There is a lot of ongoing discussion about eliminating personal property taxes. There have been bills introduced to eliminate them. It’s a major topic of debate around the state, particularly in St. Charles County.

Personal property taxes are the taxes levied on your car, boat, livestock, business equipment, farm equipment, and more. (Thanks to data centers, the business equipment part has become much more important in the past year or so.) Missouri indeed taxes personal property more than most other states. I am perfectly fine with eliminating the tax. But people should understand that if personal property taxes were eliminated, the Hancock Amendment would allow local governments to then raise real property taxes by the amount lost in personal property taxes.

So, if the state eliminated all personal property taxes statewide, it would likely end up as a revenue-neutral switch where we taxed land and buildings slightly more and taxed mobile assets not at all while removing a tax that most people find particularly annoying. I think that would be a modestly beneficial switch; I just don’t want to sell it as a tax cut.

But could counties on their own eliminate personal property taxes? Yes, every county and taxing district in the state could eliminate personal property taxes if they wanted to. They just don’t want to and I understand why.

Currently, St. Louis County is the only county that is required to set different tax rates for different classes of property. RSMo §137.073 requires every local government within St. Louis County (including cities, school districts, streetlight districts, etc.) to set a property tax rate for each subclass of property. This means that there are different tax rates for residential, commercial, agricultural, manufacturing, and personal property. The requirement to break down the tax rate by subclass was originally intended for the entire state, but eventually the rest of the state was given the opportunity to opt out if their county commission chose to, which every county in the state did. As a result, the rule currently only applies within St. Louis County and (for an unknown reason) the city of Gladstone in Clay County.

In the rest of Missouri, every government with property tax authority sets one tax rate, which is then applied to all subclasses of real and personal property. There are a few exceptions to this (primarily cities that have never taxed personal property, such as Independence), but almost all governments outside of St. Louis County set the same rate for all real and personal property. But here is the key: Any county in Missouri can adopt different tax rates for different property classifications whenever it wants to.

County officials could require all the taxing entities within their county to set different rates, and then county officials could set the county rate for personal property at zero. But county officials could not tell other taxing districts within the county to apply those new, variable rates. Would any of them choose to set the personal property tax rate at zero? Well, let’s just say that since this switch was made in St. Louis County, I know of no taxing entity that has voluntarily set the personal property tax rate at zero (other than some municipalities that don’t have property taxes at all, such as Chesterfield, or had never set a personal property tax, such as Westwood).

What would happen if a county set its personal property tax rate at zero and no other governments followed? In St. Louis County, the county portion of the tax bill is about five percent. It is a largely similar percentage around Missouri (varying slightly, of course). If St. Louis County government set its personal property tax rate to zero tomorrow, the average car and boat owner would see a five percent reduction in their annual car or boat tax bill. That assumes no other local taxing districts got approval from voters to raise their rates at the same time, which would more than offset it.

The fact is that unless school districts agree to also lower personal property tax rates, any attempt by counties to end personal property taxes will produce underwhelming results. I still think it would be a good thing. We should tax fixed assets like land and buildings instead of mobile ones like cars. It would be a general improvement in tax policy and remove a minor annoyance for most people (i.e., their annual car tax payment).

Let’s just not pretend it would be a large tax cut.

The post What If You Eliminated Personal Property Taxes and Nobody Noticed? appeared first on Show-Me Institute.

A version of the following commentary appeared in the Columbia Missourian.

As technology companies try to meet the skyrocketing demand for AI-specialized computing capacity, they are dotting the country with data centers to the dismay of some and the delight of others. As is all too often the case in Missouri, many of these companies are being offered taxpayer-supported subsidies or tax exemptions.

For example, Independence, Missouri, is giving Nebius more than $6 billion in tax breaks over the next 20 years for a “hyper-scale” data center, and Montgomery County has offered Amazon hundreds of millions in tax abatements to build a data center near New Florence. But why would subsidies be needed when it seems like data-center developers have money to burn and are desperate for suitable building locations?

Recent actions of data-center developers suggest that it is not the cost of building and operating those facilities that is the barrier; the main problems appear to be finding pathways to secure reliable energy generation and getting their centers online smoothly and quickly (speed-to-operation).

These two obstacles are so serious that the major technology companies (Amazon, Google, Meta, Microsoft, etc.) recently met with President Trump and signed the “Ratepayer Protection Pledge” to supply and pay for their own power for their AI data centers.

Why would these companies agree to take on this expense? Because their constraint is not cash. For these firms, time is money. The costs of delays in permitting and interconnection outweigh the value of a local tax incentive.

