville is a failed example of that. Is that right, basically?

Aaron Renn (01:01): Yeah, I’m a little skeptical of how these things have worked out in practice.

Susan Pendergrass (01:05): Yeah, in terms of losing the flavor and the coolness of the city. Literally this morning I saw an article about how Louisville is having a renaissance and these young professionals are all moving there because they didn’t tear down all their beautiful old Victorian homes, so you can still get one for close to a million dollars. They’ve got a cool art scene and a bourbon scene. So it sounds like maybe Louisville did not lose its personal flavor in the merger. I would be curious to know what you think of that.

Aaron Renn (01:33): Well, I like to put St. Louis in context. I’m glad you mentioned Louisville because many of these river cities have similar characteristics. I like to look at St. Louis as well as three cities in the Ohio Valley: Louisville, Cincinnati, and Pittsburgh. All of them heavily German Catholic in their demographics. All of them are very geopolitically fragmented with many small tiny suburbs throughout. They all have very fragmented neighborhood systems as well, where everybody has a strong sense of neighborhood identity. Where you go to high school is a big social marker. They all have phenomenal collections of urban assets and great historic buildings. They all still have their own unique character in a country where that has sort of bled away.

Aaron Renn (02:31): And they also have curiously underperformed demographically and economically in terms of growth. They’re slow growth places. So one thing I always encourage people is to pan back the lens and don’t just look at St. Louis in isolation. Look at it in comparison or dialogue with some of these other places and see what you can learn from them.

Louisville is actually a quite troubled city in important ways. From a white collar employment perspective it’s doing well, from a blue collar perspective less so. It’s one of the 10 least educated major metros in the country. I don’t want to spend too much time on Louisville, but I want to talk about the city county merger, which is distinct from recombining the city and the county. This has been considered urban planning best practice for 30 or 40 years. There was a book written by David Rusk called Cities Without Suburbs. The idea is that cities that were able to expand their boundaries through either annexation or city county mergers were prospering, whilst cities that did not, like the Clevelands, the Cincinnatis, and the St. Louises, were struggling. So the idea is we need big box government.

Indianapolis, where I live now, had a city county merger in 1970. Louisville did a city county merger, I grew up near Louisville. Jacksonville, Florida, Lexington, Kentucky, and Nashville, Tennessee did as well. What I would say is a few things. Merger is not necessarily bad. For Indianapolis, merger did prevent the city from essentially going down the tubes in important ways. So it really was a win in important ways.

But it did not prevent the historic city from going into the exact same demographic decline as St. Louis. The historic city of Indianapolis has lost almost exactly the same share of its population since 1970 as St. Louis has. Secondly, these are very politically difficult to pull off. They take enormous effort. They often fail multiple times. Louisville had multiple failures.

The most precious resource is always management time and attention. Is this where you want to put all your political chips? And in order to get it passed politically, what happens invariably is that most entities are actually not consolidated. In Louisville, none of the existing incorporated suburban governments were in fact merged. In Indianapolis, the school districts weren’t merged.

This means you don’t necessarily get all of the benefits you think from consolidation, because many things are excluded. And then unlike a corporate merger, where there’s typically a lot of downsizing and cost rationalization, in city county mergers nobody ever loses their job and salaries and benefits might even be harmonized upward to the high watermark. So don’t expect it to save any money. Personally, city county merger might have some benefits for St. Louis. I’m not saying it would have no benefits, but in my opinion it’s not going to be a needle mover and most likely it would be extraordinarily politically difficult and uncertain to pull off.

Susan Pendergrass (06:00): Yeah, no question. It’s been very politically difficult. People don’t want to do it. However, we do have these little tiny school districts and police districts. We have, I don’t know, 28 911 systems. We have a lot of what looks like bureaucratic waste and red tape. To the extent that doesn’t get resolved in a merger, then what’s the point? But I do think, you know, we’ve been talking about the demographics of St. Louis. There were over 800,000 people in the city once. Now there are maybe 280,000 and declining, and we’re in the death spiral of more people dying than being born. We’ve been in that for a while. And I guess it brings up the question of what is St. Louis to do if we are in this death spiral? We’re not having the babies. We’re having fewer babies than we did 15 years ago. So school enrollment is only declining. What is the prescription in that situation?

I’ve been to Cincinnati quite a bit. They’re trying to get people downtown with sports stadiums. It doesn’t really work. Louisville has sports stadiums downtown. I don’t know if people really want to move down there. I don’t see it working in St. Louis. So what is a city in that situation to do?

Aaron Renn (07:18): It’s going to be challenging in a sense because your problems are a little over determined. St. Louis was once a regional capital city, much like a Dallas or an Atlanta or a Denver or a Minneapolis. And it lost a lot of those functions. Many of its headquarters have left. It used to have a lot of professional services firms like ad agencies that did business all over the country, not just for the local market. Now St. Louis, although it’s still bigger than Indianapolis, looks a lot more like an Indianapolis or a Columbus, Ohio, where you have fewer corporate headquarters and most of the service firms are just there to serve the local market. St. Louis has essentially shrunk a little bit in relative importance, and it’s hard to get that back.

The demographics are also quite difficult and create a situation where it’s hard to attract business when you have a shrinking labor force, weak demographic growth, and a weak ability to bring people in from the outside. So it’s a very complicated situation and I don’t think there’s any silver bullet for St. Louis.

Susan Pendergrass (08:39): That’s what I’m asking you for. You have the answers. What’s the silver bullet?

Aaron Renn (08:43): So here are the things I would look at if I were in St. Louis. One of the clear issues that affects all of these river cities is that their wonderful, unique local cultures come with a downside, which is an extreme parochialism that has two negative effects. One, it makes it difficult for the communities to cohesively work together, which I’m not telling you anything you don’t already know. City-suburb divides tend to be bigger. In Indianapolis, regional leadership is mostly all on the same page about the big issues. Same with Columbus, Ohio. Secondly, it makes it very difficult to attract people from out of town because they come there and they can’t make friends, they can’t penetrate the social networks.

Susan Pendergrass (09:15): 100%, yes.

Aaron Renn (09:40): You hear it over and over again in places like St. Louis, Cleveland, even Minneapolis, Minnesota. There are some sayings there. If you want to make friends in Minnesota, go to kindergarten, because that’s when everybody makes their friends. Or Minnesotans will give you directions anywhere but their house. They’re never going to invite you over. St. Louis has that reputation. I don’t think it’s just a reputation. And I know you just had Ness Sandoval on.

Susan Pendergrass (09:53): Yeah.

Aaron Renn (10:08): He’s talking about you need to get better on migration. Migration isn’t going to improve if migrants are not going to be able to join the social networks here. And that’s not even just international migration, that’s domestic migrants. So I think that’s a huge issue for the city. Cultural issues are hard to solve, but maybe less intractable than infrastructure.

The other thing is looking at Pittsburgh as a sort of model. Pittsburgh hasn’t solved really most of its problems by any means, but it has been able to regenerate in the city a sort of high value economy around Carnegie Mellon and the University of Pittsburgh Medical Center. It’s done quite well. Many Silicon Valley firms have set up shop there. What’s happened in Pittsburgh, although it’s still a demographic decline story, is there’s been a demographic transition in the city. Pittsburgh went from one of the least educated cities in America to now one of the youngest and most educated. Part of it is old people moved and died off and young educated people replaced them. So the total number of people in the city was declining, but there was a churn happening underneath. And the same thing is already happening in St. Louis.

Susan Pendergrass (11:13): How did they do that?

Aaron Renn (11:33): College degree attainment in the city is now well north of 40%. So the people who live in the city of St. Louis are very educated. That demographic churn has raised educational attainment and thus incomes in the city a lot. Now Pittsburgh was different because it was an almost entirely white city. There’s a racial divide in St. Louis and gentrification concerns become more salient. But St. Louis is now an educated city. This is not an old post-industrial blue collar city. The city of St. Louis itself is very educated. And also being very small, it doesn’t necessarily need a massive change to move the needle. In Indianapolis we have a population of over 900,000. Moving that behemoth takes a lot. St. Louis now being smaller has a situation where there could be a big impact from lower numbers of things. So I think a knowledge economy built around Washington University and your medical centers has some possibilities, somewhat similar to Pittsburgh.

