For some reason, film tax credits remain popular in Jefferson City. They are much less popular with economists.

Missouri lawmakers are once again debating whether to extend the state’s film tax credit program. Earlier this month, I testified against legislation that would continue the subsidy. For those who don’t remember, this is a debate the state has already had.

Missouri operated a film tax credit program before ending it more than a decade ago. In 2010, the state’s Tax Credit Review Commission examined the program and concluded it served too narrow an industry to justify its cost to taxpayers. Lawmakers shut it down soon after. The idea never fully disappeared, though, and in 2023 the subsidy returned, this time with the promise of better results. The current program allows up to $16 million per year in credits for film and television productions.

So far, there is little evidence that anything has changed. Supporters point to production spending as proof that the program works. The Missouri Film Office reports that productions spent more than $40 million in the state in 2025 while receiving roughly $15.7 million in credits. But production spending is not the same as fiscal return. Much of that activity consists of temporary wages, lodging, equipment rentals, and other short-term expenses tied to a shoot. When filming ends, much of that spending leaves with it. What matters for taxpayers is how much tax revenue actually makes its way back to the state.

On that measure, film subsidies perform poorly almost everywhere they have been tried. Research summarized by the Tax Foundation estimates governments recapture between eight and twenty-eight cents in new tax revenue for every dollar of credit issued. Even Georgia, often cited as the model for film incentives, struggles to demonstrate that the program pays for itself. A 2020 performance audit by the Georgia Department of Audits and Accounts found that tax revenue generated by film production activity fell well short of the credits the state awarded.

There is also a basic budget reality lawmakers should keep in mind. Film tax credits are sometimes treated as something different than spending because the state only grants them after a production films in Missouri. But the fiscal effect is the same. Each credit issued is a commitment to collect less revenue in the future.

Meanwhile, the productions most closely associated with Missouri often film somewhere else entirely. A new HBO series set in St. Louis, DTF St. Louis, was filmed in Georgia. The Netflix series Ozark, which was set at Missouri’s Lake of the Ozarks, was also largely filmed in Georgia.

Though it should go without saying, Missouri’s lawmakers should be focused on using state tax dollars as effectively as possible. And there’s no disputing that film tax credits have repeatedly failed that test. Extending the credit today would mean ignoring the state’s past experience and choosing to repeat it.

The post Missouri’s Film Tax Credits Still Don’t Add Up appeared first on Show-Me Institute.

Youth sports centers have been exploding around Missouri for two decades and, unfortunately, tax subsidies seem to go hand-in-glove with them. Let’s make one thing clear at the start: these aren’t parks. These aren’t public facilities where any kid or family can go and play or picnic or fly a kite with a delightful, singing nanny. These are businesses aimed at youth travel sports clubs, which are private, expensive teams. I like club sports (if my kids’ coaches are reading this, please don’t bench them). I just don’t think they fit any definition of a public good. These private facilities have no business being subsidized by taxpayers; if there is a market for them (there is), then they will succeed on their own.

Here is a brief listing of some of the major youth sports facilities that received taxpayer funds of various types (grants, incentives, special sales taxes, etc.) by various governments:

• Springfield heavily subsidized the Sports Town project.
• St. Louis County had trouble deciding which of multiple youth sports projects to ultimately fund (it eventually subsidized both).
• A baseball complex in Lake of the Ozarks has seen multiple battles over tax incentives.
• O’Fallon just rejected subsidies for another complex (yeah!), but then turned around one week later and approved them (boo!).

This is just a short list. I am sure there are more. The first policy change we need is to remove the ability of cities to make these decisions. At a minimum, counties should make all of these tax subsidy decisions. County officials are at least answerable to the voters for their choices. Municipalities routinely grant tax subsidies to businesses where the immediate impact to the city is limited but the harm to the school district, library district, and other entities that rely on tax revenue is substantial. Yet voters in those other districts often don’t live within the municipality and can’t hold anyone responsible with their votes.

Beyond that, we need local municipal officials to better understand basic economics and think both long term and regionally. I am not holding my breath.

The post What’s the Deal with the Tax Subsidies for Youth Sports Centers? appeared first on Show-Me Institute.

On November 4, Jefferson City voters will decide on a proposal to renew the city’s seven percent hotel tax. The proceeds from the tax will help fund a new conference center for the city. Supporters of the new conference center have claimed it will create 370 new jobs and generate over $100 million in economic growth. Exaggerated estimates such as this one have been made on behalf of convention and conference center projects all around the country for decades, and the historic evidence is clear that Jefferson City voters should be dubious of such claims.

Between now and November, Jefferson City residents who visit St. Louis should drive by the largely empty dome attached to St. Louis’s downtown conference center to see how these conference center promises often play out. That dome was a part of a large convention center expansion in the 1990s. The same promises of growth, revenue, and utopia were all made when St. Louis voters approved a hotel tax increase back then. Now the dome is mostly empty, and the regional body that manages it is struggling to pay for its upkeep. You can also visit the site of the taxpayer-subsidized convention center hotel that went along with the project. You can only visit the site of the hotel, not the hotel itself, because the hotel failed and was foreclosed on long ago.

Like a Cold War general in a Kubrick movie or a carpenter with a box full of nails, local tourism agencies have the same solution for every problem. Economic recession? Expand the convention center. Economic growth? Enlarge the convention center. Global nuclear war? Definitely gonna need a bigger convention center to commiserate in.

The renewed hotel tax isn’t the only public money being used as part of this plan. State tax dollars are being pursued in the legislature, and the conference center may receive local tax subsidies.

Supporters of the conference center plan in Jefferson City would likely say their plan is not as grandiose as a major convention center and dome project in St. Louis, and they are correct in that regard. However, there are plenty of examples of more comparable projects that have failed to reach the level of activity anywhere near was promised. Haywood Sanders is a researcher and writer with the University of Texas–San Antonio who has studied convention center expansions for decades. He has documented how cities and tourism agencies systematically inflate projections to get these projects approved. Sanders has cited the actual and underwhelming numbers of very comparable projects in Overland Park, Kansas, and St. Charles, Missouri. Overland Park opened its convention center and hotel in 2002. Project supporters had projected $36 million in annual hotel revenue by 2012, but the reality was much lower, coming in at under $20 million.

Sanders explains that the convention and conference-center industry peaked in the early 2000s and shows no signs of returning to the success it had back then. With a major convention area nearby in Lake of the Ozarks, a new center in Jefferson City will face intense competition for these limited conference opportunities.

Taxpayers should not be on the hook for conference centers whose overstated benefits, small as they will be, will largely go to private entities. Jefferson City is the capital of the Show-Me State, and the claims being made by convention-center supporters should be met with a healthy dose of skepticism by voters.

The post Jefferson City Residents Should Be Skeptical of Conference Center Project appeared first on Show-Me Institute.

On November 4, Springfield voters will decide on a proposal to increase the city’s hotel tax by three percent. The proceeds from the new tax will help fund a new convention center for the city. A recent report paid for by the Visit Springfield tourism bureau said exactly what Visit Springfield wanted it to say: that a new convention center will generate enormous revenue for the Springfield area. The report claims a new convention center will drive $1.3 billion in new spending over the next 30 years. Exaggerated estimates like this one have been made on behalf of convention centers all around the country for decades, and the historic evidence is clear that Springfield voters should be dubious of such claims.

Between now and November, Springfield residents who visit St. Louis should drive by the largely empty dome attached to St. Louis’s downtown convention center to see how these convention center promises often play out. That dome was a part of a large convention center expansion in the 1990s. The same promises of growth, revenue, and utopia were all made when St. Louis voters approved a similar hotel tax increase back then. Now the dome is mostly empty, and the regional body that manages it is struggling to pay for its upkeep. St. Louis’s local tourism agency thinks the solution is the same thing it always is: further expansion of the convention center. Like a Cold War general in a Kubrick movie or a carpenter with a box full of nails, tourism agencies have the same solution for every problem. Economic recession? Expand the convention center. Economic growth? Enlarge the convention center. Global nuclear war? Definitely gonna need a bigger convention center to commiserate in.