The negative effects of economic development subsidies and tax breaks are well known. When local officials offer these incentives, they diminish positive benefits that could come from a new data-center development: increased property-tax revenue to fill in the gaps for local services or be used to lower the overall tax rate of the community.

With all of this in mind, rather than just doing what most other states do (handing out checks or tax exemptions) Missouri should work on policies that actually deliver what these companies need most: pathways to secure and reliable energy generation, regulatory certainty, and speed-to-operation.

For local communities, this means they should not offer taxpayer dollars. Even with big tech agreeing to pay for their own power, many municipalities will still try to lure projects with incentives. No doubt the companies will take whatever money is offered to them, but subsidies are unlikely to significantly drive their decisions about where to locate.

Instead, local communities should offer a stable, predictable permitting environment and a suitable location to build. That would help address the greater desire for certainty and speed-to-operation.

And at the state level we should think even bigger. Policies like consumer-regulated electricity (CRE) could help make Missouri a true hub for data center development—without using unnecessary subsidies.

CRE would enable private electricity providers to serve large, energy-intensive customers independent of the existing, permission-heavy grid structure by allowing them to build their own power plants. Rather than spreading the costs for this infrastructure, CRE would create a “parallel path to energy abundance” —one financed by the large customers who demand the power.

CRE would allow these data centers to work with a private partner to meet their own energy needs, with less red tape, more certainty, more control, and more freedom to innovate. These benefits are likely to be more appealing than subsidies.

Unfortunately, offering subsidies seems to be a reflexive reaction in Missouri when there is an opportunity to attract a new business. But especially in this case, Missouri would be better off focusing on what the data center sector really needs. Efficient regulatory and permitting policies (like CRE), a predictable and stable environment in which to construct, and abundant energy would be far better suited to attracting and improving data center development than taxpayer dollars.

The post Why Hand Out Subsidies to Data-Center Developers? appeared first on Show-Me Institute.

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

Listen on Spotify

Listen on Apple Podcasts 

Listen on SoundCloud

Timestamps

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

Produced by Show-Me Opportunity

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

The largest of these, the Independence School District near Kansas City, will soon hold a public vote on whether to retain its four-day schedule after a judge ruled that the voter-approval requirement in state law is constitutional and must be enforced.

As for the upcoming vote, I expect the 4dsw to be approved. Crystal City recently saw its citizens vote 86.7% in favor of keeping their 4dsw—a result that makes sense, as those who already use the model are typically its strongest supporters. However, the strongest opponents of the 4dsw are those who do not believe that they can provide childcare on the fifth weekday. Even in districts that overwhelmingly vote in favor of a 4dsw, individual families may face real difficulties adjusting.

I believe recent events highlight a broader point: school choice could help relieve some of the tension surrounding the 4dsw by giving parents more options.

Senate Bill 727 and the Four-Day School Week

Senate Bill 727 was an omnibus education bill passed in 2024. One of its provisions requires that districts located wholly or partially in a county with a charter form of government or in a city with more than 30,000 inhabitants hold a public vote for adopting or retaining a 4dsw. As Independence’s recent lawsuit indicated, this only applies to 87 Missouri school districts.

If the goal of this provision was to give Missouri parents a voice on a significant decision, it was fair to ask why the 4dsw would be put to vote in some districts but not others. The recent court ruling clarified that lawmakers had a rational basis for the distinction, citing evidence that suburban and urban districts are more likely to experience negative effects on academics, crime, and childcare access than rural districts. Nevertheless, there remains a need to address the problems that arise when a family’s schedule no longer aligns with its school.

School Choice Can Help

Expanding open enrollment and Missouri’s Education Savings Account (ESA) program could give families the flexibility they need. Open enrollment would allow families to transfer students to districts that best fit their needs, whether that’s a 4dsw district or one with a traditional five-day school week.

This approach enjoys broad support. In 2023, the Show-Me Institute surveyed 1,200 Missouri parents statewide and asked what options should be available if a district moves from a five-day to a four-day schedule. Two thirds of parents supported allowing transfers to another district, while majorities also favored providing vouchers for private school attendance.

Figure 1: Policy Options for Students in 4dsw Districts

“If a school district moves from a five-day to a four-day school week, parents should be given the option to . . . (1) transfer their children to another school district . . . (2) use a voucher for their children to attend private school.”

Support for both options crossed party lines. Among self-identified Republicans, 67 percent supported interdistrict choice and 57 percent supported vouchers. Among self-identified Democrats, 71 percent supported interdistrict choice and 62 percent supported vouchers.

As Missouri continues to debate the 4dsw and how to manage its use, expanding school choice remains the best way to reduce tension and ensure every family has workable options.

Want to Learn More?

My colleague James Shuls and I wrote a series of papers that tackle different questions relating to the 4dsw.

