Festus is not alone in its debate. Nationwide, there have been significant disputes about whether communities should want data centers in their backyards. While data centers can bring investment to a community, there are concerns about electricity, water usage, and sound.

Of the hundreds of citizens participating in the recent Festus hearing, one gentleman’s comments captured my attention. The St. Louis Post-Dispatch reported:

He urged local governments to turn any revenue gain due to the new facility into lower property taxes for the general public. He also said a data center should pay for any increase in utility rates due to the extra energy usage it requires. And, he said, the city should not offer the data center any tax incentives.

I have to wonder—has this gentleman read this article I recently published?

Jokes aside, his comments convey a few key points that I think are important to keep in mind when considering a data center project in a community.

#1: Lower taxes help drive economic growth, so a reliable course of action is to return extra revenue to taxpaying citizens.

New data center revenue ought to be returned to taxpayers through lower tax rates, easing pressure on the entire tax base. Property tax abatements should not be handed out.

#2: Find innovative solutions for electricity needs.

Last year, a major energy omnibus bill, Senate Bill 4, included a provision that protects average ratepayers from “any unjust or unreasonable costs from service to such customers [such as data centers].” This should help shield average ratepayers from rate hikes to meet this new energy demand, but some burden will likely still fall on them.

While it is a state-level solution, Missouri should explore consumer-regulated electricity (CRE), which would allow new data centers and other large customers to be served by separate, independent grids. This idea could be beneficial for both ratepayers and developers. You can read more about CRE here.

#3: Remember what data center developers are prioritizing, and do not hand out subsidies.

Lastly, the actions of the biggest data center customers have made their priorities clear.

Money does not seem to be a big factor for these enormous developers. They instead seem focused on energy availability, speed to operation, and long-term stability. A clear example of this is Microsoft pouring an enormous amount of money into restarting Three Mile Island for its data centers.

Instead of handing out subsidies, a municipality could evaluate its own permitting rules. Reducing red tape could both accelerate speed to operation and signal that the community is a dependable, long-term location.

Festus will certainly not be the last community to have a heated debate about data center development. Keeping these key principles in mind, however, may help communities have productive debates on this topic.

The post The Data Center Debate Continues in Festus appeared first on Show-Me Institute.

One thing I noticed about all the cities that I listed is that they contain lots of “U’s” and “L’s,” so I guess we know who the patron saint of this blog post is.

A use tax is simply a sales tax imposed on goods you purchase online or via catalogue and have delivered to your home. Municipal use taxes in Missouri actually predate the internet, but not surprisingly, most cities didn’t pass them until online shopping took off over the past fifteen years or so.

I am generally unsympathetic to the idea that these cities need a tax increase. If Creve Coeur needs more tax revenue, why did it just pass an enormous tax abatement in a very prosperous area that absolutely does not need tax subsidies to encourage development? If Festus needs more tax revenue, why did it put the fix in to sell its water system to another public entity without going out for bids as good government principles require? I don’t have any specific criticisms of Ladue, but I highly doubt the city is in financial trouble. This famous doggerel about Boston Brahmins could easily have been written about Ladue:

And this is good old Boston,
The home of the bean and the cod,
Where the Lowells speak only to Cabots,
And the Cabots speak only to God.

My view is that use taxes are a good way to expand the tax base, level the playing field for businesses, and raise local revenues. However, this last point is key. They should not be used simply as a way for cities to get more revenue. Cutting other taxes after the use tax is imposed (should voters pass it)—especially if you have a particularly harmful tax — is a great way to achieve the above benefits without a tax windfall for the city. Cities can lower their property tax rates, reduce their utility tax rates, or adjust other sales taxes (altering sales tax rates is much trickier than other types of taxes).

I don’t know if any of these cities have pledged to reduce other taxes if the use tax passes. Without such a pledge, the use tax would likely be a significant revenue gain for the city. If you think your city, town, or village actually needs that revenue, then so be it. But I’d be hard-pressed to buy that for the cities listed above, especially Ladue, Creve Coeur, and Festus.

The post Use Taxes on the Ballot in Missouri This November appeared first on Show-Me Institute.

As systems evolve and become more complex over time, certain things that used to be commonly provided by cities and counties have moved beyond the realistic capacity of local governments. Two such examples are sewers and hospitals. The last public hospital in St. Louis closed in 1997, and municipal sewer systems in Arnold and Eureka have both been privatized recently. Not all of these changes result in the private sector taking over service provision. For example, in the City of St. Louis and most of St. Louis County, the Metropolitan Sewer District (MSD) is a large, independent public agency with the resources and expertise to manage the sewer system for our region. Local governments in two areas in our region are currently preparing to hand over responsibility for major services to outside providers, and in each instance the prospects for beneficial transformations are being put at risk by a process that is not being managed in the best interest of the public.