The increased hotel tax isn’t the only public money being used as part of this plan. Other local sales taxes are slated to be used for funding, and state tax dollars are being considered. Tourists, Springfield residents, and possibly all of Missouri will get to pay for this new event space, whether it is actually needed or not.

Haywood Sanders is a researcher and writer with the University of Texas–San Antonio who has studied convention center expansions for decades. He has documented how cities and tourism agencies systematically inflate projections to get these projects approved. Sanders has reviewed the Springfield convention report and noted in an interview with a Springfield News-Leader reporter earlier this year that the report didn’t state how it calculated its room occupancy estimates and ignored underwhelming numbers of comparable convention centers in Overland Park, Kansas, and St. Charles, Missouri. Sanders states that the convention-center industry peaked in the early 2000s and shows no signs of returning to the success it enjoyed back then. With two major convention areas so close by in Branson and Lake of the Ozarks, a new center in Springfield will face intense competition. But I have no doubt that local Springfield convention-center boosters will ignore reality in their quest for tax revenue and city spending.

Visit Springfield wanted a report that claims a convention center will be an economic boon for the city. They got it. As Springfield residents prepare to decide on the hotel tax increase proposal, they should study the work of Heywood Sanders and others to learn about how these claims have been made about many other convention centers in many other cities, and how they usually fail. Springfield voters can also go to St. Louis to see the failures of these promises with their own eyes. Taxpayers should not be on the hook for convention centers whose overstated benefits, such as they are, will largely go to private entities. This is the Show-Me State, and the claims being made by supporters of the convention center for Springfield should be met with a healthy dose of skepticism by voters.

The post Springfield Voters Should Be Skeptical About Convention Center Claims appeared first on Show-Me Institute.

In 2001, a group of very libertarian-minded activists launched the Free-State Project, which encouraged thousands of libertarian believers in minimal government to move to New Hampshire. The overall success of the project has been limited, for a variety of reasons, but if imitation is the sincerest form of flattery, then I’d like to see people in Missouri flatter the Granite State and try to do a similar thing here in one of our many cities.

What would such a limited-government, free-market oriented municipality look like in Missouri? To start with, it should be modeled on successful, small-government municipalities like Weston, Florida, and Sandy Springs, Georgia, which provide many local services by contracting with the private sector. It should not be based on the more radical, no-government “utopias” like Grafton, New Hampshire, where the removal of almost all government services led to an increase in bear attacks.

How many limited-government activists would it take to create a free city in Missouri? Not very many. There are hundreds of existing municipalities here with less than a hundred residents where, at most, a few dozen show up to vote in local elections. If, say, 50 true free-market believers moved into one city, what types of changes could they make to create that desired free city?

To start with, they could remove all municipal planning and zoning rules and replace them with private contracts managed by property-owner associations where allowed. Those property-owner associations could manage issues like short-term rentals, trash collection, and home-based businesses.

Municipalities, especially small ones, could focus on contracting with larger cities or counties to provide many services, like policing or building inspections. The new free city could contract with private companies to provide many other services, like trash collection and recreation management. It could similarly contract with nonprofits for some other services where profit opportunities are limited, such as animal shelters. If it had municipal utilities, it could privatize them into regulated, private utilities. The free city could reduce local code requirements, permitting rules, and occupational licensing to the largest extent possible. The important ones, like fire codes and elevator inspections, could be kept, while arbitrary or obsolete regulations, like television repairman licenses and pool-table taxes, could be thrown out.

None of these examples are farfetched. Every one of the above examples is already in place in a city somewhere in Missouri. Private utilities provide water, gas, and electricity to millions of Missourians. Cities contract with counties and other cities for services all over the state. In St. Louis County, every municipality (88 at last count) contracts with the county for at least some inspection services. Nonprofits provide important services to the public, like Pinnacles Youth Park near Columbia, and operate many animal-care facilities. Private businesses operate city-owned golf courses and manage municipal swimming pools throughout the state.

How would a free city fund these services? It would maximize private contracts between residents and companies and enact user fees to the largest extent possible. Low general sales and property taxes could fund the rest, along with revenues shared from other sources, like the gas tax. Importantly, such a city would avoid special deals such as tax abatements or tax-increment financing, for some businesses or people. Making the sales and property tax bases as wide as possible would allow the rates to be as low as possible for everyone. This free city would absolutely avoid the errors of a local income tax such as exist in Kansas City and St. Louis.

Overall, a Missouri free-city project would create a municipal government system not all that different from those in many rural, unincorporated parts of Missouri. It would just be in a more urban or suburban setting. It may seem unrealistic to expect hundreds—or even dozens—of people to make such a move based on political philosophy. But as a model of quality, low-tax local government, it is perfectly realistic. While no city may have enacted all of these ideas, each of them has been enacted with success somewhere. We just need the right number of people to put it together all at once.

I vote we try it somewhere near the Lake of the Ozarks.

The post The Free-City Project for Missouri appeared first on Show-Me Institute.

Susan Pendergrass speaks with Show-Me Institute Director of Municipal Policy David Stokes about his new paper in the Free-Market Guide to Missouri Municipalities series on planning and zoning. They discuss how fragmentation among local governments can limit overly strict zoning, how zoning rules affect housing affordability, and why “last house syndrome” poses risks for Missouri’s future growth. From accessory dwelling units and minimum parking requirements to the debate over multifamily housing, Stokes explains how smart reforms can protect property rights and keep housing costs down.

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Timestamps

00:00 Introduction to Planning and Zoning in Missouri
02:35 The Impact of Fragmentation on Zoning
05:24 Housing Affordability and Zoning Regulations
08:22 The Role of Municipalities in Housing Development
11:18 Challenges of NIMBYism and YIMBYism
14:21 Accessory Dwelling Units and Short-Term Rentals
17:00 Planning and Infrastructure in Missouri
19:57 Future Papers and Conclusion

Transcript

Susan Pendergrass (00:00)
Thank you, David Stokes, so much for being on the podcast this morning. You have a new paper out with the Show Me Institute. Well, it’s actually part three of an existing series on your free market guide to Missouri municipalities. And this one is on planning and zoning. So thanks for joining us to answer some questions about it. Great. I do have one question that I was just saying before we started recording. I’ve seen this paper a few times.

David Stokes (00:19)
Delighted to be here.

Susan Pendergrass (00:26)
And one thing that I noticed up front is that I complain about the number of school districts in St. Louis County and how fragmented it is. And other folks have also said similar things, too many small municipalities. But it seems to be the case that when we’re talking about things like planning and zoning and permitting and regulations, that can be a good thing. Is that right?

David Stokes (00:46)
Absolutely. Because it’s harder to enact comprehensive planning, zoning, major things like urban growth boundaries—the extreme things like an urban growth boundary that we don’t have in Missouri. But it’s harder to enact that the more governments you have to get in line to agree to it in the first place. So it’s definitely—I don’t want to say it’s a causation. I don’t think the data is there to—

Susan Pendergrass (00:47)
What?

David Stokes (01:14)
But it’s definitely a—I would say it’s a truism—that there’s a strong connection between the metropolitan areas that have less strict zoning around the country. And over the past decade, we’ve really changed a lot in American local public policy to realize the harms of overly strict zoning. Until the past decade or so, it was just sort of assumed that strict zoning was a good thing. So now that we recognize the harms of it, we see that the places like St. Louis—and to a lesser extent, Kansas City—that have more fragmentation. St. Louis by any measure nationally has extreme fragmentation, meaning a whole lot of local governments, be they cities or school districts or fire districts or streetlight districts. I mean, we can really get into the obscure ones here in Missouri, but the more you have of that, the less strict zoning you’re going to have. And then that results in lower housing prices.

Susan Pendergrass (02:00)
You—

David Stokes (02:10)
What is the good that comes from that in the end? I think there’s lots of goods that come from it and some harms too. But the real good—the point of this paper, and the good for somebody who doesn’t care about public policy or libertarian thoughts or anything and just wants to be able to buy a nice house at an affordable price—is: the less strict zoning you have, the more fragmentation you have, the more you see that in lower housing costs.

