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.

Last legislative session, Missouri lawmakers took a swing at addressing anxiety over data centers increasing electricity rates with the passage of Senate Bill (SB) 4. This bill requires that customers with loads over 100 megawatts (MW) pay their share of costs associated with connecting to the regulated grid (the Missouri Public Service Commissions recently expanded that rule to 75 MW). For reference, 100 MW is roughly equivalent to the electricity needs of 80,000 U.S. households.

There has been confusion about whether average Missourians’ rates would increase due to data centers. It’s understandable that people might be confused about some language in the bill. For example, what exactly does “any unjust or unreasonable costs arising from the service to such customers” or “pay their share of costs” mean?

A recent hearing at a St. Louis Board of Alderman committee meeting brought some needed clarity to the matter. When questioned, Ameren’s manager of economic development clarified that “all Ameren customers, including residential customers, pay for expanding the grid through building new power plants through rate increases, and that may be needed to accommodate large-load customers.”

In plainer English, average Missouri ratepayers would pay for new power plants constructed to meet data center demand—which could be a hefty bill if Missouri does indeed need new power plants.

Major technology companies (Amazon, Google, Meta, Microsoft, xAI, Oracle, and Open AI) are meeting with President Trump to sign a pledge that they will supply and pay for their own power for artificial intelligence data centers.

So average Missourians won’t be paying for new data centers at all?

Potentially, but it depends on the deal that is finalized with the major tech companies.

While there is some uncertainty about who will pay for what, Missouri could bring clarity by allowing consumer-regulated electricity (CRE).

CRE offers a private, parallel pathway to energy abundance, and gives data centers a private partner (CRE utility) to meet their own energy needs with less red tape, more certainty, more control, and more freedom to innovate. A CRE utility would develop and operate generation on behalf of large-load customers that prefer not to own and operate power plants themselves.

SB 4 was a good start, but Missouri can go further in protecting ratepayers and attracting investment. Allowing CRE could create a clear, structural pathway that could not only further protect ratepayers, but also provide attractive, tangible benefits to the developers paying for their own energy needs.

The post Who’s Paying for What with Data Centers? appeared first on Show-Me Institute.

Jokes aside, I came across a recent poll from the yes. every kid. foundation that reminded me of a vital pairing for holding education systems accountable: understandable information and comparable information.

The poll is nationwide, but the results apply to Missouri. Parents want to hold schools accountable, but they need high-quality information to engage.

Our annual Blueprint has consistently emphasized the importance of building informational resources that are both understandable and comparable. Missouri provides some data, but there is no central, user-friendly landing place where parents can easily access and evaluate information about the quality of their children’s schools.

For instance, this data dashboard from DESE reports a number of understandable statistics for the year, but you cannot compare districts to each other. Some DESE sources are difficult to decipher and navigate altogether. And if a parent truly wants to compare districts and years, they will need to break out their Microsoft Excel skills.

Using DESE’s dashboard, a parent can see that 58 percent of Parkway C-2 students scored proficient or advanced in mathematics on the Missouri Assessment Program. But is that good? Isn’t 70 percent usually a passing score? How does it compare to last year? How does it compare to other districts across the state? Should a parent be concerned, or encouraged?

These are all important questions, and sadly, the answers require a lot of digging.

Thankfully, parents can find the answers to these questions on our own website, MOSchoolRankings.org.

There, Parkway C-2 is ranked as one of the better districts in our state: 133 out of 551 overall. In fact, its math score is the 37th best in the state. But it’s not all peachy in Parkway, as its low-income math scores ranked 378th in the state, and the overall mathematics score declined from the prior year. These statistics give meaningful context for parents to more accurately hold schools accountable.

Our website serves as a valuable resource for the state, but DESE ought to provide a similar tool—one that is even more comprehensive and accessible—using the state’s greater manpower and authority.

Taken together, survey data and practical experience point to the same conclusion: Missouri’s education system needs to be more accountable to parents. Achieving that goal requires creating resources that are both understandable and comparable.