Susan Pendergrass (12:45): So much medical.

Aaron Renn (12:58): Carnegie Mellon’s engineering and computer science areas will be a little different. I might also look at Vanderbilt, what’s going on there? What are some peer schools you could watch to see what’s going on? But I think there are actually some reasons to think that the city of St. Louis, believe it or not, could be sort of turning a corner. It has now demographically renewed itself to a higher educational attainment state. Being small, it probably doesn’t have that much further to fall, and you can start building from there. Obviously there are governance challenges, but looking at the Pittsburgh model, studying similar complexes around peer schools, and addressing the culture issues is where I’d look.

David Stokes (13:33): Hopeful.

Susan Pendergrass (13:47): So as a spokesperson for St. Louis, what do you see for the future?

David Stokes (13:52): Well, I would be curious to get Aaron’s thoughts on that size question, about how the city of St. Louis has in fact gotten so small. It’s about 10% of the metro area. How does that affect the pros or cons of any type of a merger? These would not be a merger of equals. St. Louis County would almost subsume St. Louis City into it. How do you think that would affect things for better or worse?

Aaron Renn (14:28): Well, that was the critique of the Louisville merger by two academics at the University of Louisville. I mentioned the book Cities Without Suburbs. They wrote an academic paper called Suburbs Without a City, which basically said if the merger passed in Louisville, it would essentially mean the suburbs take over the city, not the city taking over the suburbs, because the old city of Louisville only had about 260,000 people and the suburbs would numerically dominate. The same thing would certainly happen in St. Louis. If there were a merger, suburban St. Louis County would control the city in essence.

Another consideration, and this is a Cincinnati issue, I interviewed about 15 years ago the mayor of Cincinnati, John Cranley. Here’s what he said, and I think this is an important point. He said, 30 years ago, city county merger was the thing because cities were in decline and you wanted to tap that suburban tax base to fund the city. But now it’s reversed. Now the cities are coming back and it’s the inner suburbs that are actually going down the tubes. And so in Cincinnati today, we have all the corporate headquarters, we have the universities and the medical centers, and we don’t have to share our tax revenue with anybody. If we were merged with the county government, we’d have to prop up all these failing suburbs. And so I think you’re in a similar situation in St. Louis, where the high value activity, not all of it is in the city of St. Louis because of Clayton and so on, but the St. Louis County suburbs are mostly places that are themselves on negative trajectories. Merging the city, which may be on the cusp of being able to bottom out and turn around, with all of these still declining inner suburban areas, might actually be an albatross around the city’s neck.

Susan Pendergrass (15:16): What would that mean?

David Stokes (16:37): I just think one of the differences between St. Louis and Cincinnati, and I don’t know the property tax base of Cincinnati, is that so much of the city of St. Louis is tax exempt right now. Between Washington University, Saint Louis University, and all the government entities, there’s just so much of it. I say that as somebody who supports property tax changes to make them pay something towards it. But I just don’t think the Cincinnati argument applies to the city of St. Louis right now. That property tax exemption part is a huge factor because the most growing, thriving part of it is the entire giant Barnes-WashU-Cortex complex, and the amount of property taxes they pay is miniscule.

Susan Pendergrass (16:38): Hmm.

Aaron Renn (17:26): Well, some of that is a planning issue. And I think the reality is, when you have a complex like that, are all these people going to move to St. Charles? Maybe not. I’ll tell you, I live in the suburb of Indianapolis named Carmel, and a lot of the hospitals and things have been opening facilities here. When these nonprofit hospitals come up here, we will not approve zoning changes for those hospitals unless they agree to make payments in lieu of taxes. You want to come up here and you want a zoning change, you’re going to have to pay. We were actually quite prescient in that one of the local hospital chains opened a for-profit hospital. As part of the approval deal, we said, if you ever convert to nonprofit status, you will continue paying property taxes. And we did that.

So I think there probably is leverage from the city over some of these entities. You don’t have a lot of leverage over a corporation deciding where to put their office, but that’s not a tax exempt situation. The stuff at Cortex is probably not going to leave if you make them pay a little money the next time they come to you for a zoning approval. I think you need to start looking at how to get more money out of these entities that are nonprofits in name only. These universities and hospitals are effectively gigantic hedge funds. Their executives are extremely well compensated and billions of dollars are flowing through there. Undoubtedly the better solution there is to figure out how to tax them rather than figure out how to tax the soon-to-be-dead mall in the suburb over the border.

David Stokes (19:24): Well, yeah, and that’s sort of the trade off, unfortunately, is that they do pay earnings tax. The employees, many of them very highly compensated, pay the earnings tax. And that’s what makes the city more dependent on local income taxes, not less, because they’re either tax exempt or in the case of Cortex, have tax abatements that make them essentially tax exempt.

Susan Pendergrass (19:25): We do have earnings taxes, right? So the folks who work there have to pay an earnings tax.

Aaron Renn (19:53): Yeah. Again, I don’t know exactly the fiscal architecture there. But I would say you don’t want to do a merger simply to do a tax dollar grab. The lesson of Indianapolis is we did that. We grabbed suburban tax dollars and we used it to rebuild our downtown successfully. But here we are 50 years later, and now we have enormous tracts of decayed suburbia that are an enormous problem. Our entire core county is now in a sense the inner city. We have big challenges because we were not able to invest in ways that allow those suburban areas to retain their allure over the long term.

And I’m not saying that’s impossible, but any short term juice you get, cities always rise and fall. Core cities have proven more resilient and more able to regenerate themselves than suburbs. Part of it is because state governments cannot afford to let their state’s largest city or major urban center go down the tubes.

Susan Pendergrass (21:06): Yeah.

Aaron Renn (21:16): Missouri cannot let St. Louis and Kansas City implode. Michigan cannot just write off Detroit and say who cares. But these suburban areas have proven a lot tougher to save. We don’t have a good model. We’ve spent decades thinking about how to rebuild cities and build districts. There are certain things you can pull off in a city around conventions, civic events, gathering spaces, museums, and government that are very hard to translate to suburban settings. So there’s not a great playbook, especially in declining markets, for renewing suburbs. The playbook for suburban renewal, if you want to call it that, is places like Carmel, Indiana, which are growing and affluent, and therefore can build large mixed use centers, new urbanist developments, trails, and parks. The suburbs of St. Louis County are probably tremendously deficient in infrastructure as we would understand it today.

So again, there may actually be some benefits in having St. Louis City rejoin the county in a sense, because then the county functions are spread and amortized across a larger population.

Susan Pendergrass (22:45): It would immediately improve our murder rate because we would be mixing it in.

Aaron Renn (22:48): Yeah, there is some of that. The murder rate is an artifact of the size of the city more than anything. There are places in Chicago with higher murder rates. A former colleague of mine at the Manhattan Institute, Rafael Mangual, did an analysis of Chicago. He said there are areas on the South Side of Chicago that are larger and have more people than St. Louis with far higher murder rates than St. Louis.

Susan Pendergrass (22:56): We get called out because of the small denominator.

Aaron Renn (23:17): And so there is that. The other thing is Chicago is a good example. New York City was essentially a city county merger. In 1898, the five counties that are the five boroughs of New York were consolidated into one city. Philadelphia was also a city county consolidation from the 19th century. But what happens when you create a very large city of say a million people or more is you really have to scale up your government. You have to have a government that operates at that scale.

What happened with Indianapolis was we merged city and county government, but we didn’t really have a government that could effectively manage this new larger territory. It never built out the infrastructure in the suburbs. In New York, the Bronx has subways, great parks, everything built out with proper infrastructure, because it was part of New York and New York had to expand governance to become a city of eight million. Chicago got big in the 19th century and built a city government that could run a city of three million people. And some of the stuff that gets critiqued there, for example, is a lot of city services were organized by ward or city council district. There are 50 city council districts and every city councilor is sort of a little mini mayor of their district. The alderman essentially has veto power over any zoning changes. It’s called aldermanic privilege. So there are a lot of constraints there.