Evidence Based? A Systematic Literature Review of the Four-Day School Week?

Five for Me: A Survey of Missourians Regarding the Four-Day School Week

Longer Days and Fewer Total Hours: Examining the Four-Day School Week in Missouri

The post Four-Day School Week Votes and School Choice in Missouri appeared first on Show-Me Institute.

People don’t appreciate things that are free, for good reason. One of the most famous insults in film history is on point here, when Rodney Dangerfield notices Ted Knight’s ugly golf hat in “Caddyshack” and says, “I bet you get a free bowl of soup with that hat.”

The Kansas City Area Transportation Authority (KCATA) didn’t give out free soup to riders when it made all transit free in 2020, but it might as well have. Free transit is great if your goal is to turn buses into mobile homeless shelters. If your goal is to provide quality, safe, affordable transit, then making it free is the last thing you would want to do. It reduces revenues the system needs while making ridership a worse experience for more people.

KCATA head Frank White III has acknowledged that security problems have increased under the free fare system. The agency addressed those problems by adding more security and police, which is better than doing nothing. But it is spending more money on security to address problems caused by collecting zero money in fares. No wonder there is a funding shortfall. Austin, Texas, instituted free fares on buses in the 1990s, and crime dramatically increased. Reinstating fares addressed that problem quickly.

KCATA is finally moving toward reinstating some fares, but it won’t go nearly far enough. According to plans, numerous groups, including the homeless, will remain exempt from paying fares. Politicians and other free-transit backers will blame the inevitable decrease in ridership on the fares while overlooking that the free rides for some will continue to make the bus experience so unpleasant that others who need it will choose not to use it. That’s basically progressive public policy in a nutshell: Make local government services equally awful for everyone.

On another transit front, Independence, Kansas City, and several other cities have been experimenting with a different option for public transit: outsourcing it to a private company. Independence had been contracting for bus services with Transdev bus company, but increased costs and low demand led the city to end those routes and that contract. Now, Independence and Kansas City are contracting with the private company RideCo to offer their own version of Uber or Lyft. To save money and time, the IRIS program in KC takes riders to a general area rather than an exact address, so some walking is required (which most Americans, including the author, could use). The IRIS program is subsidized by taxpayers, as public transit generally is. But it charges a modest fare, as it should. The baseline fare in Independence is $5. Some type of fare is needed both to fund the service and address the (both literal and figurative) free rider problems.

Will this new program succeed? I hope so. Such an experiment with subsidized ride sharing can only be done with the private sector. If it succeeds, wonderful. If it fails, the program can be ended and taxpayers won’t be on the hook for it anymore. Engaging the private sector avoids the complex politics of hiring and firing new government employees.

Successful public transit moves people who depend on it to where they need to be in a safe, efficient, and timely manner. The louder supporters of transit often confuse actual success with more grandiose aims: convincing well-off suburbanites to use transit, designing flashy but useless pet projects, or creating utopia by making everything free. For a perfect example of that confusion, see how KCATA is cutting its bus route hours while the flashy and useless (yet expensive) KC Streetcar route is being expanded.

Reinstituting some bus fares and contracting with private operators for rideshare service will hopefully give KCATA, Independence transit, and the larger region the resources it needs. The purpose of transit is to move people who need it, not to satisfy the dreams of urban planners or ideologues. Free transit and streetcars do the latter, but all actual transit users want is a safe and affordable way to get to work or school on time.

The post “Free” Transit Is Anything But appeared first on Show-Me Institute.

Sugar Creek doesn’t operate its own water utility, which makes this proposal a little different from other privatization proposals. Sugar Creek buys water from the Independence municipal utility (which should also be privatized along with the Independence electric utility, but that’s another story).

Privatization, however, is still a very good idea for the residents of Sugar Creek. The main problem with public utilities is that customers are also voters, and politicians are hesitant to raise rates on their voters. This leads to an underinvestment in the system. As the City of St. Louis said in 2024 when it finally increased water rates:

Major I-64 Water Main Break Highlights Need for Long Overdue, Much-Needed Investment in City’s Water System

This was the city’s own water system it was talking about! Cheap rates have harmful consequences down the line.

Beyond that problem, studies have demonstrated that private utilities are generally more efficient than municipal utilities. In 2000, economist B. Delworth Gardner of Brigham Young University determined that private water utilities in Utah charged lower rates for water than comparable public utilities despite the large advantages in taxation and regulation that government utilities have. A recent comparison of public and private electric utilities in Florida concluded that private utilities outperformed public utilities in nine of 14 categories.