The post Accountable, Understandable, and Comparable appeared first on Show-Me Institute.

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

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

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

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

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

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

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

#2: Find innovative solutions for electricity needs.

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

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

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

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

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

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

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

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

In my recent report, Connecting Nuclear’s Past and Present: Guiding Missouri’s Future, one of the policy solutions I offer to meet electricity demand is consumer-regulated electricity (CRE). In short, CRE would allow for the creation of private energy entities, disconnected from utility grids, in order to serve the largest customers more efficiently.

A recent article on this topic caught my eye. The article mentions that delegates at the World Nuclear Association summit in London discussed forming private energy clusters, disconnected from the grid, to meet surging demand from data centers.

Doesn’t that sound familiar?

Bringing Energy Clusters (or CRE) to Missouri

A few weeks ago, New Hampshire’s governor signed into law House Bill 672, which allows for “off grid electricity providers”—independent and disconnected from the main grid—to generate, transmit, distribute, and sell electricity.

Whether you call it CRE, off-grid providers, or private energy clusters, the concept is similar: enabling private energy systems to serve large industrial customers with less delays, less red tape, and less pressure on the main grid and ratepayers.

Poland and the Netherlands are beginning to consider the use of energy clustering to meet industrial energy needs. The previously mentioned article identifies a few potential benefits from energy clustering:

• It would allow large customers to take their electricity from a co-located generation source
• If a thermal energy source like nuclear is used, large customers could use its industrial heat (high-temperature steam used in industrial processes like manufacturing)
• The energy developer would benefit from simplified project finance
• Both consumers and developers would avoid long transmission lines
• These clusters would also help reduce the burden on grid resources, which are at a premium in most markets and in Missouri

CRE gives large customers the option to use an energy source of their choice, so long as they meet the still-applicable regulations (such as the Clean Air Act for fossil-fuel plants).

As we have seen with the drastic actions of Meta, Microsoft, and Google, there is a market for this type of arrangement as these huge customers have sought connection to nuclear reactors. States and countries are taking notice of these market conditions and are bringing the free market into the energy sector.

Missouri needs to reduce pressure on the grid and attract investment. In the upcoming legislative session, lawmakers should seriously evaluate how CRE—or private energy clustering—could benefit consumers, energy developers, and ratepayers in our state.

Want to read more? Check out these related articles:

Connecting Nuclear’s Past and Present: Guiding Missouri’s Future

New Nuclear Energy: Business-Speed and Business Friendly

Mission Impossible and Nuclear Energy

One Way Missouri Could Keep its Grid Reliable

Weighing Consumer Regulated Electricity to Meet Energy Demand Growth

Missouri Needs to Be Prepared for Growing Energy Demand

The post Is Consumer-Regulated Electricity Going Worldwide? appeared first on Show-Me Institute.

Managing this problem in the current system that is dominated by monopolies is difficult. But what if market forces could be infused into our current system to help address new demand?

An Introduction to Consumer Regulated Electricity (CRE)

One potential policy solution that could complement Missouri’s current system is consumer regulated electricity (CRE). While still a developing idea, CRE is worth considering as Missouri navigates an uncertain and potentially very costly energy future.

In theory, CRE would allow private investors to create new, independent electric power systems (both generation and transmission) using their own capital. These private grids would be scaled to specifically meet new demand growth from large consumers. In order for a CRE entity to operate appropriately, it would need to be free from restrictions placed by the Missouri Public Service Commission (MPSC). That means CREs would need to be unconnected to the regular grid and only serve new industrial and large commercial customers.

It should be noted that these CRE entities would still be subject to federal regulations, such as the Nuclear Regulatory Commission for nuclear projects. These entities would still need to meet federal safety standards.

Considering the Benefits of CRE in Missouri

Travis Fisher of the CATO Institute argues that these private grids—partly free of the massive regulatory red tape for utilities—could be developed more quickly, infusing needed competition and innovation into the energy sector. As “private energy islands” for new, large energy consumers, CREs could potentially relieve strain on the primary grid and ratepayers. Rather than relying on ratepayers to fund new power plants to accommodate rising industrial demand, the market could provide that solution.