But if it’s just one mayor and one city council trying to think about a huge city of 77 neighborhoods and three million people, they can’t keep that much in their head. All they can think about is downtown. And that’s what happened in Indianapolis. The mayor and city council can really only think about downtown. We should have built out structures in townships throughout the city so that you had leadership focused on that area and money focused on that area. That’s what made the suburbs work really well. A suburb like Carmel is basically township sized. We have 100,000 people, big enough to do things, but not so big that our mayor and council can’t keep the whole city in their head and plan and manage the whole city.

So if you merge with the county government, you’re going to have to create an entirely new government structure that allows you to essentially manage every sub area of the whole thing and bring it all up to a standard of services. That’s the other thing they often did in Louisville and Nashville. They merge, but they have a two tier service system where there’s an urban services district for the old city which gets more services, and then the others get less. They didn’t do that in New York. There’s one standard of service in New York, one in Philadelphia, one in Chicago. So if you can’t commit to a single standard of service, you’re basically creating a bogus merger in my opinion. If you’re going to do a merger, you need to obliterate every government and entity in St. Louis County and city, merge them all into one with one standard. That’s not going to happen.

Susan Pendergrass (26:35): That’s not going to happen. What do you think, David?

David Stokes (26:37): Yeah, that’s not going to happen.

Aaron Renn (26:43): So you end up with a lot of problems. Louisville didn’t merge any fire departments. Imagine a city that doesn’t have a consolidated fire department. Imagine a city without a single police department. That was actually Indianapolis. When we merged, the Indianapolis Police Department still patrolled the old city, but the new parts of the city that were consolidated in from the county were still controlled by the sheriff.

Susan Pendergrass (27:13): That is 100% what would happen in St. Louis. Everyone would retain their school system and their police department and their fire department. I lived for a long time in Fairfax County, Virginia, which is a single county government. It’s massive, 150,000 students in their school system. It seems to function with a single police department and fire department. But I don’t think you can backwards engineer that into a place that for hundreds of years has been operating as it has been operating.

Aaron Renn (27:43): Lexington, Kentucky worked pretty well because one, the schools were already consolidated, as in the South it’s typically county school districts. Secondly, there were no other government entities, no township governments, no other incorporated municipalities. So it merged everything. And they were sort of able to solve the urban services district issue because the outer areas of Fayette County were horse farms. They actually put in a kind of green belt rule, you can’t develop out there, because they wanted to protect these scenic landscapes. So there was actually a good reason to treat that differently, because it was a very unique American landscape. Lexington, I think, was pretty successful.

Susan Pendergrass (28:15): They are. I appreciate it when I drive across Route 64.

Aaron Renn (28:39): Lexington was pretty successful and wasn’t especially controversial when they did it, in part because there weren’t all these entrenched interests like there are in other places. If you look at places that did the mergers, they weren’t the Cincinnatis and Pittsburghs. They’ve been talking about consolidation in Pittsburgh forever. It was very hard. And Louisville did it, but it was one of the least consolidated so-called consolidated governments. What the Louisville merger functionally did was dissolve the city of Louisville and reorganize county government. The county government now has a mayor and a council instead of the old fiscal court with the judge executive and all that.

Susan Pendergrass (29:21): That’s kind of what would happen in St. Louis, right?

Aaron Renn (29:36): That’s essentially what they did. They basically dissolved the city and the county government was reorganized, but nothing was merged.

Susan Pendergrass (29:43): Did you have a question?

David Stokes (29:45): I want to get back to the fire district point. We’re talking about why this would be so hard. There’s actually a law in St. Louis that only applies in St. Louis County that makes it impossible to consolidate fire districts. Even if a modest mid-sized suburb annexes an unincorporated part of town, they’re not allowed to provide fire services to that new annexed area, or they can, but they have to pay so much to the old unincorporated fire district that it makes it impossible to do so. That’s just one example of how even if you wanted a full scale merger, it would just be impossible to actually carry through.

Susan Pendergrass (30:34): Why do you think people float this idea, David? Why does it come back every couple of years?

David Stokes (30:38): You know, it’s the old line. I remember a study I read about Pittsburgh and St. Louis many years ago. The question was, are the St. Louis and Pittsburgh areas really inefficient with all the fragmented government? And the conclusion was, well, you would never design a metro area like this, but they’ve both made it work over the last century better than you would think. The conclusion was that St. Louis and Pittsburgh aren’t actually as inefficient as you might assume when you run the numbers.

I think people have trouble accepting that. People look at so many small municipalities, many of them dysfunctional, many of them until recent times funded themselves primarily with traffic tickets, which is a terrible way to fund local government, and that’s not even an exaggeration. And there’s just this fundamental belief that if you can just plan it better you’ll create a better place. I just think it fails.

One of the reasons it would fail, going back to what Aaron led this conversation off with, is that if St. Louis County and St. Louis City joined together, they’re not actually going to lay any government employees off to save any money. St. Louis City government is not going to fire city employees. It’s never going to happen. So you’re not going to save any money and it’s all just going to collapse.

Aaron Renn (32:12): Yeah, New York City and large governments are not more efficient.

I look at it and say, look, I think merger is a solution for failed states, if you want to call them that, in the St. Louis suburbs. Take some micro-suburb that’s a complete scam or is bankrupt and merge it in with its neighbor. Do some consolidation like that, that probably needs to be led by state government, almost like a receivership sort of thing. That’s just kind of good government as you work through it. But I just don’t think the benefits you would gain from trying to do a complete governmental merger of St. Louis City with St. Louis County would outweigh the opportunity cost of how much time and effort you spend on it, when you could be spending that on other things that I think will actually move the needle more.

The downsides are arguably as high as the upsides. There’s no guarantee it’s even net positive in this environment. The time to have merged was when Indianapolis did it in 1970, not in 2026. Nashville did it in the 60s. Jacksonville did it a long time ago.

And then I think it doesn’t fix the fundamental issues around the culture. You’ve got to take a hard look at that and say, it’s maybe very difficult to change. The idea that people who aren’t from here have to be able to move here and get connected and feel like they belong in the city. There’s a couple we know who lived in St. Louis. The wife taught in St. Louis public schools. They’re big urban people. The husband was from St. Louis, and they moved here to Carmel, Indiana.

Susan Pendergrass (33:47): Tell me more about that.

Aaron Renn (34:10): Basically they said, man, people are just so much friendlier here. They make better eye contact, they engage more. It’s just so much more welcoming than it was in St. Louis, even though they were actually in a sense connected because the husband was from there.

So when even people who lived in St. Louis and liked it notice a difference when they leave, that is a killer when you’re already struggling demographically. I had a guy who owned a business in Cleveland who said to me one time, I learned the hard way never to recruit anyone from out of town to work for my company unless that person or their spouse is from Cleveland, because otherwise they will never stay. When that’s where you are as a place, that is just rough. I think that is one of the killers for these river cities.

Susan Pendergrass (35:16): Yeah, what’s the fix for that? I don’t know what the fix is.

Aaron Renn (35:38): I think the optimistic case for St. Louis, and I actually tweeted this a year or two ago, is that St. Louis City educational attainment is really high now. In a sense, it’s a small, highly educated city that is probably going to continue growing more educated. So I think the Pittsburgh option looks viable in St. Louis.

Susan Pendergrass (36:00): And certainly great medical care. I know that the average age is getting older in St. Louis. I think within 10 years, one in four people will be over the age of 65. But we also have an Alzheimer’s research center and access to medical care, which as you get older gets more important. I do think there’s an opportunity to lean in to the medical services that are available, as the country as a whole gets older. I think St. Louis looks more attractive for that reason. So I think you’re right that with universities and medical centers, there’s an opportunity.

Aaron Renn (36:35): Yeah, I think if America’s demographics keep on this trend, a lot of other places are going to get to where St. Louis is. And the thing to be careful of is that when you’re in a declining market, that often prompts centralization of activity and population. What happened with Japan is that once Japan’s population started falling, everybody started moving to Tokyo. It’s Tokyo and a handful of other cities where everything is concentrated, and they literally have ghost towns there.

I don’t think it’s any accident that Indianapolis’ growth really took off once the Rust Belt era and deindustrialization hit the state. Indianapolis and Columbus, Ohio have grown in large measure through drawing people out of the rest of the state as those states declined. Huge numbers of people move from Cleveland to Columbus every year.