Missouri American Water is offering $5 million for the system and has promised to invest $8 million in upgrades over five years. The equipment would also go onto the tax rolls, expanding the property tax base for Sugar Creek. Most importantly, it would put water services in Sugar Creek in the hands of a more efficient private operator, which is closely regulated by the Missouri public service commission. The idea that Missouri American Water could use its monopoly power to keep raising rates is incorrect.

This policy change would be a very good move for the people of Sugar Creek.

The post The Salad Days in Sugar Creek appeared first on Show-Me Institute.

Chiefs President Mark Donovan committed such a gaffe when he spoke at a press conference to unveil planned renovations at Arrowhead Stadium. He was asked why the Chiefs aren’t planning to build any retail developments if the Royals leave the complex to move their stadium downtown. He responded: “Right now in this market, this is not a location that is worthy of developing. As harsh as that sounds, it’s just the reality from a business standpoint.”

At the very least, this was an impolitic thing to say about the region. Located between Kansas City and Independence on Interstate 70, the location would seem to have a lot of potential. More importantly, Donovan concedes what many economists conclude and what Show-Me Institute researchers have been pointing out for years: stadiums do not generate economic growth.

Rest assured, I will be adding Donovan’s comment to my PowerPoint deck on the many false claims of economic development impact statements.

The post Chiefs Team President Accidentally Speaks Truth appeared first on Show-Me Institute.

Is it Johnny-come-lately political theater? Is it a principled beef against higher taxes on behalf of citizens? The court will decide!

Blue Springs will join one of its neighbors [Independence] and become the third city suing Jackson County over property tax assessments. . . .

“The mayor and City Council are authorizing legal action to ensure the residents of Blue Springs receive a fair and consistent process for the assessment of real property in compliance with state law,” the City Council said in a statement Thursday. . . .

Last month, Auditor Scott Fitzpatrick said his office’s whistleblower hotline has received complaints about significantly higher property assessments, not being able to get through the phone line, and software company Tyler Technology making decisions it might not be qualified to make.

The lawsuits by the cities are in addition to the class action lawsuit filed privately by residents on similar issues, asserting (in short) failures of notice and process by the county. For example, the Lee’s Summit suit asserts that the state’s requirement that a reassessment be the result of a physical inspection was not met for this year’s reassessment, and the Independence suit asserts that the county failed to meet a variety of deadlines, among other statutory violations.

Whether anything comes of this stack of lawsuits remains to be seen, but the fact remains that property tax reform should be a priority for legislators and county leaders in 2024, so that future reassessments will be predictable and reasonable for Missourians statewide. As for Kansas City, my colleague David Stokes would remind policymakers that the constitutional exemption that allows the Kansas City public school district to not roll its tax rate back as property assessments increase is a major issue that should be grappled with sooner, not later.

The post And Then There Were Three: Blue Springs Joins Jackson County Property Tax Lawsuit Party appeared first on Show-Me Institute.

One Missouri city is now one step closer to suing the county over property assessments. The vote from the council was unanimous.

This would mark the first time Independence would take legal action for this reason against the county if they (sic) were to sue. The councilman who introduced the resolution calls it unprecedented.

“This county has acted absolutely recklessly, savagely, against the citizens of Independence,” John Perkins, Independence City Councilman, said. . . .

The county says on average, people will see a 30% increase in their property tax but the issue is that many people have seen there’s (sic) go up way higher than just 30%.

A 30 percent property tax increase on average.

It’s also worth noting the backdrop against which this property tax conflict is set. As Jackson Countians grapple with how they are going to pay the added burden stemming from the county’s reassessments of their property, Kansas City, Independence, and Jackson County all are also fighting for the Kansas City Royals to stay put, as the Royals’ current home is geographically advantageous to all three governments. Open internecine fighting between these governments is not great to begin with,* but having that conflict happen at a critical moment in the Royals negotiations is illuminating, if not shocking.

Whether the tone and tenor of the Jackson County property tax conflicts are related to the Royals’ forthcoming decision on a new stadium is not certain. What is certain is that cutting the team a sweetheart deal to stay in Jackson County as the county ramps up taxes on everyone else is going to be a tough sell. Get the popcorn.

*unless you’re, say, the director of government accountability at a local think tank who thinks local governments should feel the pain of accountability more acutely

The post Get the Popcorn: City of Independence Mulls Lawsuit Over Jackson County Property Taxes appeared first on Show-Me Institute.

Independence is one of the few cities in Jackson County that continues to provide extensive municipal utilities to its residents. It recently announced that is it considering the privatization of its municipal electric utility. If privatization is done in a transparent manner designed to encourage multiple bids for the electric assets and customers, it will greatly benefit the residents of Independence. In fact, the city should go even further and consider privatizing its water utility, too.