Susan Pendergrass (02:35)
Yeah, and if you were starting a business too and one municipality, let’s say Clayton, has really high restrictions on what you can build, where you can build a health office and be—I don’t know if they do or don’t—but then you could just simply go next door to the next place and pick a different place that has fewer restrictions.

David Stokes (02:52)
You can, and that does happen. One of the ways they’ve solved that dilemma in St. Louis County especially is they do a lot more code enforcement and permitting at the county level than at the municipal level. Because nobody wants to have to get—if I’m going to be a plumber—nobody wants to have a plumbing license in 88 different cities. So they do that at the county level. You get your county license and it’s good throughout all of St. Louis County. Now, there are good aspects of that—mostly that you have to get one license instead of 88, which is an obvious good—but it’s also subject to abuse as well. It’s sort of the counterargument to the benefits of fragmentation in that it’s easier for special interest groups, like in this case, say the plumbers union, to capture licensing in St. Louis County if they only have to dominate one board as opposed to 88 boards. So there are two different ways to go—there’s the good and then the part of it that might not be quite as good.

Susan Pendergrass (03:59)
Yeah, so you make the point in this paper that while St. Louis does not necessarily have a housing affordability issue—or maybe even Missouri—it’s still worthwhile for folks who are working at the municipal level, like if you’re working as a newly elected Board of Aldermen or newly elected county board official, to educate yourself on what is and isn’t possible to make sure that you avoid what you just described as the pitfalls of over-regulating.

David Stokes (04:28)
Absolutely. A lot of this paper is about—in the not very scientific term—sort of low-hanging fruit. Just because zoning in Missouri may be less strict than in other states… there’s actually, I discovered in researching this paper—I’d always understood and known that zoning in Missouri and in St. Louis and Kansas City was less strict than in many other parts of the country—but then I discovered that there is actually an index out of the Wharton Business School at the University of Pennsylvania that ranks metropolitan areas by zoning strictness. And St. Louis is the least strict for zoning of any metropolitan area in the country in this ranking. And Kansas City is sort of in the middle. But then you see that Kansas City on the Missouri side is closer to St. Louis, and it’s the Kansas side that is more strict and puts them in the middle. So we really do have not-strict zoning.

Susan Pendergrass (05:05)
That’s hilarious.

David Stokes (05:24)
And that’s a wonderful thing, but it doesn’t mean that cities shouldn’t make some of these reforms that are coming nationwide that would still benefit Missouri, such as abolishing minimum parking requirements, allowing smaller lot sizes, allowing people to build accessory dwelling units on their own property. It’s a great reform focus—from the Show Me Institute’s perspective—because these are changes that can be made that enhance people’s own property rights and what they can do with their own property, while at the same time giving people more choice. And in the long run, if you do more of these, you’ll help keep housing prices down even more for people. And in a good way—you’re not doing this through mandates or rules; you’re just saying we’re going to allow people to build even more. And I’m not against every limit on every property thing ever. There are some that are reasonable—particularly in Missouri we have floodplain limits on where you build that are very reasonable in many cases—but there’s still a lot of good stuff we can do.

Susan Pendergrass (06:33)
Yeah, I saw recently last week that in the upcoming election cycle, housing affordability is a top issue for folks. This is really bubbling up the list of priorities because it’s gotten so expensive and, you know, I keep reading about why people can’t afford to move, and they can’t afford to sell their home, or they can’t afford to buy a home. And certainly some markets—like you mentioned in the paper, like Portland—and you mentioned this briefly: Portland’s got a brown zone and a green zone, and you can’t build in the green zone. You have to stay in the brown zone, and it makes it very prohibitively expensive to build new housing stock in Portland, and the prices have gone up dramatically. We do not yet have that problem in St. Louis, but I know that it’s on a lot of people’s minds and certainly, statewide, we still have some concerns about having enough affordable housing for everybody. I do think it’s important to make sure that we don’t let regulation creep happen so that we find ourselves raising our prices artificially.

David Stokes (07:36)
And you see this in disputes in our exurban areas now in, say, St. Charles and Jefferson County—surrounding counties of St. Louis—and on the Kansas City side as well. Last year, for example, in St. Charles County, a big new subdivision was rejected in a wooded part of the county—I think it was near Weldon Spring. They’re also allowing some, but—

Susan Pendergrass (07:56)
Was it Weldon Spring, or what was that?

David Stokes (08:02)
And that’s the dilemma that people face: as places like St. Charles and Jefferson County grow and get more full, there’s going to be inevitable pressure from the people there now to stop new building. It’s called last-house syndrome: “Great, my new home here is great. Now don’t build any more because I got the house and it’s perfect.” You see that everywhere, and you understand the concerns. I try not to completely ignore the concerns of the folks, because they’re not always wrong—of course, we’ll go back to the floodplain issue—but you’ll have people worry. It’s the people there now: concerns about traffic and overbuilding and destruction of wooded areas and too dense and all those things. But you want people to realize that other people probably said the same thing before they built your house, and it was a good thing that people in most instances really said no to that, and it allowed that construction to continue. And I really want people to realize that.

Susan Pendergrass (08:34)
Yeah. That’s right. ⁓

David Stokes (09:00)
If we go—it’s not about any one subdivision, because look, there probably are certain instances in certain places where the new zoning is too dense, whatever it may be—it’s not that every rejection is always completely wrong. But if you start in Missouri making a pattern of this in the outer areas of Kansas City and St. Louis, where you start turning down a lot of these new subdivisions to preserve whatever it is that people moved out there for 20 years ago, then housing prices are going to increase in Missouri. They will increase substantially, and it won’t take that long if you really do stop the building. So that’s one of the takeaways from this paper: to the largest extent possible, we need to keep allowing the building of these new homes or apartments. And obviously a big part of the paper is that apartments should be generally allowed in more places too. That’s how we’re going to continue to have low housing costs, and that’s the benefit of it. It’s not about one subdivision in one space, but if it becomes a trend, it’s really going to be a problem—the trend being protecting it.

Susan Pendergrass (10:15)
Yeah, and the multifamily for sure. What are your findings around that? People don’t seem to want to have to look at apartment buildings. Is that right?

David Stokes (10:25)
They don’t—there’s just some natural rejection against it. And it’s frustrating to see. In some spots—I remember in the City of St. Louis; this is one where, when you lived in St. Louis, you lived near there—at the corner of Skinker and Delmar there was a proposal for a large apartment building right there, and it got a lot of opposition, and it has not moved forward. It was stopped. I hope it comes back because it’s a perfect lot for an apartment building. It’s just an empty lot—it was a chicken restaurant for many, many years and a popular one—but it’s been vacant forever. And it’s right near public transit. So it’s the perfect idea where you should be able to build there, and you shouldn’t have generous or extensive—

Susan Pendergrass (10:59)
An abandoned empty lot, right?

David Stokes (11:18)
—parking requirements for those buildings, because one of the projects—

Susan Pendergrass (11:21)
That’s what people were kind of freaking out about though, was the parking. Like, where are all these cars going to go? And there was one across the street and they had only put in like one parking space for every two units or something, and they figured that people would use public transport. Anyway, I remember the pushback on that. And it’s this NIMBYism–YIMBYism thing, right? It’s so hard to push people to YIMBYism—yes in my backyard—because of things they don’t… I don’t… These same people often talk a lot about housing affordability, so I don’t mean to overgeneralize, but there are some of the very same people who are so concerned about it who don’t want to look at apartment buildings.

David Stokes (11:50)
Right, don’t want to—and you understand. That’s a very liberal area that we’re talking about. If you were to define the politics of that area, you’re right: many of the residents of those communities in both the city and in University City right there would, in theory, in the big picture, probably agree, but then, “Oh, we don’t want this development here.” And it was a perfect place for a new apartment. Again, of all the St. Louis area, it’s one of the best areas served by public transit—

Susan Pendergrass (12:06)
Yes.