This idea aligns with growing momentum in the private sector to pair small modular reactors with corporations (Google, Microsoft, Meta) urgently seeking energy sources tailored to their needs. CRE could allow the free market to guide this practice, and potentially, more quickly match demand with supply as companies would not be subject to current MPSC regulations that limit competition. This could be a boon for economic development in Missouri.

In theory, CRE would not tear down Missouri’s existing framework, but rather, complement it and allow private developers to target growing energy demand from the largest consumers, which are causing the most concern about reliability.

How Could We Potentially Bring this to Missouri?

Bringing CRE to the Show-Me State would likely require a modification of state statute to declare that CRE entities—if they are not connected to existing infrastructure and only serve large, industrial customers—are not subject to state regulation. New Hampshire is one state considering this concept. While further study is needed, CRE is a compelling idea that our lawmakers ought to consider.

The post Weighing Consumer Regulated Electricity to Meet Energy Demand Growth appeared first on Show-Me Institute.

• “Microsoft deal would reopen Three Mile Island nuclear plant to power AI”
• “Amazon goes nuclear, to invest more than $500 million to develop small modular reactors”
• “Amazon and Google have plans for fueling their data centers: Nuclear power”
• “Oracle will use three small nuclear reactors to power new 1-gigawatt AI data center”

Why are some of the largest corporations, who are the biggest consumers of energy, trying to get nuclear plants up and running?

In my view, energy security—access to sufficient, affordable, and reliable energy—is the key motivator. These corporations likely foresee potential shortfalls in energy supply, particularly for sources that can meet demand at any time.

As these headlines show, corporations are even willing to go “behind-the-meter” in order to have access to clean, reliable, and consistent nuclear power. Behind-the-meter refers to the practice of purchasing power directly from a plant, bypassing tradition utility infrastructure. For Missouri, these national trends again highlight the need to seriously consider nuclear power as a solution to building a reliable grid for the future.

What Big Tech is Saying about Energy

A strong and reliable electric grid is vital. Demand for electricity is growing because of data centers, artificial intelligence, electrical manufacturing, and electric vehicles. More than ever, citizens rely on energy to power their daily lives.

Michael Terrell, senior director for energy and climate at Google, said this:

We feel like nuclear can play an important role in helping to meet our demand, and helping meet our demand cleanly, in a way that’s more around the clock.

When major corporations, whose profits depend on uninterrupted power, express concern about future electricity demand, it is worth paying attention.

A Warning Sign for Missouri

Missouri is not doomed, but if you see a bear running away from something in the woods, it is wise to at least consider why it is running. Big Tech’s movement toward nuclear may be a similar warning signal.

Missouri needs to be prepared for an immense energy transition. Amending the Construction Works in Progress (CWIP) law is one way forward. This would open the door for nuclear construction by allowing utilities to gradually recover costs during construction as opposed to all at once afterwards. Investing in more nuclear power is an investment in a strong, reliable power source that we will need as energy demands continue to increase.

The post What to Make of Big Tech’s Pivot to Nuclear appeared first on Show-Me Institute.

Health care price transparency was added to the Show-Me Institute’s 2022 blueprint because of its potential to dramatically improve the lives of Missourians. Price transparency arms the health care consumer with greater knowledge about what exactly procedures will cost, what prices insurers negotiate with hospitals, and how the cost of a procedure differs from hospital to hospital. This information should be easily accessible so that someone could do accurate research before ever scheduling a hospital visit.

The main benefit of price transparency is that more information is available to patients, insurers, and employers to aid in decision making. Insurers can use the information to better negotiate prices with hospitals, while patients and employers can use the information to make more informed decisions when purchasing health plans. A price tag attached to a procedure makes it much easier to weigh the costs and benefits of a service, so you know exactly what you are putting in your healthcare shopping cart.