There is no standard method for providing utility services in Missouri cities. Springfield, for instance, has a city-owned public utility that provides every utility service. In Kansas City gas and electric are provided by private companies, while water service is handled by a city department. Almost all of the one million residents of Saint Louis County are customers of private companies for utility services.

Municipal utilities often charge lower rates than private utilities, but that is not the case with Independence. The city admits its municipal electric utility charges more than the private companies serving the area (mainly Evergy), despite the structural cost advantages in taxation, regulation, and financing that government-owned utilities have.

Studies have demonstrated that private utilities are generally more efficient than municipal utilities. In 2000, economist B. Delworth Gardner of Brigham Young University determined that private water utilities in Utah charged lower rates for water than comparable public utilities despite the large advantages in taxation and regulation that government utilities have. Economists Daniel Hollas and Stanley Stansell found in a 1994 study that private gas utilities were more economically efficient than public gas utilities. A recent comparison of public and private electric utilities in Florida concluded that private utilities outperformed public utilities in nine of 14 categories (with one category being equal).

It is a reasonable supposition that private utilities would be more efficient in their costs and operations than Independence’s current municipal utilities. Privatizing the utilities could benefit the city in a number of ways. Most importantly, the city would experience an immediate cash infusion from the sale. Eureka, in Saint Louis County, sold its municipal water and sewer systems to Missouri-American Water for $28 million in 2022. Independence is much larger than Eureka, and its electrical and water utilities could likely be auctioned off for a much higher price. The substantial sale proceeds could be used to continue funding vital city services, be deposited into a reserve fund, or be put to a variety of other uses that would benefit city residents.

Independence would also see other fiscal benefits from privatizing the city utilities. The assets of the newly private utilities would become taxable, expanding the Independence and Jackson County tax bases. Finally, reducing the number of municipal employees would scale back the long-run taxpayer costs associated with government pensions and health care. It is imperative, though, that the entire process be an open one to serve the interests of taxpayers and consumers.

Private utilities are just as capable of providing quality services at a low price to the residents of Independence, and likely would be more efficient than city departments. Privatization of the Independence water and electric utilities would bring a needed cash infusion to the city, add substantial assets to the tax rolls, and reduce long-term public employee costs. Cities throughout Missouri have seen positive results from such privatization efforts, and there is good reason to believe that Independence taxpayers and residents would, too.

The post Independence Could Benefit from Privatizing Utilities appeared first on Show-Me Institute.

Independence has struggled to maintain its own power generation as the environmental and financial costs of coal plants has [sic] pushed many other energy firms into renewables. While many say IPL provides exceptional service and reliability, city officials note that their customers pay higher electricity rates than those served by for-profit companies in other parts of the region.

The utility is also facing financial headwinds: Its cash reserves will drop below the utility’s target of $25 million by 2025, officials said. And those reserves will drop to a negative $97 million by June 2032 as the costs to maintain the utility’s infrastructure mount.

“The problem we have, as we sit here today is that IPL is on a course to a financial train wreck, due to what I believe to be questionable decisions in the past,” said Councilman Jared Fears. “So clearly something has to change.”

It bears repeating that Independence utility customers pay more than those using for-profit utilities in the region. This is despite the advantages in taxation and regulation that municipal utilities have over private utilities. There have been several water utility privatizations in Missouri in recent years, but not many electrical utility privatizations. The case for electrical privatization is probably even stronger, as one does not have to deal with the typical “how do you privatize something that falls from the sky?” argument. Unless you make extensive use of your home lightning rod, someone is artificially generating the electricity you use. Eureka and Arnold are just two of the larger cities that have privatized their water or sewer systems in recent years. From the Post-Dispatch story:

Arnold sold its sewer system to Missouri American in 2015 for $21 million. “The system was not in good shape. It was not well maintained,” said City Administrator Bryan Richison. “And city council members were running on not raising rates, so it put us in a bad position.”

As electric vehicles ramp up the electrical power needs of our communities, it is time for Independence, Columbia, Kirkwood, and (most of all) Springfield to get out of the utility business. Private, regulated utilities are much better positioned to provide the necessary services to these communities. These cities should privatize their assets via an open, transparent process and use both the sale price and the future tax revenues to provide better overall public services for their communities.

The post Prudent Pundit Ponders Independence Power Privatization Proposal appeared first on Show-Me Institute.

In the previous blog post in this series, I posited that (generally speaking) able-bodied individuals should be expected to pay for their housing, and that for housing to be “affordable” to an individual, it should take up no more than about 30% of their salary, both as a rule of thumb and by the federal government’s own definition. But that’s not the end of the story when it comes to establishing what affordable housing is.