David Stokes (12:31)
—with buses and MetroLink and the WashU shuttles, because so many people who would be in those apartments would be WashU students. They’ve got that extensive shuttle system. But it was rejected, and I hope it comes back. And that’s just one of many, many examples of it.

Susan Pendergrass (12:31)
Yeah, yeah. What about the—what part of zoning and planning is this push in the City of St. Louis, anyway, to try to get people to move downtown? Is that something that’s coded in? I feel like they’re trying to get people to go downtown.

David Stokes (13:03)
They are. And thankfully, I don’t think zoning is preventing that. Of all the reasons people may or may not be choosing to move downtown—fear of crime and businesses leaving downtown, the jobs—as somebody who lived downtown in the late 1990s and early 2000s, to move down there when many of the jobs have left—fear—it’s a harder thing to convince. But I don’t think there’s— I don’t think it’s difficult or has ever been difficult for the loft developers of the ’90s to get permission to take an empty commercial building and turn it into lofts. There might have been a lot of issues they had to deal with, but zoning—I don’t believe—was one of them. Thankfully that’s a very good thing. But it’s one of the fun parts about this paper, right? We’re talking in the other papers and in the ones to come about the best ways to do public safety and public works and a lot of things. In most of these instances we all agree somebody has to do this service, and it’s just a question of: does the city provide it themselves? Do they contract with a neighboring municipality to do it—such as a small city contracting with a neighboring city to do police service? Should you let the private sector do it in a regulated manner, like utilities? But we can all agree it has to be done. Whereas I started this paper saying: despite the fact that it may be incredibly common, cities don’t actually need planning or zoning—life can exist without it. And that’s where the current HOA options come into play. And the history of HOAs in St. Louis, in the private place model, is such an interesting part of that. So there’s a little bit of the historic discussion of all of this in the paper too.

Susan Pendergrass (14:53)
So where do Missouri municipalities for the most part right now stand on things like—two questions I’m going to ask you—accessory dwelling units and short-term rentals or Airbnbs? Where do they stand on ADUs?

David Stokes (15:06)
Well, slowly but surely, we’re starting to permit ADUs. We haven’t had any sort of statewide, to my knowledge, overarching legislation. And that’s where the fact that we have low housing costs in Missouri matters. I don’t think we’re going to see the California situation that had to go statewide because none of the municipalities would agree to it. I don’t think we’ll see that here because there’s not the tremendous high-cost-of-housing crisis to push that. But slowly but surely, cities are starting to allow more ADUs, and that’s a very good thing. When you get out into rural areas—and in some places that don’t even have zoning in the first place—you can do any ADU you want to, or the zoning is so loose that of course you can build an apartment above your garage if you’d like to. Why are you even asking? But the cities have the rules against it.

Susan Pendergrass (15:52)
That’s where I live.

David Stokes (16:03)
Slowly but surely moving in the right direction there. And then it’s going in the opposite way with short-term rentals. Slowly but surely most cities are instituting short-term rental limitations. I’m not automatically opposed to that in every case. I get it: if you have a neighborhood and all of a sudden there’s a house where big parties are being thrown every weekend because they’re renting it out to different groups of people to throw parties, you’re going to hate that, and that’s going to impact the quality of your life. So I’ve been saying for a few years now that the short-term rental regulations I support would generally be things that don’t go to a blanket prohibition. I think that’s too far—and most cities aren’t doing that—but rather really focus on punishment of the property owner for repeated rule-breaking. One party is maybe one party, but if there’s a trend where you own the property and the people you’re renting to are consistently out of control, then the fines should be increased. I wouldn’t be opposed to them getting fairly steep up to a point too—that if it happens too often, you would lose your business license to operate that short-term rental. Because I do think that if you’re doing it a lot—if you’re routinely renting it out—you should be treated a little more like a hotel. We don’t want to give short-term rentals an advantage over the hotel-motel industry. You want that playing field to be as level as possible, especially for people who are renting their houses or condos or whatever out a lot. So then pull that license if it’s an abuse that’s happening consistently. But let’s try to—

Susan Pendergrass (17:55)
Well, I had that on my street.

David Stokes (17:56)
—go to a method through crackdown on rule-breaking, not blanket prohibitions.

Susan Pendergrass (18:00)
Yeah, we had that on my street in St. Louis, and it was a street of, I don’t know, three- or four-bedroom houses, and they somehow had eight bedrooms and a pool, which was very rare in my neighborhood. So they mostly just rented it out to college students and got called all the time—the police got brought in all the time for noise complaints. And there wasn’t really a good mechanism in place at the time to prevent it from happening. So I agree that there should be some limitations around them, but not to make it so strict that people can’t use it as intended. I mean, I stay in Airbnbs all the time. I like having them, but—

David Stokes (18:36)
Now, that police dilemma—that’s something in St. Louis and probably Kansas City, a few big cities, where the cops just have better things to do than break up parties. I mean, they’ve got violent crimes to address. That’s an issue: how are they going to take it seriously enough? In the average Missouri suburb or mid-sized cities, the police are going to take that a little more seriously, I would think. And a good comparison I like is in Lake of the Ozarks, where some cities have instituted strict rules against short-term rentals, while others, like Osage Beach—at least as of our research—hadn’t instituted anything and took a much more free-market approach: “We’re a tourist area; we want tourists to come here.” So it’ll be a good natural experiment over time to see how it affects property values, how growth is affected, as different comparable cities in the Lake of the Ozarks region choose different paths to move forward. So I definitely look forward to following that.

Susan Pendergrass (19:37)
Well, then I’ll know—another component to this paper is on planning. I think you just said a city doesn’t have to do planning if they don’t choose to, but are Missouri cities or municipalities planners? I mean, is that a planned thing, or are we more like anything goes?

David Stokes (19:56)
Most Missouri cities have plans. Right?

Susan Pendergrass (19:57)
I’ve been to New Town, by the way. I just want to say I have visited New Town, so—before you start talking.

David Stokes (20:03)
Well, that’s the architectural planning—how do we want to design it? Then there’s the legal, defined planning. And luckily, again, I really don’t think Missouri cities need to do any planning outside of general infrastructure planning. So I shouldn’t say they don’t need to do any planning—there’s the general infrastructure planning that pretty much everybody supports, meaning you should have an idea of how growth is going to go in your city and where you’re going to put sewers and sidewalks and streets. You want a general long-term plan for that, even if that plan is—as it should be—thoroughly adjustable and can be changed as growth happens naturally. But then you get into planning like we mentioned with Portland earlier—urban growth boundaries—where the planners really start to say, “You can live here; you cannot live here; you can build here; you cannot build here,” and it gets to be really extreme. We don’t really have that in Missouri. Thankfully, the plans that cities do adopt can be easily amended by any city council. They can be changed. When I worked at St. Louis County, we dealt with the county planning commission for the parts of the council district I worked in that were unincorporated, where the planning commission had a lot to say on that. So elected officials can and should be able to change that plan as they go. And then the biggest—let’s say you permitted a development that’s against your plan, but the elected officials want to do it anyway—I usually don’t have a problem with that. The fact that it’s inconsistent with your plan would generally be something that, if locals want to sue to stop the development, they would cite in the lawsuit—that it was inconsistent with your process and your plan—and then it would be determined by judges and the whole legal process. But planning in Missouri is something that, outside of basic infrastructure planning, cities shouldn’t really do. And to the extent that they do it, it’s easily amended and changed. And that’s a good thing.

Susan Pendergrass (21:55)
Mm-hmm. So the first two papers in your series were taxation, right?

David Stokes (22:20)
Taxation was number two, and the first one was just sort of the structure of municipal government in Missouri. It had a lot to do with city managers. And then the fragmentation issue was addressed as well in the first one that we discussed here, because that’s a part of that, obviously.

Susan Pendergrass (22:23)
Introductory. Okay. And taxation. And this is zoning and planning. Right. And then what’s on deck? What’s the next one?