Missouri is a little different than that. One of your challenges is that St. Louis does not draw people from rural Missouri. When I looked at the data, it’s not like there’s a massive flow into St. Louis from the rest of the state. So you don’t have that siphon bringing people in.

Susan Pendergrass (37:55): There are public safety issues around that, but yes.

Aaron Renn (38:00): And the issue we have is that we’ve now eaten our seed corn. There’s not going to be next generations of children in the towns I grew up in in rural Indiana to move to Indianapolis anymore. The cohort sizes are going to be smaller. So that pump, even Tokyo is declining now in population. That siphon is draining the water table. We can only rely on that so long.

But I think this is the risk for St. Louis in that kind of environment. People with opportunity might avoid or flee St. Louis and go to Austin, Texas or Nashville. They go to the handful of places in America that are really still growing. That’s a threat even for Indianapolis and Columbus, Ohio. In a declining market, it’s very hard to get people to want to come to a shrinking city because the opportunity space is shrinking. St. Louis’s opportunity space has been shrinking because you’re losing corporate headquarters and your working age population is declining. That dynamic is really going to be a challenge. But within that, the city of St. Louis might end up doing okay. Again, being small actually helps it here.

Susan Pendergrass (39:25): Any closing thoughts on that, David?

David Stokes (39:27): Just that the part of Missouri that is definitely still growing, and that probably is attracting those young rural people who are moving to a city, is going into southwest Missouri, the Springfield-Branson area. That’s absolutely the growing part of the state. And even Kansas City is growing certainly more than St. Louis is.

Aaron Renn (39:48): Yeah, it’s not a culturally cohesive state. Springfield and that area are definitely growing, and growing despite the fact that they have nowhere close to the urban assets of a St. Louis. It’s interesting to watch, and we’ll just have to see what happens.

Susan Pendergrass (40:05): It is. I think about it a lot. I’ve been talking about this in terms of school enrollment for years and years, where you could see the biggest kindergarten cohort was after the Great Recession of 2009. You know that that’s the biggest kindergarten cohort for the last 15, 16, 17 years. We do nothing but build schools and hire teachers. We are slow to catch on to these things happening. But I think your perspective is certainly very interesting. On the question of the merger, it’s not worth the cost for whatever benefits there might be. But it still gets talked about, so I appreciate you coming and giving us your thoughts on it. Maybe we’ll have to have you back to talk about it again.

David Stokes (41:02): And Aaron, I want you to come back. I want to find out how we get more roundabouts in Missouri. I love roundabouts. I go to Carmel it seems like once a year for these gigantic youth sports tournaments up at Westfield, just a little bit north of you. My kids’ sports take me there. And I love the roundabouts. You cannot get enough of them.

Aaron Renn (41:09): I’d love to talk about that. My favorite topic.

Aaron Renn (41:24): Yeah, it’s great. We hardly ever have to stop. There are barely any stoplights or stop signs left in our city. It’s amazing. We’re one of the few growing places in America where traffic is better today than it was 20 years ago.

Susan Pendergrass (41:32): They’re awesome.

David Stokes (41:45): People don’t realize how good that is for air quality and everything. You just keep moving along, not stop and start. We need 100 times more roundabouts in this area.

Susan Pendergrass (41:55): Are you pretending that people stop at stop signs in St. Louis? Because let’s be honest, people don’t stop at stop signs.

David Stokes (42:00): Well, they roll them, but it’s still wrong when they roll them. Maybe all the people blowing red lights on Kings Highway at 50 miles an hour are just being environmentally conscious. I need to give them more of the benefit of the doubt, I guess.

Susan Pendergrass (42:12): That’s exactly right. All right, thanks so much. I really appreciate it.

Aaron Renn (42:19): Thank you.

Produced by Show-Me Opportunity

The post The St. Louis City-County Merger with Aaron Renn and David Stokes appeared first on Show-Me Institute.

This November, Laclede County residents will vote on reducing an obscure tax that places the county at a competitive disadvantage compared to its neighboring communities.

In 1985 the State of Missouri changed the way local governments tax commercial and industrial property. It eliminated the tax on business merchandise and inventory and replaced it with a surtax on the value of commercial real estate. Every county that year calculated the new surtax (also known as the commercial surcharge) at a revenue-neutral replacement level for the lost business inventory taxes. The change, made by an amendment to the state’s constitution, was explicit that the replacement levy calculated by the counties could be lowered only by voters, not elected officials, and that the surtax would not adjust downward as assessed valuations increased. This provision puts the commercial surtax at odds with most other property taxes in Missouri, for which the tax rate is supposed to go down as assessed valuations go up.

When the rates were established in 1985, Missouri’s economy looked very different than it does today. Kansas City and the City of St. Louis played larger roles than they do today (especially St. Louis). But Laclede County, likely because of inventory taxes generated by its role as a regional manufacturing hub, bucked the trend toward low surtax rates in most counties. It set its surtax rate at $1.03 per $100 of assessed valuation. That is the 14th-highest rate among Missouri’s 115 counties, and much higher than those of its neighboring counties. By comparison, Texas County has a commercial surtax rate of $0.68, Wright’s is $0.66, Pulaski’s is $0.49, Webster’s is $0.37, Dallas’s is $0.31, and Camden’s surtax is a miniscule $0.03.

Assessed valuations have grown enormously since the tax was introduced. For example, the commercial assessments in Laclede County have gone up almost 400 percent between 1985 and 2021, from $23 million to $108 million, yet the surtax rate has never been reduced to offset that increase. The combination of a high tax rate and the difficulty of reducing it puts Laclede County at a competitive disadvantage compared to other counties in its area.

To address this problem, the Laclede County Commission decided in August to propose lowering Laclede County’s surtax rate from $1.03 to $0.51. If passed by voters, this notable reduction in the commercial surtax rate would both spur economic activity in Laclede County and reduce the perceived need for tax subsidies. In general, Laclede County and its municipalities have been hesitant to use tax subsidies to selectively benefit a small number of businesses. That is to be commended. If this surtax cut passes, the county and its cities can remain focused on setting good policies and low tax rates for everyone, not special deals for a few.

The Lebanon R-3 school district has come out in opposition to this tax reduction, projecting a loss of $275,000 from the tax cut out of total revenues of $58 million. That is just $60 per student in a district that spends over $12,500 per student and one that received over $4 million in federal stimulus funds for a now-past economic emergency. Beyond that, personal property taxes for the school district (e.g., car and boat taxes) are expected to come in significantly higher than ever before due to the dramatic increase in used car values. In short, Lebanon R-3, like many taxing districts around Missouri, has more money than it knows what to do with, yet the district is opposing a tax cut to help grow business and jobs in Laclede County.

As Laclede County continues to grow and commercial assessed valuations continue to increase, actual revenue reductions for local governments that receive the tax money will be small. That’s not voodoo economics; it simply reflects expected growth in population, business, and assessed valuation.

Laclede County leaders deserve credit for placing this surtax reduction proposal on the ballot this November so voters can have a say in making their community more economically competitive. If approved, this reasonable and beneficial tax cut will help grow Laclede County’s economy, and everyone benefits from that.

The post Laclede County Should Reduce Its Commercial Property Tax Surcharge appeared first on Show-Me Institute.

Business Facilities’ 2019 Metro Rankings Report scored Kansas City in the top ten on its list of major American cities with the highest potential for economic growth.

Kansas City landed on the list based on a few different factors, including the city’s quality of life and cost of living. Researchers at the Show-Me Institute have often urged Kansas City to play to exactly these strengths. Back in 2016, urban policy expert Wendell Cox published a paper walking through the advantages the region offers:

The fundamental question is, “What competitive advantages does Kansas City have over other metropolitan areas, and how can it maintain or expand those advantages?” The answers are clear. Kansas City’s strongest advantages are its low cost of living (the result of superior housing affordability), superior mobility, and a complete array of lifestyle choices. However, each of these advantages could be threatened by policies that currently enjoy favor within urban planning circles.

These factors might not be the most impressive on paper, but they are very important to those choosing to move into or stay in the region. Instead of playing to these simple strengths, Kansas City officials seem to be determined to become the next Denver, Dallas, or Seattle, using economic incentives to build trendier entertainment districts and businesses.