Another major question is this: How far away from one’s employment can housing be to still be functionally affordable for that worker? If I work a minimum wage job on the moon, renting a house on Earth and paying to commute daily to outer space won’t cut it.

For a more grounded example, if a worker’s job is in Overland Park, Kansas, but their housing is 25 minutes away east of downtown Kansas City, would that housing—meeting all criteria before considering location—qualify as “affordable housing”, given the added cost of transportation? If the same job were in Independence—nearly 40 minutes away from Overland Park—would we expect that worker to change jobs to something closer to home, or move to housing closer to their job? How do our expectations change if instead of gas being $2 per gallon, it jumps to $5 per gallon?

This question of affordable housing in the context of geography is a nuanced question that doesn’t necessarily have an intuitive or universal answer. But that doesn’t mean answers aren’t being proposed.

For example, the Housing and Transportation Affordability Index, or H+T Index, attempts to simulate what residents of a given census tract might expect to pay in housing and transportation combined as a percentage of their income. Keep in mind that “transportation” here includes all transportation, including trips to the grocery store, for entertainment, etc., so the H+T Index isn’t an apples-to-apples comparison to the HUD definition or other housing-only definitions of affordability. But the H+T index is helpful for understanding that affordable housing that isn’t close to gainful employment is, for all intents and purposes, not affordable.

Other factors can also play into the definition of affordable housing, including whether affordable housing includes homes for purchase as well as homes for rent; whether affordability considers the mitigating costs of roommates where appropriate; and the extent to which affordable housing could still be inadequate housing in some other qualitative way.

That said, a reasonable baseline definition of affordable housing includes the following: it should generally be paid for by the individual, should not exceed 30% of their salary, and should be available in rough proximity to their place of employment. Now, we can turn to the question we’re exploring in this series: Does Kansas City have an affordable housing problem? Stay tuned.

The post Part Four: Does Kansas City Have an Affordable Housing Problem? appeared first on Show-Me Institute.

This TIF incentive package was previously touted as imposing “no financial risk” on the city, but there’s simply no way to guarantee that a TIF agreement will not have negative financial effects on a city. Along with the numerous other problems posed by TIF (as outlined in my new paper), TIF can pose a financial risk to cities, and it has in Missouri on several occasions across several decades.

In the 1990s, the St. Louis Marketplace TIF bonds were backed by the city, meaning that the city was on the hook for the bond payments if the project did not generate enough revenue. Spoiler alert: it didn’t. A similar situation took place in Independence, Missouri, when a TIF project anchored by a Bass Pro shop failed to meet sales-tax revenue projections, so lawmakers used $3.5 million from the general fund to cover the shortfall in the bond payment.

While these situations aren’t a normal occurrence, there’s clearly no guarantee that TIF won’t present a huge financial burden to the city. Apparently, this is a lesson that Missouri municipalities cannot learn. Local lawmakers should be wary of TIF and bold statements like those made about the Brody Corners project. Its good news for Springfield that this plan was dismissed, and hopefully it won’t return in the new year.

The post Brody Corners Decision Good for Springfield appeared first on Show-Me Institute.

TIF is an economic development incentive tool used to try and spur development. When a TIF project is approved, governments return a portion of a developer’s tax payment back to the developer to help fund the development. It’s a classic case of the government picking winners and losers by choosing which developers receive handouts. This practice is almost always a misuse and waste of taxpayer dollars. Independence, MO, had a particularly frightening experience with TIF.

TIF is often financed through debt bonds. Normally, the increment (the extra taxes generated by a development) is returned to the developer. When TIF is financed via debt bonds, that money is returned to the developer, but the developer then uses those funds to make bond payments. A TIF district in Independence anchored by a Bass Pro Shop was funded with bonds issued by the city. However, when the project failed to meet sales tax revenues projections, the developers couldn’t make the bond payments. Independence lawmakers decided to use $3.5 million from the general fund to cover the shortfall in the bond payment. The city wasn’t required to do this because the bonds weren’t guaranteed, but it did so to “ensure the city’s strong financial credit rating.”

Independence’s bad bet cost taxpayers. Paying the $3.5 million to cover the shortfall and protect the city’s credit rating may or may not have been the right move, but the point is that the decision could have been avoided altogether. Taking money from the general fund to bail out a development that already received tax dollars means even less funding for other critical city services. TIF cases such as these, and other taxing district failures, are policy scare stories. Cities such as Webster Groves that are currently considering large TIF projects need to consider the considerable risks with tax subsidies. Maybe it’s time for lawmakers to end this nightmare for good and stop using TIF to fund private developments.

The post A Policy Scare Story: TIF appeared first on Show-Me Institute.