In Missouri, the strictest price transparency rules come at the federal level. Under the guidelines of a Trump administration 2019 executive order, hospitals are required to publish a list of standard charges for 300 common procedures in a user-friendly, shoppable display. In addition, hospitals must publish a complete list of charges in a machine-readable format. “Machine readable” simply means the information can be downloaded off the hospital website into a file format that your computer could understand—like a Microsoft Excel file, as one example. The files need to include the gross charge, a discounted cash price, any payer-specific negotiated charges, and both the highest and lowest negotiated charge for any given service.

While price transparency reforms such as this one are potentially very beneficial for patients all across the nation, there are problems with compliance. The Wall Street Journal reported that, as of last December, many of the nation’s largest hospital systems were not complying with the 2019 rule, without any penalty from the Centers for Medicare and Medicaid Services. In the next post, I take a deep dive into Missouri hospitals and their compliance (or lack thereof) with price transparency rules.

The post Health Care Price Transparency in Missouri: Part One appeared first on Show-Me Institute.

Microsoft has found a solution to this public-relations dilemma: It will conduct the free training, and people will have to go through the Missouri state website to sign up. (The program is coming to other states, too.) Microsoft claims that its selfless intention is to grow the economy.

There’s no good reason for people to go through the government to collect their vouchers for training — they could just as well apply on the Microsoft website. All that this “partnership” with the state accomplishes is that it makes Microsoft look noble. The state should not be recruiting people for this training, just like it shouldn’t give out pizza samples in a grocery store or perfume samples at the mall.

I’ve got nothing against advertising and free training, but don’t ask the government to sign off on it like you’re a Newfoundland seeking official status.

The post Missouri Helps Microsoft Advertise With Dignity appeared first on Show-Me Institute.

In Missouri, the virtual school teaching academic subjects to a couple thousand students is cut from the budget because it’s seen as an unnecessary cost, but the state plans to distribute more than 24,000 vouchers for an online program that teaches people to use Microsoft Excel. The governor explains why:

“I’m proud that the state of Missouri is teaming up with Microsoft to provide cutting-edge, in-demand training that will help our citizens compete in the 21st-century economy,” Gov. Nixon said.  “The world has gone digital, and it’s vital that Missourians have the knowledge and skills to land and keep the jobs of tomorrow. For folks seeking a new job, or looking to brush up their skills, Elevate America will be a tremendous resource.”

The post Technological Double Standard appeared first on Show-Me Institute.

Steinmetz says it’s a slippery slope:

[T]he sale of this subway station seems to be a harbinger of more distressing and confusing sales to come. Another commenter satirically encapsulated this worry in “Modern Subway Directions”: “Get on at McDonalds and go five stops to Starbucks. Transfer to the Walmart and continue on to Staples.” And if subway stops are for sale, why not streets? If streets are for sale, why not whole towns? Will Missourian legislators be someday casting votes in Microsoft City?

Let’s not get so attached to the names of our streets and bus stops. Even without corporate sponsors, these names can change. In cases where a street retains its name for decades, people usually forget the original significance anyway. The only problem I can imagine with saying, “Get off at Staples,” is that passengers could be confused whether they should look for a Staples store or a stop named Staples. The ambiguity would diminish as people get used to the new names. Some people were confused when St. Louis Bread Company became Panera, too, but they survived.

Things get murkier when the advertisers aren’t harmless office supply stores. What if, instead of cleaning up trash on a highway, the National Socialist Movement decided to sponsor a bus stop instead? While most drivers overlook the “Adopt-a-Highway” signs, bus stops get more attention. Would we have to rename the neighboring stops to get back at the neo-Nazis?

Such issues regarding advertising in public spaces will need to be sorted out — if only because we can’t name everything after a dead president or a British province.

The post Sacred Bus Stops appeared first on Show-Me Institute.

The relationship between the two inputs is strong, but with a considerable amount of variance and a few outliers. Also, the data itself says nothing of causality. I speculate that richer states are more willing and able to pay higher taxes, although this simplistic chart alone could just as easily suggest (I think incorrectly) that rich states are prosperous because of their higher taxes.