David Stokes (22:41)
We don’t actually know yet what number four will be—germinating. Most of them are ready to go pretty quickly, so I think the next one will be released within the next two months—certainly this year. And I think it’s going to be on public works. But we have papers coming on public works, public safety, parks and recreation—which is one I’m really going to enjoy. You go to Forest Park and there’s all the great things in St. Louis’s Forest Park, and then you realize that many of the wonderful things there are actually done under contract with the private sector, either for-profit businesses like the Boathouse and the ice rink that pay the city to operate, or nonprofit businesses like the Muni that have been in the park for a long time. So it’s a great option to talk about all the different ways to provide parks and recreation services.

Susan Pendergrass (23:18)
Yeah.

David Stokes (23:35)
But those are at least three of the upcoming ones. And then there’ll be a concluding, summarize-it-all-up section as well.

Susan Pendergrass (23:41)
I look forward to hearing more about those, and thanks for coming on to talk about planning and zoning. It’s going to be a great series when it all gets put together. Thanks.

David Stokes (23:48)
Thank you very much, Susan.

Produced by Show-Me Opportunity

The post A Free-Market Guide to Zoning with David Stokes appeared first on Show-Me Institute.

The new state law creates three types of counties for property taxes:

1)        Five percent counties: These counties are made up primarily of Missouri’s smaller, rural counties. In these counties, upon local voter approval, a homeowner’s property tax liability can go up by no more than the lower of five percent or the national inflation rate during reassessment, unless voters approve tax rate increases or the homeowner improves their property. There are 75 counties in this category.

2)         Zero percent counties: These counties are made up primarily of mid-sized and suburban Missouri counties. In these counties, upon local voter approval, a homeowner’s property tax liability cannot increase at all during reassessment unless voters approve tax rate increases or the homeowner improves their property. There are 22 different listings for counties in this category.

3)         “Unaffected” counties (my term, not language from the bill): These counties are primarily Missouri’s large urban counties or counties in central Missouri, including the Lake of the Ozarks area. These 17 counties and the City of St. Louis are not included in this legislation and their tax and reassessment system will continue unchanged. It is worth noting that Jackson County, which has had by far the worst administration of assessment and tax collection in recent years of any Missouri county, is unaffected.

There are many reasons why these substantial changes to the system are bad, but the first one is that, in general, property taxes are the least harmful tax for economic growth. So, if you want to create a tax system that encourages greater economic opportunity for all Missourians, the property tax is the last tax you should focus on. Furthermore, these changes will almost certainly lead to greater governmental reliance on income taxes (mostly through the state’s foundation formula for school funding), which is exactly the wrong way to go about this.

Here is a chart I like to share. It includes four major economic studies of tax policy. The conclusions are obvious. Property taxes, in general, are the least harmful for economic growth and income taxes are the most harmful. Why Missouri would be severely limiting property taxes in many counties in a manner that will increase dependency on income taxes is beyond me. It may make for good politics. It is not good tax or economic policy.

Not all property taxes are the same, of course. Property taxes focused on the value of the land are the best, and we need to expand that (i.e., land taxation) in Missouri. Property taxes focused on homes and buildings are next best. Missouri makes heavy use of personal property taxes on cars, boats, etc., and those taxes on mobile assets are less beneficial and should be phased out. Finally, personal property taxes on business and farm equipment are harmful, and should be ended. (The final category makes up a very small part of the property tax base, so ending it would not be difficult.)

Future posts will discuss the constitutional problems with this bill, the harmful effects of favoring current homeowners over future homeowners, a discussion of Charles Tiebout and his theories, and more. For more information, please see my testimony from the special session, these policy studies on this issue of property taxes and assessments, and related commentaries.

The post Why the New Property Tax Rules in Missouri Are Bad, Part 1 appeared first on Show-Me Institute.

In November, voters in Clay County (and also Laclede County) will have the opportunity be the first counties in Missouri to reduce their commercial property surtax rate.

See a map of commercial surtax rates across Missouri here.

The commercial surtax is a property tax levied at the county level on commercial property only. Unlike other property taxes, it does not adjust downward as assessment value increases, and it cannot be lowered by elected officials. Per the Missouri Constitution, it cannot be raised, and only voters can lower it. To date, voters in Missouri have never lowered a surcharge tax rate, but in November, voters in Clay County will have the opportunity to be the first to do so. The modest reduction Clay County is proposing to equalize itself with Jackson County, in my opinion, is very good public policy, but more on that later.

The tax rate varies by county based on the amount of money the tax it replaced—a commercial inventory-based tax—raised in each county in 1985. If your county had many businesses that generated products subject to the inventory tax, such as Clay County with the Claycomo Ford Plant, you probably have a high replacement tax rate. If you are a county that had a lot of businesses that did not generate much taxable inventory, such as counties in the Lake of the Ozarks region with its tourism economy, you likely have a low commercial surtax rate. But the real issue is that because of the difficulty in adjusting the rate, counties still have the rate based on the economic conditions of 1985.

The post WATCH: Clay County Voters to Decide on Tax Reduction appeared first on Show-Me Institute.

Tax relief and reform alone won’t solve all of Missouri’s problems or immediately launch Missouri to the front of the pack in attracting talent and capital from around the country. We need better schools with more educational opportunities We need to reduce crime, especially with three of our major cities—St Louis, Kansas City, and Springfield—ranking distressingly high on national crime indices. But solving either, let alone both, of these problems is very complex and likely to require a multi-pronged approach as policymakers work to build consensus and tackle each element of the problem.

There are some things Missouri can never have—like Florida’s coastline (although the Lake of the Ozarks is plenty to brag about)—but implementing good tax policy is well within our grasp. Some would seek quick, superficial, and ultimately harmful “fixes,” like using subsidies or tax credits (subsidies by a different name) as handouts to lure large, well-connected companies to expand in Missouri, with no guarantee that any jobs they create would outlast the flow of taxpayer money. But history and research have undermined the claim that we can subsidize our way to prosperity or successfully pick winners and losers. One thing policymakers absolutely can do is create a better, more level playing field for families and small businesses with an income-tax cut that returns money to their pockets and reduces the penalty on hard work and investment.

Thankfully, Governor Parson and the General Assembly appear poised to pursue exactly that—rate reductions to Missouri’s income tax—in the upcoming special session of the legislature. Doing so would not only be welcome relief to Missourians suffering under decades-high inflation, but it would also be a great way to kickstart a bold tax-reform agenda to improve the economic prospects of every Missourian. Economic research has demonstrated that lower income-tax burdens encourage work, improve productivity, increase entrepreneurship, promote innovation, and attract people and firms from places with more punitive taxes. When we enable people to earn higher returns on their labor and investments, it should come as no surprise that we get more of both.

This isn’t theory or idle speculation. One only needs to look as far as neighboring Tennessee to see a state much like our own that has grown dramatically faster than Missouri in recent decades. One major reason for that growth is that Tennessee is one of nine states with no income tax, and its major cities do not have local income taxes. Greater economic growth is more than just a statistic. It’s more jobs and new businesses at places ranging from local mom-and-pop shops to modern tech start-ups—all driving up wages and creating ladders of opportunity. Growth benefits Missourians of all backgrounds, which is why we must seize on the opportunity to return power and money to the people through the kind of income-tax-rate reductions now being discussed.

Those who oppose these cuts look past the obvious success of Tennessee and Florida and instead bring up the specter of Kansas, which faced negative consequences in the years following its own major tax cuts. But not every tax cut is created alike, and prudent budgeting always demands running the math both on the revenues and spending sides, which is exactly what Missouri policymakers are doing carefully and seriously as they deliberate. By contrast, when Kansas cut taxes, it created a special zero percent rate for only certain forms of income (namely, LLCs, S-Corps, and other pass-through entities) and did not undertake other subsidy and spending reforms to ensure that the numbers would add up. Favoritism and bad arithmetic are bound to create problems. Not surprisingly, many businesses changed their structure to these newly tax-free entities, and Kansas state revenues fell. Kansas reduced the tax rate on pass-through income to zero, far below that of regular income. Not only did this change have little justification economically but it also greatly encouraged tax avoidance behavior through income reclassification

That is not the proposal under consideration in Missouri. Governor Parson and the legislative leadership are considering accelerating already-planned rate reductions by cutting the Missouri income tax rate from 5.3 percent to 4.8 percent—a move well justified by the enormous surge in revenues the state continues to experience. It would be even better for our state if Missouri were to push even further past 4.8 percent. The prudent course of action in that case would be to also pursue subsidy reductions and other tax and spending reforms to ensure the stability of Missouri finances for vital public services. State leadership is also considering increasing the standard deduction on state taxes, which would deliver further relief to working- and middle-class Missourians, removing some from the tax rolls entirely.