William Frey of the Brookings Institution just published a report entitled “How migration of millennials and seniors has shifted since the Great Recession,” and it has some promising numbers for Kansas City. In the report, Frey writes:

Another feature of young adult migration magnets is their location in the South and West “Sun Belt” region where all except three of the top 20 magnets are located. (Those three—Minneapolis-St. Paul, Columbus, and Kansas City—are among the most highly educated Midwest areas for millennials.)

…Today’s young adults, now encompassing those in the prime millennial ages, show a penchant for “educated places”—including Denver and Seattle—as well as more affordable areas like Minneapolis and Kansas City with pre-recession hot spots like Riverside, Phoenix, and Atlanta showing reduced appeal. 

Frey, as do most researchers, uses the term Kansas City broadly, to encompass an entire metropolitan statistical area (MSA). The Kansas City MSA stretches from Independence to Lawrence and includes 14 counties. Its population is 2.1 million, compared to the under 500,000 within the political boundaries of Kansas City, Missouri itself. Knowing whether a statistic describes a city or a metropolitan area is important, lest you conclude, as some would have you believe, that Kansas City gets 25 million visitors a year. It doesn’t.

It’s important to remember the Brookings Institution numbers on millennial migration speak to the broader MSA. Frey doesn’t report how much of the growth is taking place in downtown Kansas City, or how much is taking place in Olathe and Overland Park, two places recently listed as top destinations for millennials. Frey doesn’t report it because he doesn’t know it; I asked him.

As has happened before, it is possible that reports like this will be set upon by groups like the Downtown Council and the City of Kansas City as proof that the billions of dollars spent subsidizing wealthy developers in downtown Kansas City are bearing fruit. But until we know migration numbers within the MSAs, all that optimism is premature and skepticism is warranted.

Below: a map containg data from Frey’s analysis.

The post Some Promising Numbers About Millennials in Kansas City. Maybe. appeared first on Show-Me Institute.

Kansas City and Saint Louis, for example, upload full spreadsheets of city expenditures on their websites for anyone to download at no charge. For many other cities, getting data was as easy as sending an email request and, occasionally, paying a small service fee.

On the other hand, some local governments ignored my request entirely or said their software does not have this reporting capability, as was the case with Independence. At the far end of the spectrum, a Jefferson City employee said the process would take about 40 hours and would cost $936.

The goal of the government checkbook project is to allow all Missouri residents the same level of access to information that those living in places like Kansas City and Saint Louis currently enjoy.

As it now stands, public records on city expenditures are not always kept in a way that can be shared easily. Though Missouri’s sunshine law requires state and local governments to disclose their documents upon request, it does not prevent these governments from charging fees, nor does it obligate them to generate new documents. As a result, what might seem like a simple request can result in fees of thousands of dollars when the data are not user-friendly, as analysts working on previous Show-Me Institute projects have discovered.

Is there any reason why a digital-age society that values government transparency and accountability should not make public information easily available?

The post The Cost of Government Transparency in Missouri appeared first on Show-Me Institute.

As we have argued in the past, using tolls to pay for the improvements of highways is both fair and economically sound. Tolling allows all users of I-70, whether Missourian or non-Missourian, commuter or trucker, to jointly invest in a modern highway.

The new MoDOT study suggested that a plan to expand I-70 to three lanes across the state could cost $2 billion, far beyond the current resources of the department. However, the project could be financed with toll revenue and quickly implemented with the use of a public-private partnership (PPP). There are many varieties of PPPs, but they generally devolve some combination of the construction and operation of public assets to the private sector. If well designed and properly enforced, PPPs can deliver service that is both high quality and low cost.

While we may have issues with the scope of the I-70 project and how tolling is implemented, the fact that Missouri is getting serious about using PPPs and tolling to improve the highway system is to be lauded. More on this to come.

The post Toll Possibilities for I-70 Rebuild appeared first on Show-Me Institute.

MoDOT has exposed the need to rebuild I-70 for years. Its oldest sections are more than 55 years old, and much of the highway requires rebuilding from the ground up. But MoDOT is not just looking to rebuild I-70, they are also planning to expand it. MoDOT’s preferred plan would replace the pavement, expand the highway to at least three lanes on each side, construct a wide median, and replace interchanges. The plan is estimated to cost $3 billion. If Amendment 7 had passed, more than $1 billion (a quarter of all sales tax dollars going to the state road system) would have gone to improve I-70. Of that, $500 million would have gone to expanding the highway to three lanes from Wentzville to Independence.