Regardless, the numbers show Missouri’s standing when compared with neighboring states. Residing barely underneath the trend line, Missouri taxpayers make slightly more money than they pay in taxes when compared to all 50 states. Although we spend relatively more in taxes than neighbors Oklahoma and Tennessee, the chart shows healthier proportions than many other nearby states. Missourians should continue striving for a low-tax environment, perhaps looking no further than across state borders for role models.

Sources: Tax Foundation, U.S. Bureau of Economic Analysis and Bureau of the Census
Please note that all data is for 2007. Image created with Microsoft Excel.

The post Missouri in Relatively Good Standing appeared first on Show-Me Institute.

Nobody likes to pay taxes, but no matter where you live or work, some level of taxation is a certainty. Not all locations are the same, though. Sometimes, moving just a few miles down the road may have a significant effect on how much of your own money you get to keep. Unfortunately, though, most people don’t have the resources to compare tax rates for cities and counties throughout the state.

You might well wonder: How much am I paying in taxes? Are my property taxes comparable to the Missouri average? How much tax am I paying on my purchases at the grocery store? Does where I live affect my overall tax burden?

Wouldn’t it be nice if there were a way to quickly receive answers to these and other Missouri tax-related questions?

The Show-Me Institute’s Missouri Tax Estimator can help. We’ve collected tax rates from cities and counties across the state to help Missourians better understand the taxes they pay.

The estimator is an interactive Microsoft Excel worksheet, with its macros digitally signed for your protection. It calculates your expected tax burden based on the information you provide, then allows you to change a variable or two in a comparison column, to see how your bottom line might change if you, say, moved to a different town or paid down some debt. It’s both informative and fun — check it out, and tell your friends!

The post New Tax Estimator Compares Rates Throughout Missouri appeared first on Show-Me Institute.

I searched but was unable to find a list of the largest cities in America that use a city manager. Kansas City has to be right at the top, though, making Mr. Cauthen sort of a star in the industry. Cincinnati is well-known for being a forerunner in this form of government, but most large cities, like St. Louis, still use the more well-known mayor-council form. The job of city manager is also notoriously unstable, as Mr. Cauthen is seeing right now.

38 cities in Missousi use the council-manager form of government, including my home of University City. The essential points of this system are that the elected mayor and city council leave the day-to-day operations of the city to the manager, usually someone with a background in government and degree in a related field like urban planning. The mayor and council then focus on the larger issues, and give final approval to those decisions of the manager that require legislation, such as contracts. One rule often held in council-manager cities is that it is improper for the elected officials to contact municipal employees directly — they must go through the city manager. Often, the single most important decision a council makes is whom to hire as city manager.

Approximately 150 Missouri cities use the closely related city administrator form of government. This form is used in cities such as Kirkwood, Arnold, St. Charles, Jefferson City, Chesterfield, and Raytown. In this form, the mayor and council appoint a professional city administrator to run the city, but the mayor and council retain more control of certain operations. In reality, the daily jobs of city managers and city administrators are very similar, but city managers rank higher on the occupational totem pole.

I have generally been very impressed by the people I have met who are city managers and administrators. In my opinion, the key to the job is not falling too much in love with government itself, and to recognize and accept the limits of what government can do. In most cities, the city manager or administrator is extremely powerful, because part-time elected officials just do not have the opportunity to know everything there is to know. This is, of course, sort of the point, but if the city manager or administrator falters, it may take awhile for the council to become aware of it. Something like that happened in Crestwood a few years back, if I recall correctly.

I have no idea what will happen to Mr. Cauthen in Kansas City. In the larger cities that use city managers, like KC, and have full-time mayors, it is no doubt imperative that they be able to work together. I would love to see some type of city manager system brought to St. Louis, but I might as well wish for Microsoft, Exxon, and the Bank of England to relocate here while I am at it, for all the good it will do.

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