At a time of high inflation and labor shortages, putting Missouri on a faster growth track through pro-growth, pro-work, pro-investment income tax reductions could not be more appropriate. In the short term, having more money in their pockets will provide much-needed relief to struggling families and empower Missourians to achieve their dreams, whether this means saving for a house, starting a business, or donating to their communities. In the long run, taking an important step toward major tax reform signals that Missouri is open for business and no longer willing to cede ground to states like Tennessee, Florida, or Texas. If those states can attract investment and talent by rewarding hard work and entrepreneurship, then we can too.

However you measure it, Missouri has not been growing compared to other states. If the Governor and legislature succeed in passing some combination of tax rate reductions and other adjustments to our income-tax system, they will increase opportunities for all Missourians. That would be a legislative special session we could be proud of.

The post Would an Income-tax Cut Benefit Missouri? appeared first on Show-Me Institute.

The tax rate varies by county based on the amount of money the tax it replaced—a commercial inventory-based tax—raised in each county in 1985. If your county had many businesses that generated products subject to the inventory tax, such as Clay County with the Claycomo Ford Plant, you probably have a high replacement tax rate. If you are a county that had a lot of businesses that did not generate much taxable inventory, such as counties in the Lake of the Ozarks region with its tourism economy, you likely have a low commercial surtax rate. But the real issue is that because of the difficulty in adjusting the rate, counties still have the rate based on the economic conditions of 1985.

That is why we built this map. The map below shows the commercial surtax rate for every county in Missouri. The redder the county, the higher the rate. The rate varies from $1.70 per $100 of assessed commercial valuation in St. Louis County to $0.01 in Reynolds County. The unweighted average rate is $0.53; the median rate is $0.41. Please check out the map (there is also a download link at the bottom of the post) and see where your county fits.

The post Map of Commercial Property Tax Surcharges in Missouri appeared first on Show-Me Institute.

I have no doubt that the sales tax is being proposed in order to make sure that tourists pay their “fair share” of the costs for greater law enforcement in the area. The Lake is one region where either a sales tax or a property tax increase is going to raise significant tax money from non-permanent residents, with either tourists paying the sales (and lodging) taxes or vacation homeowners paying the property taxes.

But back to the sales tax increase. Residents know better than anyone if increased or better law enforcement in Camden County is required. They and the tourists (like me) will pay for it. But is there money available outside of a tax increase? Here are some things to consider:

• Online sales tax collections are coming (officially) to Missouri, which will increase local tax collections starting in 2023.
• Parson just signed the gas tax increase, which (assuming it survives legal challenges) will further lead to more money for counties. (The money raised has to be used on roads, but that loosens up other tax revenues.)
• In the short term, Camden County is set to get almost $9 million from the stimulus plan. That is, shall we say, a lot of money.
• Housing values are soaring, and even with the required tax rate rollbacks, there will still likely be noticeable local property tax collection increases.

Leaving aside this increased future revenue, are there other ways to increase funding for law enforcement in Camden County without tax increases?

I would suggest two things. First of all, get control of the generous tax subsidies granted to developers in the region. That is tax money that is given away to private interests instead of going to public services. The Lake Ozark region has currently promised TIF subsidies of $395 million. $395 million! To be clear, because the TIF reports don’t give addresses, and because many Lake of the Ozarks cities are in multiple counties, I can’t determine how much of that is within Camden County itself. But undoubtedly it is a very large amount of tax subsidies over the next decade or so, very likely in the hundreds of millions. That is tax revenue that could have been used for public services, including law enforcement.

Another option is greater consolidation of 911 emergency dispatching services, like Miller County and many other Missouri communities do. Camden County law enforcement agencies appear to operate their own dispatching services, which is an area ripe for economies of scale and cost savings.

But in the end, the choice, as it should be, is up to the voters.

The post A New Sales Tax for Law Enforcement in the Lake of the Ozarks appeared first on Show-Me Institute.

Longtime United States Senator and Chairman of the Senate Finance Committee Russell Long of Louisiana used to say, “Don’t tax you, don’t tax me, tax that man behind the tree.” Long knew that everyone’s favorite tax was the tax that forced someone else to pay for something. We all want services from the government. The problem there (actually, there are many problems there, but let’s focus on the tax issue) is that we have to pay for those services with taxes. Like many other politicians, Long realized that what we really want is to have other people, the “outsiders,” pay for our public services.

Local governments in Missouri have excelled at this practice for many years. It was here in Missouri that local governments took it to its most extreme form in Mack’s Creek, St. George, and many other places by funding their city governments with reprehensible fine and ticketing practices. Ferguson got much of the attention for these actions after the riots, but, in fact, they were a fairly normal Missouri city when it came to using fines and tickets to fund their city’s operations. After the violence in Ferguson, the state passed beneficial legislation that finally limited this practice, and our entire state is better off for that change.

But local governments still focus on raising revenues by taxing outsiders. Voters in Kansas City and St. Louis just approved keeping the earnings tax, which includes taxing people who don’t live in those cities and can’t vote on the issue. Who wouldn’t want to tax someone else who is only in the city for limited periods, uses fewer public services, and has no say in the matter? Branson did the exact same thing earlier this month when voters passed proposals to pay for important infrastructure improvements entirely with new hotel and restaurant sales taxes.

Welcome, stranger, thanks for visiting.

A more common practice is the use of special taxing districts such as transportation development districts (TDDs) and community improvement districts (CIDs) to fund local services. Such districts have exploded in recent years, going from a combined 86 in 2004 to 732 in 2020. Special taxing districts can use property taxes, sales taxes, or direct user fees like tolls for their projects. While a couple of the most well-regarded of these tax districts do use property taxes or tolls to fund their operations, I’ll let you guess which tax most of them use. That’s right, the sales tax.

In a 2017 audit, Missouri state auditor Nicole Galloway cited numerous TDDs and CIDs for financial and management abuses. In Springfield, she detailed how the College Station TDD failed to notify shoppers of the tax and failed to include area residents on the TDD board. In Waldo (in Kansas City) multiple CIDs are layered on top of each other, creating high taxes for shoppers that benefit business owners, not the general public. In Southeast Missouri, the Black Mountain CID in Van Buren was caught using the CID’s tax money to make private loans, pay private debts, and fund private expenditures. In Mid-Missouri, the Stoneridge TDD in Jefferson City granted a no-bid contract submitted after the supposed deadline to a board member’s company, while the Rock Bridge TDD in Columbia collected sales taxes from businesses outside the district. Missouri needs tighter limitations on the use of TDDs and CIDs, or they will continue to be abused around the state.

There are benefits to funding government with consumption taxes. This is not an anti-sales tax piece, generally speaking. What I want to argue against is the exploitation of the idea that those shoppers, workers, or visitors who briefly appear in your city need to pay their “fair share” of the local tax burden. “Free rider” is a term for people who use public services without paying the costs. Good public policy should work to limit free riding where possible. But is a person who shops in your city really a free rider who must, in the interest of fairness, pay another half-cent sales tax on the goods that they buy? I don’t think they are, even in tourist havens like Branson or Lake of the Ozarks.

Those shoppers are already paying gas taxes, and a portion of the gas tax gets sent straight to cities for their local roads. Beyond the gas taxes, shoppers and other visitors will generally travel major state and county roads to get to their local shopping destinations. Those malls, shopping centers, grocery stores, etc., are rarely located on streets maintained by city governments.