But Kansas City is unique, and has a lot to offer without trying to chase the trends of other areas. People live here for simple reasons like affordability and ease of transportation. A city government that chooses to spend taxpayer dollars on subsidizing things like sports stadiums or streetcars instead of bolstering basic city services is doing the region a disservice.

Kansas City risks squandering its potential for growth if policymakers fail to understand what the city does best. As my colleague Patrick Tuohey has previously stated, “If we want Kansas City to succeed, we need to understand exactly what we have to offer.”

The post Kansas City Should Rely On Its Strengths appeared first on Show-Me Institute.

It’s gotten me thinking: Could this “Uber, but for scooters” thing catch on? And if it does, how would it fit into our short-term, or even long-term, public transit future?

For Kansas Citians and St. Louisans, whether scooters catch on is an important question in light of the rail plans that both cities have pursued in recent years and may yet continue to pursue. As we know, streetcar lines are fixed, stop often, and can be dramatically impacted by traffic. Scooters are much more tailored to the user’s needs, though heaven help you if it rains.

But that said, during my Nightcrawler-esque scooter-gathering pursuits it has been fascinating to see so many people using rental scooters zip past Kansas City’s streetcar as the publicly financed, free-to-ride trains trundle on their tracks, from stop to stop, at roughly the same speed. And, according to the Dallas News, it seems the scooters are catching on just about everywhere they’ve been introduced:

Only last week The Atlantic ran a piece about [micro-scooter inventor Wim] Ouboter that said scooters aren’t the future, but only because they were the present long ago. They might have been sold and marketed as kids’ toys—even winning, in 2001, the award for “best toy designed for outdoor play.” But as The Atlantic’s Sarah Holder just wrote, the scooters were always intended “to fundamentally change urban transportation.”

Until now Razor has ceded that transformative micromobile marketplace to Bird, which has 3,000 scooters in Dallas, and Lime, which replaced most of its green-and-yellow rental bikes with around 2,000 rental scooters, according to docs prepared for the briefing. Clearly [scooter manufacturer] Razor grew tired of missing out on the business it essentially created—especially now that Bird is up to $1 billion in funding, making it what CNBC recently called “the burgeoning industry’s first unicorn.”

Lime and Bird have already shown these things work. The companies gave the city stats that show rides span just more than a mile and take, on average, about 13 minutes. The companies say people are riding twice as far on the scooters as they did on the rental bikes—yet their rides are six minutes shorter. Nothing in those docs indicates that scooter riders are less sweaty. But I can attest, yes, you do tend to smell better after 13 minutes on a scooter than 19 minutes on a bike.

What the scooter companies will tell you is that they’re in the business of solving the “last mile” problem in urban areas—that is, replacing the walk from public transit to your home, with a scooter ride instead.

But I also wonder to what extent, at least in Kansas City, the scooter is not just replacing the last-mile walk, but also the first mile of public transit. Granted, the scooters aren’t free to use like the streetcar, but they meet a need that the streetcar doesn’t—transit flexibility over short distances. Keep in mind that in Dallas the average trip is about a mile, which makes the two-mile length (north to south) of the streetcar line in Kansas City particularly notable. And that’s to say nothing of the east-to-west flexibility that scooters provide that Kansas City’s streetcar would seem unlikely to ever satisfy.

Will private rental scooters, or something similar, end up replacing the publicly-financed streetcar? It’s a possibility that I think city leaders here in Missouri and elsewhere need to consider before starting or expanding their urban streetcar systems.

The post How Do Rental Scooters Fit into the Transit Paradigm? appeared first on Show-Me Institute.

More specifically, Kansas City leaders have not adopted land-use policies that have made cities like Portland and Denver so expensive. To demonstrate the impact of these regulations, Cox uses a “median multiple,” which he calculated by dividing the median house price by the median household income:

In 1990, the three metropolitan areas [Denver, Portland, and Kansas City] had similar housing affordability. The median multiple in both Denver and Portland was 2.4. Kansas City’s median multiple was 2.3. By 2015, the median multiples in Denver and Portland had more than doubled to 5.1. By comparison, the increase in the median multiple was much less in Kansas City, at 2.9.

Other cities also saw housing prices rise without a commensurate increase in median household income:

Sydney, Australia, which was among the earliest to adopt urban containment policy, now is among the least affordable housing markets internationally, with a median multiple of 12.2 in 2015, while San Jose and San Francisco have median multiples of 9.7 and 9.4, respectively. In these metropolitan areas, which had median multiples of under 3.0 before adopting strong land-use regulation, residents now face median multiples that are more than three times as large as those in Kansas City.

Kansas Citians are constantly told that we need to be like Portland and Denver by streetcar aficionados,  Dallas for folks who want a new airport, or Indianapolis by people pushing a new convention hotel. But Kansas City is not those places, thankfully. And our greatest strength—housing affordability and the cost of living it allows—exists exactly because we didn’t follow their lead on land use regulation.

Kansas City needs to be Kansas City, and Cox’s paper is required reading for anyone who wants to understand how we can promote ourselves to the world.

The post When Kansas City Leaders Got It Right appeared first on Show-Me Institute.

Cox comes to a number of very interesting conclusions.

For one, Kansas City’s housing is much more affordable relative to incomes than in any of the cities The Economist considers for their list of the 10 Most Livable Cities. The reason for this is that while cities were increasing land regulation through urban containment policies, Kansas City did not. For example, in 1990 Denver, Portland and Kansas City were all similar in the relation of housing prices to median income. Since then, due largely to excessive land use regulation, Denver and Portland housing prices have skyrocketed while incomes have not. Kansas City homes have remained as affordable as they were before.

Another one of Kansas City’s competitive advantages is commute times. Despite its sprawl, Kansas City has one of the shortest commute times in the world. Thanks to an impressive network of highways, traffic congestion is so slight that Kansas City had the least traffic congestion (tied with Richmond) in the 2015 Tom Tom Traffic Index. And lack of congestion isn’t due to public transit. Eighty-two percent of area residents commute to work alone in a car—including 76 percent of low-income workers.  In fact, only 3 percent of low-income workers in Kansas City commute to work by transit. Kansas City (like virtually all US metropolitan areas) is an automobile-oriented city and doing just fine.

Understanding these advantages is imperative if Kansas City is going to build on our strengths. Policy makers are often lured into adopting programs based on the results in Portland, or Denver, or Dallas. But Kansas City is not any of those places, and there is little guarantee that such policies will work here. If we want Kansas City to succeed, we need to understand exactly what we have to offer. This paper seeks to start that discussion.

The post Kansas City: Genuinely World Class 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.

First, the city and TNCs got into a bit of a spat. (Listen to Mayor James’s thoughts here.) Then a compromise was reached, allowing TNCs to operate in the city. But now the terms of that compromise are coming up for review, and guess what? The city wants more control, and TNCs don’t want them to have it.

The major proposed changes to the City’s TNC ordinance include: (1) eliminating a 30-day orientation period and replacing it with a 30-day temporary permit; (2) forcing drivers to acquire additional insurance and increasing the company’s permitting fee from $45,000 to $70,000; and (3) handing all background-checking duties to the city.

1. The Star and regulators have cast a 30-day orientation period—during which TNC drivers can operate without a city permit—as a loophole for “dangerous” and “undocumented” drivers to “overcharge passengers or do something much worse.” While these worries are likely overblown, simply replacing the orientation period with an issued-on-the-spot permit is unlikely to threaten TNCs’ ability to operate in the city. In fact, if this measure were implemented, Kansas City would still be one of the easiest places to start driving for a TNC (compared to, say, Dallas). If this change assuages the concerns of regulators at little to no cost, so be it.
2. Requiring extra insurance and increasing the fees TNCs pay to the city are a different story. In short, the heavier insurance burden forces TNC drivers to carry the same insurance as taxi drivers. It requires insurance to cover incidents even when, for example. a TNC driver is involved in an accident while providing a ride but not working through the ridesharing app. This, in conjunction with higher city permitting fees, will place a significantly greater financial burden on drivers and will likely keep many from entering the market at all.
3. Lastly, and most controversially, handing background-checking duties to the city’s preferred vendor over those contracted by TNCs is complicated. This proposed change would keep driver information centralized and thereby prevent unqualified drivers from going from one TNC to another. But it isn’t clear that the vendors TNCs currently use for background checks are any less thorough than the city’s preferred vendor. If it came down to just this change, Kansas City regulators should ask themselves: is conducting their own background checks worth driving Uber and Lyft out of town for good? Although officials have public safety in mind, as my former colleague Joseph Miller has argued, they should let riders assess the level of “risk” they are willing to take.