MoDOT is so concerned with expanding I-70 because they projected traffic would almost double from 2007 to 2030. If I-70 does not add lanes, it would mean stop-and-go traffic across the state. Here is a chart of MoDOT’s projections:

MoDOT expected average daily traffic to increase roughly 2.5 percent per year from 2007 to 2030. If the growth in I-70 traffic follows the trend above, MoDOT is more than justified in its drive for more lanes. However, these increases are failing to materialize. For instance, in 2013, traffic should have been around 16 percent higher than it was in 2007. However, at most points along I-70, traffic was down. And lest one think this is a trend of the recession, 2007 traffic was around the same as 2000 traffic.

The idea that people are driving less, or at least not driving much more, should not surprise MoDOT. After all, they repeatedly say just that when requesting more dollars to spend on expanding rail and transit projects. If traffic on I-70 is not growing much now, and MoDOT expects people to drive less in the future, why hasn’t MoDOT updated its projections and plans for I-70? Claiming to need more money because people are driving less, while simultaneously needing money to handle traffic growth, seems like trying to have it both ways.

A more economical solution to the I-70 problem may be to rebuild the two-lane structure while addressing bottlenecks around places like Columbia. That might fit the needs of Missourians, while lessening some of MoDOT’s financial strain.

The post Are Outdated Projections Driving I-70 Rebuild Plans? appeared first on Show-Me Institute.

Transcript:

Remember alphabet soup when you were a kid and trying to make the letters into words? Lawmakers like to play with letters, too, with tax subsidies: TIFs, EEZs, TDDs…

The list goes on and on, but they all have one thing in common. They give corporations our tax dollars.

Take TIFs for example: Tax Increment Financing. Because of a TIF, Independence tax payers have paid 8 million dollars on top of the original subsidy to support a Bass Pro store.

You may think any new business is good no matter the tax break, but studies have found that TIFs cost areas billions of dollars without achieving economic growth.

Let’s say “goodbye” to the alphabet soup of tax subsidies like when Lee’s Summit rejected an EEZ and focus on real economic growth.

This has been the Show-Me Minute. Learn more about the Show-Me
Institute, where liberty comes first, click on our website at ShowMeInstitute.org.

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“Bass Pro Shops could only have happened in America – the home of the free enterprise system.” Those were the words of Bass Pro founder Johnny Morris in a recent Bloomberg News article.

Bass Pro has become a household name throughout America, synonymous with the great outdoors, and undoubtedly is an exceptional business.

It has completely changed the nature of sporting retail with its Walmart-size stores filled with unimaginable stocks of outdoor equipment, aquariums, wildlife displays and gun libraries.

Morris clearly benefited from a free enterprise system in America. However, one cannot overlook the fact that much of Bass Pro’s success and expansion are due to taxpayer-funded subsidies.

Many of those subsidies are from tax increment financing. TIF districts originally were created to spur economic development in portions of cities deemed economically depressed or blighted. Yet, cities across the country have long used a very loose definition of what constitutes a “blighted” area. The wealthy St. Louis suburb of Des Peres once declared a local shopping mall blighted because it lacked a Nordstrom’s.

Bass Pro has routinely received at least some amount of public assistance with many of its stores. According to the Public Accountability Initiative watchdog group, Bass Pro had received $500 million in taxpayer subsidies as of 2010.

The outdoors megastore sells itself to suburban communities as a destination retail attraction, capable of bringing in customers from hours away and even across state lines. To local leaders, bringing in a store the caliber of Bass Pro seems like a surefire way to increase local property and sales taxes.

However, Bass Pro does not always live up to its promise as an economic kick-starter and job creator. Many of the stores fail to raise the tax revenue that cities imagined, as happened in Mesa, Ariz. Bass Pro projected the Mesa store would produce $5.7 million a year in sales tax revenue for the city; instead, it has only managed an average of $1.7 million in four years.

In Missouri, Independence witnessed a similar result with the TIF it passed for a Bass Pro store.

What city officials fail to realize is that a large, new store does not give people more money to spend on fishing poles or waders.

Often, Bass Pro Shops only consolidates the market of outdoor supplies by killing smaller competitors, which negates the total growth that the development added.

Local leaders across the country are desperate to take credit for creating jobs and bringing a marquee brand to their community. In this desperation, they may dole out overly generous taxpayer subsidies for a few select businesses, which puts local, smaller businesses at an immediate disadvantage.

Big box retailers like Bass Pro often are built in affluent areas that could attract businesses without subsidies. We do not need the government picking winners and losers.

Bass Pro can build its stores on its own, as it did in Columbia, just north of Interstate 70. Instead of conjuring up incentives to bring businesses to their town, local leaders should focus on creating a pro-business atmosphere for all. That means lowering taxes and reducing regulations. If cities create a business-friendly environment, the rest will take care of itself.

Will Reynolds, an Ozark native, is an intern at the Show-Me Institute promoting market solutions for Missouri public policy.

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