Those businesses that employees work for or shoppers patronize are already paying commercial property taxes (which are assessed at higher rates than homes) to the city. They pay business license fees to the city, so I might ask what the purpose of a business license is if not to allow employees and customers to come to your place of business? Arguments for raising new taxes, including through measures like TDDs and CIDs, frequently leave out any discussion of all of the other taxes and fees that are currently being paid.

Another issue with funding as much of your local government as you can with a sales tax directed at outsiders is that doing so makes things the government wants look like things the government needs. Do you think that Missouri’s nascent and inexplicable enthusiasm for new trolleys and streetcars would be happening if property owners and trolley users (the few there are) were paying the entire cost? Of course not. The Loop Trolley is entirely funded by outsiders via local sales taxes and federal tax dollars. The Kansas City Streetcar is significantly funded by federal tax dollars and a local TDD, although—to give credit where due—some of the operating funds come from local property taxes. The ability to export most or all of the cost of a new government project onto people who don’t vote on it makes it much more likely that government will engage in activities with questionable benefits. Using property taxes instead as the primary basis for local government funding results in better decision-making by voters—who must decide if the benefits of the government activity are worth what the voters themselves will have to pay for them.

The local leaders who push these efforts to tax outsiders or alleged free riders often feel they are being clever by doing so, as if they have discovered some new trick. The recent ads in favor of the earnings tax in Kansas City proudly claim that half of the money comes from people who don’t live in Kansas City. Supporters of almost every new TDD, CID, or other sales tax proposal consistently tout how this will make those outside shoppers finally pay their fair share. What is lost here is the fact that while your city is being clever in getting that revenue from those outsiders, all of the other cities are doing the same thing to your residents. This whole endless endeavor just creates a circular firing squad of higher taxes used to fund government expenses of questionable necessity. At its worst, it led to long lines at night courts throughout Missouri as town after town was funding itself with tickets and fines targeted toward making payroll rather than public safety.

If Russell Long had been from Missouri, he probably would have changed the final line of his doggerel. “Tax that tourist in the CID” and “Tax that driver in the SUV” come quickly to mind as localized final verses. But his main point stands the test of time and geography. Long understood the desire to tax someone else to fund your public services; a desire that is alive and well in Missouri. Who knows, perhaps Senator Long once got a speeding ticket in Mack’s Creek?

The post Here’s A Crazy Idea: Tax Yourself. appeared first on Show-Me Institute.

The West Virginia Legislature just passed a sweeping school choice bill. The bill allows 90 percent of West Virginia children to receive $4,600 in an education scholarship account (ESA). These ESAs can be used for private school tuition, tutoring, education therapies, or homeschool curriculum. If the governor signs this bill, it could be a game changer.

West Virginia’s governor also announced a plan to eliminate the state income tax. The plan will be paid for in a combination of ways, including raising sales taxes, raising consumption taxes on alcohol, and reducing or eliminating tax breaks for the oil and gas industry.

All of the sudden, West Virginia, which has had a declining population since the 1950s, could look pretty attractive to young families who aren’t thrilled with the West Virginia public schools and would prefer to DIY their own plan. It’s going to look pretty attractive to high-income earners who can now work from anywhere. And it’s going to look pretty attractive to active folks who value a small-town atmosphere with a low cost of living. These are groups that can engage with their communities and help solve entrenched social problems. These are groups that Missouri would be wise to pursue.

Missouri also has great amenities. We have delightful small towns, beautiful state parks, Lake of the Ozarks, and Branson. Unfortunately, too many legislators from these very same areas are solidly against school choice in any form. They need the support of teachers to get elected and that, so far, has meant standing firm for the status quo and only the status quo. The fact that the young people who do go off to college often don’t return must not be considered. The fact that young families aren’t gravitating to these communities is seemingly being ignored. The fact that knowledge workers will go to states like West Virginia, Colorado, or Florida must not be a threat.

We keep this attitude at our peril. Post-pandemic, many people are thinking long and hard about where and how they want to live. Missouri should be setting itself up to be as attractive as possible.

The post Almost Heaven appeared first on Show-Me Institute.

A recent state audit of TDDs highlights the problems with these districts. Five of the twelve TDDs mentioned in the report collected incorrect tax amounts. I’ll let you guess as to whether they collected more or less than authorized. (Hint—it was more.) Statewide, 92 percent of TDDs have been formed by developers and were not subject to any votes or public involvement. Not surprisingly, when you allow private developers to raise tax dollars for private purposes (like improved parking lots for their own developments) they are going to act like it is private money, not tax money, and often spend it improperly. Audits on these types of special taxing districts by state auditors of both political parties have consistently found that they frequently violate the Sunshine Law, do not competitively bid out contracts, make errors in tax collections, and more. They are designed in the first place to act like fiefdoms, with little oversight of the tax dollars being collected and spent for private purposes by the developers that almost always dominate the board. The problems with these districts are, in fact, so consistent that they must be considered a feature, not a bug.

This proposed TDD will require voter approval in the April 2021 elections. Seeking voter approval here is, obviously, a good choice. However, only voters who live within the TDD itself can vote on the proposal, not all  Lake Ozark voters. I would expect the district to be gerrymandered until it looks like the lake itself in order to limit voter participation and help guarantee passage of the TDD. That is the prior experience in Missouri.

In a news story on the new TDD, supporters cite the “high quality of roads within the Horseshoe Bend Special Taxing District” as an example of why the TDD would be beneficial. The high quality of roads in that district may well be true, but Horseshoe Bend is not a TDD—it is a traditional, property tax-based special road district. The distinctions are important. Special road districts like Horseshoe Bend are subject to voter input, property tax rollback mandates (when assessed valuation increases), and much more comprehensive budgeting and financial reporting requirements. If Lake Ozark residents want better roads along with oversight, transparency, checks, and balances, the creation of a taxing district like Horseshoe Bend is a legitimate option. Other good options include passing a local gas tax to pay for the road improvements or simply raising city or county property taxes to fund the road improvements.

Honesty demands that I admit the Lake Ozark Community Toll Bridge is a TDD and has been successful for the community. In this case, the tolls collected pay for the bonds that built the bridge, and most importantly, the act of driving is connected to the cost of driving. Sales tax TDDs, such as this proposal, do not have that connection.

If people want a new taxing district with questionable dealings, little oversight, and limited voter involvement, then a TDD is the way to go. While Marty Byrde might approve of that, I trust the rest of the residents and taxpayers of the Lake Ozark region do not.

The post Lake Ozark Area Going in the Wrong Direction with Transportation Funding appeared first on Show-Me Institute.

Missouri has made the decision to mandate the earliest dates that schools can open each year, even as other states are moving away from similar policies. The reason? So that families have an extra week or two to vacation in the state’s tourist areas. I’ll be very curious to see how many families change their plans because of this law.

Where is the outrage from parents with full-time jobs who have to make summer arrangements for their children for a longer stretch of time? Where is the outrage from school boards that clamor for local control? Where is the outrage from principals who know full well about the impact of the summer slide?

The Missouri legislature had the opportunity to improve education in the state by encouraging innovative ideas and options for parents. Instead they chose to manipulate the public school system in the hope that it will benefit the Lake of the Ozarks and Branson. The next time a lawmaker claims that public education is their priority, pay attention to their actions, not their words.

The post Public Education Is More Important Than Tourism appeared first on Show-Me Institute.

But this blog post isn’t a review. (If only!) Alas, it is instead a continuation of our sometimes-Sisyphean task of criticizing the corporate welfare doled out by government, albeit this time with a twist. This time Missouri, where “Ozark” is set, didn’t subsidize the show’s production. Georgia did.

While the show won’t film at its namesake location, it is expected to drive film tourism to the Lake of the Ozarks. The expansive Missouri reservoir will be recreated at Lake Allatoona. The decision to film elsewhere is likely to do with Missouri’s lack of film tax incentives, after their 35% tax credit programme expired in November 2013.

The state of Georgia on the other hand has one of the most lucrative film incentives in the country. Productions filming on location need to incur a minimum spend of USD500,000 to access 20% in transferable tax credits. An uplift of 10% is available if productions embed an official Georgia logo somewhere in the finished product.