So, overall, and unsurprisingly, city regulators are vying for greater control in a market averse to red tape. Not all of the proposed changes are onerous, but many would put additional barriers between consumers and service providers. Perhaps city leaders will learn how to get out of the way this time around.

To learn more about the proposed ordinance changes, and to leave your comments, click here. 

The post Uber and Kansas City Go at It Again appeared first on Show-Me Institute.

Much like with the NFL, civic daydreamers pine for MLS teams. City officials hope pro soccer can revitalize neighborhoods, bring in tax revenue, and draw hip residents. That’s what Bridgeview hoped when the city covered the entire cost of Toyota Park, at the cost nearly $100 million. Unfortunately, promises went unfulfilled. Bridgeview is now in dire financial straits, $225 million in debt with a population of just over 16,000.

None of this should come as any surprise. While the phenomenon of cities spending money on MLS teams is new, cities have long subsidized stadiums for other professional sports. The evidence is clear that building these stadiums does not increase economic growth, spur urban revitalization, or increase tax revenue sufficiently to cover large subsidies. Unfortunately for taxpayers, the cost of soccer-only stadiums has risen over time, along with the subsidies:

So what of the MLS in Saint Louis? With the Rams leaving for Los Angeles, the push to land an MLS team is on. A bill in the Missouri legislature proposes sales tax increases in Saint Louis City and County for a new stadium, likely near Union Station.

But much like the Rams’ riverfront stadium plan, there is little reason to believe that an MLS stadium will do any more for the city than it has done for Bridgeview. Furthermore, private owners have funded their own MLS stadiums, as was the case with Crew Stadium, in Columbus, Ohio. Saint Louis, if MLS officials are to be believed, is a strong soccer town. If the “beautiful game” is so appreciated here, an entrepreneurial owner should be able build a stadium, bring the city an expansion team, and make money. If Columbus doesn’t need to buy a soccer stadium, Saint Louis shouldn’t need to. And if no such owner is to be found, soccer supporters could use crowdfunding like Kickstarter to fund a stadium, if such a proposition is so popular. Given the city’s issues with its existing stadiums, perhaps we should make sure we can afford what we have before we bring in a new pro team.

The post MLS to Saint Louis: On Whose Dime? appeared first on Show-Me Institute.

This week, the city received a status report on the negotiations. Nothing is final, but refurbishment plans have been shelved as “too expensive,” and the city and the airlines are now looking for a cost-effective new terminal plan. While most news outlets appear to take that as meaning a new terminal is definitely going to happen, that assumption is premature. If Southwest and the other airlines do not like the terminal plan that comes out of negotiation, refurbishment plans can be unshelved.

However, at this point it looks as though the city and airlines are looking at new terminal options, but it generates more questions than it answers. Will it be the same as the terminal plan from last year? Will it be a more modest proposal? Is Southwest planning to make the kind of investments it has made in Houston, Fort Lauderdale, or Dallas? Will Kansas City voters, many of whom enjoy the convenience of the current layout, support such a new terminal plan?

One new terminal proposal under consideration

Old New Terminal Plan (2013)

We don’t know, and likely won’t know, until earlier next year. However, the flying public in Kansas City and the airport itself will be best served by a terminal system that is cost-effective and user-friendly.

The post New Airport Terminal Coming to Kansas City, Maybe? appeared first on Show-Me Institute.

Not being from Saint Louis, the advisor did not know that almost unrealistically cheap rent (from the rest of the country’s perspective) is readily available in the region. In fact, Saint Louis was just named the most affordable major city in the country for recent grads by Trulia Trends (“investigators of unconventional house hunting trends”).

Their analysis showed that a recent grad in Saint Louis would on average make just under $26,000, allowing them to afford almost 20 percent of units in Saint Louis. How expensive can it get in other cities? In Portland, Oregon, the median wage of recent grads is under $19,000, which would allow them to afford about 0.1 percent of rental units available. Following close behind Portland, in terms of unaffordability, are Riverside, Orange County, and Miami.

One might assume that the relationship here is one of growth and desirability. Saint Louis, with relatively low growth, is not as attractive as the fast-growing Portland or Miami. But economic growth is not the whole story, because following Saint Louis on the list of affordable metros are some of the fastest-growing metropolitan areas in the nation, including Houston, Dallas, Atlanta, and Phoenix. Most likely, multiple factors, including desirable weather and urban containment policies (of which Portland has been a very prominent example), are important in making a city unaffordable for young people. Put simply, it takes capped supply along with high demand for rent to become unattainable for the average grad.

As things stand, Saint Louis is in the opposite situation from cities like Portland or Boston, in that there is plenty of supply but not a whole lot of demand. That puts Saint Louis in a good position to attract startup businesses and startup graduates from more expensive metropolitan areas. However, if Saint Louis is to gather momentum in attracting businesses, it should keep a positive regulatory attitude toward new building and avoid restricting supply through urban containment.

The post Cheap Rent: A Saint Louis Advantage appeared first on Show-Me Institute.

The revenue guarantee was part of the deal that brought American Airlines to Columbia, and prompted Delta’s departure. The idea is simple: American Airlines is guaranteed a certain amount of revenue from flights out of Columbia. If that revenue level is not reached, the city of Columbia and other regional supporters have to pay the difference. It was supposed to give American Airlines the incentive to test the Columbia market. The new service, if successful, would be profitable enough to convince the airline to operate following the expiration of the guarantee.

There is good reason to be skeptical of this government interference in the commercial aviation market. First, it transfers risk from the private company (which raises the expected value, and hence their incentive to service the route) to taxpayers who may or may not ever use the airport. Second, a revenue guarantee can make it difficult for a competitor to enter the market without the same type of risk reduction. Delta Airlines left the Columbia market for precisely this issue. Third, a revenue guarantee can be difficult to take away without risking service reduction. This is because even if American rarely (if ever) uses the revenue guarantee the insurance that the guarantee provides is part of the financial equation that determines the amount of service.

But ending the revenue guarantee is no easy choice. Small airports across the country are having trouble attracting air service, as national airlines consolidate and reduce less profitable routes (a practice known as “capacity discipline”). Cities without regular flights are at a distinct disadvantage in attracting businesses and residents.

However, Columbia Regional Airport would likely be able to attract airlines without the guarantee, as it did before the city wooed American Airlines. The real issue is how many routes and where the routes would go. City officials have long had grand designs to expand the airport’s reach to the west, build a new terminal, and massively increase total passengers. They were, when they were chasing American Airlines, and likely will remain unwilling to let the private market interfere with realizing those goals. Residents will have to decide if city leaders’ goals are worth subsidizing the airlines and interfering in the transportation market.

The post A Guarantee for More Flights Out of Columbia Regional Airport appeared first on Show-Me Institute.

Here we will address the site’s claim regarding Vehicle Miles Traveled (VMT). Previously, we have explained that rail transit does not remove cars from the road. But NextRailKC persists in making claims that, well, confuse people who honestly seek information.

New York has lower VMT because it is extremely congested, located on water and built before World War II when cars were less prevalent on a pre-planned street grid. Even without its fantastic transit network it would still have a much lower VMT.

Dallas has a lower VMT because congestion is much more severe. Worsening congestion to lessen VMT is a perverse policy goal. Further, Dallas is the poster child for how not to build rail. Despite populations increases and the addition of a light-rail network, fewer people take transit in Dallas in 2013 then before the light-rail network was built. When a region spends billions to build transit and the total number of people commuting by transit declines, you have made some major mistakes.

Kansas City’s population and density are not like the population and density in New York or Dallas. Additionally, Kansas City’s needs are different. We cannot look to New York or Dallas for any meaningful prediction of the impact of rail in Kansas City. The comparisons are absolutely meaningless, to the point of being misleading.