First, the sewers. Festus and Crystal City are considering selling their shared municipal sewer system to the Jefferson County Public Sewer District (JCPSD). Like MSD, this larger, regional system has more resources and expertise than the cities do. However, the leadership of both cities have missed an opportunity to get the best deal for their residents. Earlier this summer, both councils approved a plan to consider only JCPSD’s proposal for a $5 million sale of the sewer system—that is, to exclude any other potential applicants from participation—after quietly negotiating only with JCPSD for months. This is despite the fact that representatives from both Missouri-American Water, which has recently purchased systems in Jefferson County, and Central States Water Resources, which operates sewer systems throughout Missouri, expressed interest in making a proposal once the idea become public. Those private utilities have been denied the opportunity to participate thus far.

Leaders in both cities deserve credit for their willingness to consider major changes to their sewer system. JCPSD’s $5 million offer may well be the best overall proposal the cities receive. But how can the cities know it is the best deal for their residents if they don’t even take any other offers?

The hospital example is even more troubling. In Perry County, located between St. Louis and Cape Girardeau, the county hospital board is planning to sell county-owned and operated Perry County Memorial Hospital (PCMH) to Mercy. Such a deal is almost certainly necessary and likely beneficial for the county and its residents, but the manner in which it has been conducted would make former Kansas City political boss Tom Pendergast blush. While they probably don’t have smoke-filled rooms for politicians in Perry County hospital, they might as well have. There are two boards that run the hospital—one elected and one appointed—and the boards have gone so far as to deny vital financial information to elected members of the hospital’s own board who have had the audacity to ask tough questions about the deal. You read that right. Elected members of the hospital board who aren’t falling into lockstep are being shoved aside as the board majority forces the deal through. Things like the Sunshine law and open records requirements are not suggestions; they are the law, and someone needs to inform the Perry County hospital boards of that.

In general, I strongly support local government changes such as outsourcing services to the private sector or other, larger public bodies. Divesting entities like the Perry County hospital and the Festus–Crystal City sewer system could benefit both communities. However, elected officials in both places have a responsibility to go through the process in an open, transparent fashion. They have utterly failed that test in Perry County, and they aren’t off to a good start in Festus and Crystal City. Residents of Perry County, Festus, and Crystal City should demand better from their local leaders.

The post Good Ideas Done Poorly in Jefferson and Perry Counties appeared first on Show-Me Institute.

For some background, Festus and Crystal City—two adjoining cities in Jefferson County—are planning to sell their shared municipal sewer system. That, by itself, is a good thing they deserve credit for. However, the cities never went out for open bids on the project. They negotiated behind the scenes with only one other entity, the Jefferson County Public Sewer District (JCPSD), on the sale. They went public in June with the proposal and have entered into a formal arrangement to continue negotiations with the JCPSD. (Nobody has finalized anything yet, to be clear.)

JCPSD is offering $5 million for the system. While that may be a fair price and while JCPSD seems fully capable of running the sewer system for the community, how do the cities know if it is the best deal if they don’t accept other bids?

I filed a sunshine request with Festus last month for public records regarding the potential sale. I asked for the available records. I received the response last week. The city’s response is utterly worthless. There is nothing in it beyond copies of prior ordinances authorizing the sewer system, recent bills authorizing the city to negotiate with JCPSD, and copies of public notices. There is not one e-mail in the response, which means either no city officials or employees ever sent an e-mail on this topic over the past year—or they are claiming every e-mail is privileged. When we asked why there were no e-mails in the response, this is what they wrote me:

The City has reviewed the records within its custody which would be responsive to the requests. In response to those requests, we have provided those records which are responsive and which are open under the Missouri Sunshine Law. As noted in the City’s letter responding to the requests, certain records of the City were withheld as closed records, pursuant to Section 610.021, RSMo (1), (2), (12), and (17).

In fact, total secrecy was demanded by JCPSD and the two cities right from the beginning, despite the fact that openness, not secrecy, would have likely led to more bids and a better deal for the cities and taxpayers. Here is section eleven from the initial letter from the JCPSD to the cities dated November 17, 2022, but not made public until much later:

Without the prior written approval of the other parties, unless otherwise required by law, neither the JMUC, District, nor Cities will disclose the existence of this letter or any information concerning the transactions contemplated in this letter, to any third party, other than such party’s attorney, accountant, or professional advisor who needs to know such information to perform his or her duties in connection with this letter or intend or the transactions contemplated by this letter and who shall first agree to the confidentiality of this letter.

This has been anything but an open and transparent process. The public hearings on this matter were held shortly after the proposal was first announced, and the two city councils voted to approve the memorandum of understanding with JCPSD the exact same night as the public hearings. (Officials voting the same night is always a red flag that a public hearing is a dog-and-pony show.) The cities took no other bids or proposals, despite being well aware other entities would like to bid on the sewer systems. Now they are hiding behind legal exemptions to not share any records on the deliberations and discussions of the sale.

Festus and Crystal City selling their sewer system to a larger organization, public or private, with more resources is a great idea. Going about it all in this manner, however, is terrible government. It may be legal, but it is wrong.

The post An Airing of Grievances about Sewer Sales in Festus appeared first on Show-Me Institute.

The post Seeking Multiple Bids for the Sewer System Would Benefit Crystal City and Festus appeared first on Show-Me Institute.