There are no per-project caps on the amount that can be claimed through the programme, which has made Georgia an incredibly popular filming location for productions of all sizes. AMC’s The Walking Dead has been filmed in multiple areas throughout Georgia including Atlanta and Senoia.

References to real places in and around the Lake of the Ozarks are everywhere in the show, and at one point about two episodes into the series I turned to my wife and said I thought Ozark was good enough, and its geographical depiction true enough, to drive some serious tourism to the Lake of the Ozarks—that a lot of people were going to be introduced to this uniquely Missouri asset and want a closer look. Certainly residents at the Lake have a right to gripe about the less-than-positive portrayals of the Ozarkian villains in the show, but on the whole, you couldn’t really craft a more subversive promotional vehicle for the mid-Missouri region.

Suspense! Excitement! Drugs! Violence! Light comedy! More drugs! And all the while, Georgia is paying for that entertainment—at no charge to Missouri taxpayers or Lake residents. 

In fact, contrary to what tax credit supporters may suggest, letting Missouri’s film tax credit expire in 2013 was a benefit to the state and ultimately got the Peach State to pay for about 10 hours of promotional material free of charge for the Show-Me State, with potentially hours and hours more to come should the show be renewed. And renewal is looking likely.

If I were Georgia, I’d cut bait on the credit. But if I were Missouri? I’d laugh all the way to the Lake.

The post Georgia Paying to Promote Missouri with “Ozark” Series appeared first on Show-Me Institute.

Last Wednesday, the Osage Beach TIF Commission approved Tax Increment Financing for the redevelopment of the Dogwood Hills Golf Resort. The total cost of the subsidy package is $55 million. The proposal now goes to the city Board of Aldermen for approval. There’s a chance the board could reject the proposal, but I’m not getting my hopes up.

It’s too bad that the TIF Commission voted to approve these subsidies. I submitted testimony that pointed out granting a TIF for this project would be bad policy. Not only does TIF not lead to economic growth, it can end up harming other entities (like school districts) who rely on growth in future tax revenue to finance themselves. Instead, counties and municipalities should let the free market work and decide which development, if any, should happen on the property. If Osage Beach believes that taxes are too high for development to occur at Dogwood Hills, why not grant a small tax cut to everybody? Why should one developer get special treatment?

As officials in Osage Beach toast to the prospect of a new development in their city, other cities should not follow their example. Development can occur without TIF. I hope more policymakers will realize that.

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TDDs are small taxing districts that collect property or sales taxes and spend that money on transportation-related projects. We’ve been largely critical of TDDs in the past, because:

. . . TDDs are ad-hoc specially created taxing districts with idiosyncratic boundaries. They are created through what is not a normal democratic procedure (see “qualified voters” and flexible district boundaries), with boards that are not elected in the normal sense.

Most TDDs opt to collect sales tax dollars instead of property taxes, allowing the micro-districts to export taxation. However, as TDDs proliferate, it becomes increasingly difficult for a resident to know how much they are getting taxed and where that money is going, even in their own city.

There are situations where using TDDs or other small taxing districts may be appropriate. For instance, we wrote favorably about the use of a Community Improvement District (very similar to a TDD) to build a causeway in the Lake of the Ozarks. In that instance, the district had: 1. A clearly defined and much needed improvement (a causeway); and 2. Virtual unanimity among those who would be taxed.

As things stand, the downtown TDD fails to meet these criteria. What critical transportation improvement requires the TDD? According the chief executive of Downtown STL, “We don’t have a definite proposal but we know what the needs are. . . .” Reportedly, projects could include pedestrian improvements, security cameras, and/or supporting a “development spine” to Midtown. In addition, Downtown STL has long pushed for a streetcar; setting up a TDD is a common first step toward that goal.

Because the TDD will charge sales taxes, unanimity among taxpayers is already out of the question. City/county residents from outside the TDD who come downtown for a Cardinals game or Ball Park Village (both of which city and state taxpayers subsidize) will have no vote on the matter. But even within the district, business owners are not all on board. Cardinals ownership is opposed, and hotel representatives point out that they already have a very high tax rate—17 percent—and visitors’ complaints are mostly about safety, not transportation.

When it comes to downtown Saint Louis, there are plenty of taxes in place to pay for necessary street improvements. There are also elected representatives who are empowered to manage those resources. Residents should think twice about giving an unelected group what amounts to a $4.5 million taxpayer budget without that group articulating a clear, non-controversial plan. 

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According to Ballparks of the Ozarks COO Bob Ramsey,

[the investors] didn’t want chain link fences [for their baseball development.] We didn’t want dusty, aluminum bleachers, with mom and kids baking in the sun and everybody complaining.

What did we want? We wanted [a] destination. We wanted amenities.

Our fields as constructed will be state-of-the-art. What will push our ballparks beyond what competitors have to offer will be our amenities. Families and teams from across the nation will be drawn to the “America’s Baseball Resort” experience.

As a former little leaguer, I’m actually pretty fond of chain-link fences, dusty fields, and aluminum bleachers, but we all know that resorts are supposed to be glitzy and glamorous. If given the choice between little league and big league amenities, developers will understandably pursue the big league amenities.

Folks may not know that to get those big league amenities, this proposed baseball-themed complex may be swinging for the fences to get financial assistance from the government. Novogradac, a national accounting firm that among other things helps “prepare tax credit applications,” hosts on its website what appears to be a New Markets tax credit allocation request for Ballparks of the Ozarks. New Markets tax credits are intended to

foster the construction and rehabilitation of real estate and the expansion of operating businesses in order to create jobs, generate economic activity and improve the quality of services in low-income communities and to low-income persons.

Unsurprisingly given those requirements, the request specifically says that the resort will “support existing ‘lake’ area businesses which struggle during off peak seasons” and will provide “opportunities for low-income, minority and disadvantaged youth to utilize high quality athletic facilities through affiliated organizations.”

In other words, to help the poor, the project summary suggests that the government should help pay for a baseball resort—and indeed, quite a lot of it. Novogradac’s page suggests Ballparks of the Ozarks is seeking to have $14 million in tax credits allocated to the project, and not only that, the summary implies that but-for the federal money, the project might not go forward.

How that jibes with the project’s recent “groundbreaking,” I don’t know.

I wish the developers of Ballparks of the Ozarks the best of luck, but there may be cause for concern from the perspective of sound public policy. If a resort can’t make it on private funds alone, taxpayers shouldn’t have to cover the gap.

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CIDs are independent taxing districts created to collect sales and property taxes and spend money to improve an area in a variety of ways, including beautification and infrastructure. There are two primary problems with CIDs. The first problem is transparency. The auditor’s office has consistently found deficiencies in reporting and documentation for these districts.

The other issue with CIDs is their lack of a cap on property taxes. Under the current proposal, the CID would levy an additional 47 cents per $100 of assessed value of property taxes on top of what people/businesses already pay. However, there is no statutory language preventing the CID from increasing property taxes further. An extreme example is when a CID in the Lake of the Ozarks levied an additional $4 per $100 of assessed value. I’m not saying this proposed CID will have taxes go up that high, but there is nothing stopping such an increase from happening except the restraint of the CID board.

Given these problems, what is the compelling reason for establishing a CID, especially since the area is already seeing redevelopment? As the Columbia Tribune states:

He also cited Miller’s 2012 purchase of the old Commerce Bank building at 500 Business Loop 70 W., Head Motor Company’s recent upgrades and his own redevelopment of the Parkade Center as examples of the type of redevelopment he would like to see along the corridor. Further east, Business Loop 70 boasts a newly remodeled Burger King and renovated McDonald’s.

“We’re starting to see redevelopment occur, and we want to make sure we have pro-redevelopment policies in place,” Burnam said.

If this article tells us anything, it appears that legal restrictions on renovating existing lots are the problem. Maybe proponents should work on fixing the regulatory environment instead of raising taxes.

CIDs have serious issues and should only be undertaken without serious safeguards in place, if at all. The Business Loop in Columbia might not be a paradise, but is it so blighted that the only thing left to do is establish a CID? Color me skeptical.

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