Perhaps most indicative of the city’s lack of desire to engage seriously with taxpayers is that officials NextRailKC can’t even be bothered to develop their own misleading infographics — instead, they chose to borrow Charlotte’s.

The post Streetcars (Still) Do Not Reduce Miles Driven In Cars appeared first on Show-Me Institute.

But over the past decade, the ?cool? cities have not seen any faster job or population growth than cities dominated by non-creative industries. The fastest employment growth has been in areas such as Houston, Dallas, Oklahoma City, and Omaha. The main employment in those cities is not in the cool, creative sector, but in industries such as oil and manufacturing. And, even the rapidly growing ?cool? cities, such as Raleigh and Austin, are not transit-centered places.

It is the same in Kansas City. Rail proponents are so frustrated about nearly a dozen defeats at the ballot box that they contrived a special taxing district, permitted only the residents of that district to vote, and used the result of that vote to commit the city to at least a $100 million rail line project.

A lawsuit against the city’s scheme was dismissed because of its timing, and the city has started collecting the tax. Now the blog Tony’s Kansas City is claiming that some are preparing for a ballot petition to stop the project. If the Kansas City City Council is unable or unwilling to defer to the clearly and repeatedly stated will of the people, then voters are completely within their rights to act on their own with a petition.

The post Get Off The Train: Kansas City Cannot Ride To Economic Growth appeared first on Show-Me Institute.

But over the past decade, the “cool” cities have not seen any faster job or population growth than cities dominated by non-creative industries. The fastest employment growth has been in areas such as Houston, Dallas, Oklahoma City, and Omaha. The main employment in those cities is not in the cool, creative sector, but in industries such as oil and manufacturing. And, even the rapidly growing “cool” cities, such as Raleigh and Austin, are not transit-centered places.

So why do we keep hearing that transit is what causes economic development and revitalizes downtowns? Transit may attract a certain demographic, but trends over the past several years in our country hint that this demographic is not the economic driver it appeared to be.

Now, it is not to say that transit precludes development. But why keep focusing our efforts (and subsidies) on something that is not an absolute necessity to promote growth in Saint Louis? We have written about our support for toll roads to limit subsidies for roads, but at least those subsidies benefit a majority of the population. With transit, we are taking money from a majority of the population to pay for something that benefits the few. Even Citizens for Modern Transit unintentionally admits this with their statement “You may not ride transit, you may not know anyone who uses the bus or MetroLink; however, Missouri needs transit.”

The post Get Off The Train: Saint Louis Cannot Ride To Economic Growth appeared first on Show-Me Institute.

The document, in its entirety, follows.

We must create the demand, political and economic timetables are not the same, need private business to take the lead, like a Ross Perot and his business now employing 27,000 in Dallas. We need someone, not a government agency, to make things happen.

As Mr. Tubbesing notes, “it’s all about demand.” Where’s the entrepreneur that would drive the Aerotropolis project forward and make it a success?

The post China Hub Document: “We need someone, not a government agency, to make things happen” appeared first on Show-Me Institute.

The recent passing of Alfred E. Kahn is a reminder of that remarkable moment — when leaders on both sides of the political and ideological spectrum agreed to deregulate the U.S. airline industry. In 1977, incoming President Carter appointed the flamboyant and outspoken Kahn as chairman of the Civil Aeronautics Board, the agency responsible for setting airline routes, schedules and fares. Kahn set out on a mission of writing himself and his agency out of a job — opening the industry to real competition for the first time. Kahn gave airlines the freedom to enter (and exit) domestic markets and to price as they pleased. He also allowed new low-cost, low-fare airlines to challenge the incumbents.

With the exception of United, all of the established airlines were adamantly opposed to deregulation, as were the unions representing airline pilots, flight crews, and baggage handlers. But, as Kahn recognized, this was a classic instance of the capture of the “regulators” by the “regulated” — to the disadvantage of the traveling public.

For four decades, going back to 1938, the CAB had presided over a closed system that provided the airlines with guaranteed profits, while underwriting generous wages and pensions and cushy working conditions for their heavily unionized workforces. While earning six-figure incomes, airline pilots routinely worked second jobs, knowing that they needed to fly only two or three days a week.

“Whenever competition is feasible,” Kahn wrote, “it is, for all of its imperfections, superior to regulation as a means of serving the public interest.” In simpler language, he bluntly stated, “Where competition is feasible, the government should get the hell out of the way.”

In chairing the CAB, Kahn, an economics professor from Cornell, put together an amazing coalition that included everyone from Milton Friedman and Barry Goldwater to Kennedy and Nader. It helped considerably that two states — Texas and California — had served as laboratories in demonstrating that no-holds-barred competition between existing carriers and the first no-frills airlines had resulted in lower fares and greater choice.

For the first eight years of its existence — from 1971 to 1979 — Southwest Airlines flew only inside the state of Texas. It was, therefore, outside the CAB’s purview, because the agency regulated fares and routes only on an interstate basis.

Throughout the 1970s, there were wild fare wars inside Texas (and to a lesser extent California) as the upstarts battled with the incumbents for market share. Air fares fell by more than 66 percent, and the number of flights per day between Dallas and Houston and other city pairs multiplied. At one point, much-larger Braniff tried to drive Southwest to the wall by dropping its Dallas/Houston fare from $26 to just $13. But Southwest had a good answer. It gave its customers a choice: They could pay the new $13 price — or they could pay the old $26 price and receive a free bottle of whiskey at the end of the trip. Under this promotion, Southwest became, for a time, the biggest liquor distributor in Texas.

Beginning in 1975, Kennedy held U.S. Senate hearings that showcased the fact that the cost per mile for an interstate air ticket from — say — New York to Washington, D.C., was several times higher than it was for trips of comparable distance inside Texas. Roused by this evidence, Kennedy thundered on the Senate floor: “Regulators all too often encourage or approve unreasonably high prices, inadequate service, and anti-competitive behavior. The cost of this regulation is always passed on to the consumer. And that cost is astronomical.”

Exactly. The first two decades of airline deregulation replicated the successes seen earlier in Texas and California. Nationwide, enplanements more than doubled and, in inflation-adjusted terms, airline ticket prices fell by about 50 percent. The lowered cost, expanded choice, and rapid growth in air travel helped to stimulate further growth in many other fields.

In recent years, many critics have held airline deregulation to blame for everything they dislike about air travel today — from overcrowded planes and poor service to the abysmally poor financial record of the U.S. airline industry. Kahn responded both graciously and forcefully to such critics. He noted that some of the problems cited by critics were exposed by deregulation, not caused by it:

Labor unrest and the insecurity and downward pressure on the wages of the preexisting labor force have been undeniable. From the standpoint of the public, however, grossly monopolistic wage levels are no more acceptable than monopoly profits. The fact that these costs have been unusually severe may be just as logically blamed on the regulation that created vested interests in its perpetuation as on deregulation.

Most travelers, he went on to say, were perfectly willing to sacrifice comfort for lower fares:

In the decade before deregulation, domestic flights were, on average, less than 53% full; in 1997 to 2001, they averaged over 70%. But crowding reflects the success of deregulation, not its failure. Competition in the unregulated market has proved… that most travelers are willing to sacrifice comfort for lower fares.

Since 2001, the U.S. airline industry has shed 160,000 jobs. That’s about a third of the workforce — gone. And yet the industry has kept going — even if it hasn’t succeeded in making many people happy.

In addition to the two recessions since 2001, and in addition to increased security costs, by far the biggest problem that the industry has faced over the past decade has been increased fuel prices. Since 2002, the cost of labor, measured in cents per available seat, has been reduced by more than 25 percent — going from a little more than 4 cents per mile to less than 3 cents. Unfortunately, over the same time, the cost of fuel has shot up from a little more than 1 cent per mile to more than 3 cents per mile. For the first time, the cost of fuel equals or exceeds the cost of labor.

It is fair to say that airlines have faced some monumental problems. And they have done far better than some of their peers — in health care and college education, to name two — in holding a line against cost and price growth.