The post The Festus Municipal Sewer System Proposal appeared first on Show-Me Institute.

What’s missing?

Other bidders.

That is not necessarily Crystal City or Festus’ fault. The bid by JCPWS was unsolicited (apparently) so we can’t say that other potential bidders such as Missouri-American Water or Liberty Utilities (both of whom have been active in sewer operations in Jefferson County in recent years) were intentionally excluded. However, moving forward without asking for more bids would be a serious violation of good government principles.

Both cities claim to be interested in keeping rates low:

“Both cities are concerned about maintaining the same level of service to residents and keeping the sewer fees as low as possible,” said Jason Eisenbeis, city administrator for Crystal City.

You know what other organization was interested in keeping rates low? The St. Louis water division, which has experienced a large number of water main breaks recently precisely because it kept rates low to appease voters. That didn’t give the water division enough money to properly maintain the system, and city residents are now paying the price for that, literally and figuratively.

Politicians keeping utility rates artificially low to benefit their voters is a terrible practice, and one of the primary reasons local utilities should be privatized in the first place.

It is great that Festus and Crystal City have received a bid for their sewers. As we know, the ability of small cities to operate utilities is getting harder and harder. As the municipal sewer commission explained in the article linked in the first paragraph:

The Festus-Crystal City Sewer Commission has been working toward improving the plant, but keeping up with federal sewage system regulations is a struggle, said Matt Unrein, the commission chair.

“We have been working hard these last few years to modernize the facility, but the regulations just keep changing,” he said.

Crystal City and Festus should open up their sewer system bid process to include all potential parties, not just some. Then, city officials can consider all options in a fully open and transparent process. If JCPWD has the best total bid, it can be selected by the cities. But anything less than an open process with multiple bidders would be a failure of local government.

The post Everyone Should Be Welcomed to the Party appeared first on Show-Me Institute.

Let me re-set the stage. Missouri’s Sunshine Law (RSMo 610) requires municipalities and other public bodies to provide records of public interest, with some exceptions. It also states that if there is a charge billed to the requester, the municipality fulfilling the request should use employees of the public body that will result in the lowest amount of charges for search, research, and copying time.

Obtaining records of city expenses over the last five years is central to our project, and because there are so many cities in Missouri, it has been interesting to see the wide variety of reactions we have received from our uniform request (available below). As my colleague Scott Tuttle has noted before, responses to our inquiries have been uneven, with many cities promptly providing us the information we requested for reasonable fees, while others were less responsive and charged more.

For instance, the city of Festus took several days, waived their fees (as they are allowed to do) and gave a detailed Excel spreadsheet of their spending, which can be filtered and easily searched. Smithville took one day to fulfill the request and charged $20.00 for its records in PDF form. Meanwhile, Manchester—which to be fair is a city larger (population ~18,000) than either Festus (~12,000) or Smithville (~9,500)—told us it would cost approximately $1,200 and take up to four weeks for its staff to complete the response to my request.

Why the huge discrepancy in cost? The law does not specify the format in which information should be kept, or what a reasonable fee to charge is. To some degree this ambiguity makes sense, because the law has to be flexible enough to address situations and requests not considered when the statute was written. But should that gray area allow locales to drag their feet or (arguably) overcharge for documents that should be easy to access, while nonetheless complying with the law?

Although the responses from these three cities fulfilled statutory obligations, Festus and Smithville’s responses seemed to be most faithful not only to the law, but also to its spirit. As for Manchester’s response, you can judge for yourself.

It is puzzling with the technology available today why our cities and counties don’t simply publish their “checkbook” information online. There are plenty of free or low-cost platforms to keep these records up-to-date and accessible (look at what Manchester’s neighbor Ballwin is doing), and given the taxpayer interest and treasure involved, why should obstacles get in the way of accessing that information?

Click on the link below to see the request we sent out

The post How Easy Is It to Get a Sunshine Request Fulfilled? It Depends. appeared first on Show-Me Institute.

Second, the city of St. Louis is bidding out the operation of its animal shelter. The well-known nonprofit organization Stray Rescue will apparently get the contract. Kansas City privatized the operation of its animal shelter last year, and the accounts I have read about it indicate that the shelter is operating smoothly under private management.

As governments at every level deal with serious budget issues, it’s important that the private sector be allowed to play a role previously played by the public sector, as a major part of the changes that state and local government need to make.

The post Privatization Moves Forward in the St. Louis Area appeared first on Show-Me Institute.

I should be clear that this particular airport is not being sold specifically so a private company can operate it as a for-profit business. That could happen, but they also might sell it to neighboring companies who would stop using the land for an airport entirely. I certainly hope the private operators who buy it will keep it in use as an airport, but that is my heart talking. My head says Festus should do whatever is best for the citizens of Festus, which is exactly what they are doing. Anyway, airport privatization is an interesting issue, and one that the city of St. Louis might have to consider for Lambert in the long run as a potential move.

The post Privatization Possibilitites Abound as Festus Sells Its Airport appeared first on Show-Me Institute.