Today’s liberal Democrats are caught in a different ideological mindset than those of 1978 — one that blinds them to the possibility of applying the same kind of free-market thinking in other areas of the economy. In the health care arena, they are stuck on the idea of creating a government-controlled, single-payer system. On the one hand, they are determined to raise costs through expensive new federal mandates; and, on the other, they are committed to imposing increasingly stringent price controls that threaten to bankrupt insurers and drive many health care providers out of business, with dire consequences for consumers. As Dave Barry jokingly put it in his recent 2010 “Year in Review” in the Washington Post, Obamacare “will either a) guarantee everybody excellent free health care, or b) permit federal bureaucrats to club old people to death.” Obamacare as it now stands is a surefire formula for making everyone unhappy.

There is a better way.

Deregulate health insurance. Do to the insurance companies what Kahn did to the airlines when he forced them to compete across state lines on both price and range of product offerings.

There is ample opportunity for enabling consumers to reap immediate benefits in the form of lowered premiums and greater choice through the simple expedient of allowing health insurance to be sold across state lines. This would give individual consumers the freedom to buy low-cost, low-priced health insurance — from a far larger universe of sellers. And it would cause big insurance to lose the monopolistic or oligopolistic positions that they have built up over the years through assiduous lobbying at statehouses around the country, with cozy arrangements with state regulatory offices resulting in mandates to cover everything from hairpieces and contraceptives to acupuncture and marriage counseling.

It would be a first step to a more competitive marketplace forcing all producers (both insurers and health care providers) to reduce costs and offer products that meet customer demand.

The post Needed: An Alfred Kahn for Health Care Reform appeared first on Show-Me Institute.

St. Louis is hosting the Midwest regional finals in this year’s men’s basketball tournament […] But St. Louis was left off the list when the NCAA awarded sites for the 2012-2016 Final Four. Those tournaments instead went to New Orleans, Atlanta, Dallas, Indianapolis and Houston.

“Among those communities that were named Final Four hosts during that cycle, all of them had a public support component that significantly facilitated the staging of the event,” [Greg Shaheen, who oversees the NCAA’s Division I men’s basketball tournament,] said in an interview with The Associated Press.

God forbid, what a travesty it would be if St. Louis failed to continue to be America’s no. 1 sports city. On another note, isn’t it time we stop calling ourselves that, given that about 10 cities have won that award since we did?

Again from the Star:

Missouri currently is “a first tier sports destination,” said Frank Viverito, president of the St. Louis Sports Commission. But he added: “Without a public component to our efforts, then we will fall significantly behind other states.”

Oh well, tough break. I guess we’ll just have to keep more of our tax dollars in order to provide the services that governments are supposed to provide, rather than giving them away to sports promoters.

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On June 17, the Federal Railroad Administration (FRA) asked states for proposals for spending the $8 billion of stimulus money that Congress allocated to high-speed rail. Which raises a question: Would you pay $1,000 so that someone — probably not you — can ride high-speed trains less than 60 miles per year? That’s what the FRA’s high-speed rail plan is going to cost: at least $90 billion, or $1,000 for every federal income taxpayer in the country.

That’s only the beginning. Count on adding $400 for cost overruns. Taxpayers will also have to cover operating losses: Amtrak currently loses $28 to $84 per passenger in most of its short-distance corridors.

The FRA plan also has huge gaps, such as Dallas to Houston, Jacksonville to Orlando, and the entire Rocky Mountains. Once states start building high-speed rail, expect local politicians to demand these gaps be filled at your expense. And don’t be surprised when the government asks for billions more in 30 years to rebuild what will then be a worn-out system.

What would we get for all this money? Unless you live in California or Florida, don’t expect superfast bullet trains. In Missouri and most of the rest of the country, the FRA is merely proposing to boost the top speeds of Amtrak trains from 79 miles per hour to 110 mph. A top speed of 110 mph means average speeds of only 60–70 mph, which is hardly revolutionary. Many American railroads were running trains that fast 70 years ago.

The pro-rail Center for Clean Air Policy predicts that, if the FRA’s system is completely built, it will carry Americans 20.6 billion passenger miles per year in 2025. That sounds like a lot, but, given predicted population growth, it is just 58 miles per person.

Missouri’s portion of the plan will cost at least $875 million, or nearly $150 for every Missouri resident, plus tens of millions more per year in operating subsidies. For that, the average Missourian will take a round trip on the train only once every six years. Most of the rest of your $1,000 will go to California, which wants to you to help pay for a costly bullet train. Even this train will do little to relieve congestion or save energy; mainly, it will just fatten the wallets of rail contractors.

Who will ride these trains? We can get an idea by comparing fares between New York and Washington, D.C. As of this writing, $99 will get you from Washington to New York in two hours and 50 minutes on Amtrak’s high-speed train, while $49 pays for a moderate-speed train ride that takes three hours and 15 minutes. Meanwhile, relatively unsubsidized and energy-efficient buses cost $20 for a four-hour-and-15-minute trip with leather seats and free Wi-Fi. Airfares start at $119 for a one-hour flight.

Who would pay five times the price to save less than 90 minutes? Those wealthy enough to value their time that highly would pay the extra $20 to take the plane. The train’s only advantage is for people going from downtown to downtown. Who works downtown? Bankers, lawyers, government officials, and other high-income people who hardly need subsidized transportation. Not only will you pay $1,000 for someone else to ride the train, but that someone probably earns more than you.

Nor is high-speed rail good for the environment. The Department of Energy says that, in intercity travel, automobiles are as energy-efficient as Amtrak, and that boosting Amtrak trains to higher speeds will make them less energy efficient and more polluting than driving.

An expensive rail system used mainly by a wealthy elite is not change we can believe in. Missouri should use its share of rail stimulus funds for safety improvements such as grade crossings, not for new trains that will obligate taxpayers to pay billions of dollars in additional subsidies.

Randal O’Toole is a senior fellow at the Cato Institute, and author of the Show-Me Institute study “Review of Kansas City Transit Plans.”

[Editor’s note: A portion of the sixth paragraph of this op-ed originally read, “the average Missourian will take a round trip on the train only once every 12 years.” The correct figure for Missouri is “once every six years.” We have corrected this in the interest of accuracy, and apologize for the oversight.]

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Rail transit has become such an albatross around the necks of the American cities that have it that it is hard to imagine that anyone of good will would wish it upon Kansas City. Rail transit is expensive to build, operate, and maintain.

One of rail transit’s dirty secrets is that the entire system — rails, cars, electrical facilities, stations — must be replaced, rebuilt or rehabilitated roughly every 30 years. This costs almost as much as the original construction, which means for taxpayers that rails are a “pay now, pay more later” proposition.

The Chicago Transit Authority is on the verge of financial collapse. The agency estimates it needs $16 billion it doesn’t have to rehabilitate tracks and trains. To keep the trains running, the agency siphoned money away from the city’s bus system and lost a third of its bus riders between 1986 and 1996.

Newer systems face other financial challenges. San Jose’s light-rail system put the city’s transit agency so far in debt that when sales tax revenues fell short early in this decade, it was forced to cut bus and rail service by 20 percent.

Rail construction almost always costs more than the original estimates. Denver voters approved a 119-mile rail system in 2004 on the promise that it would cost $4.7 billion to build it by 2017. The current estimate is up to $7.9 billion, and the regional transit agency says the system might not be complete until 2034.

Once built, light-rail systems never live up to their promises, even in places like Portland. Before building light rail, Portland’s bus system carried 9.8 percent of the region’s transit riders to work. Today, thanks to cutbacks in the bus system forced by the high cost of rail, transit carries just 7.6 percent.

Nor is rail transit good for the environment. Most U.S. light-rail lines use more energy, per passenger mile, than an SUV. Considering that most of Missouri’s electricity comes from fossil fuels, a Kansas City light rail, like the ones in Dallas, Denver, and Cleveland, is also likely to produce more greenhouse gases per passenger mile than an SUV.

Buses can provide better, faster, safer transit service than light rail at a far lower cost. Light rail is a hoax perpetrated on taxpayers by companies that profit from designing and building rail lines.

Rail advocates tell Kansas Citians that they need to catch up with other cities that have rail transit. I suggest instead that Kansas City should be proud not to fall for the light-rail hoax.

Randal O’Toole is a senior fellow at the Cato Institute, and author of the Show-Me Institute study, “Review of Kansas City Transit Plans.”

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