Kansas City and St. Louis are notably highlighted for their fiscal challenges. Kansas City is ranked 57th, while St. Louis is positioned at 59th. Both cities have been assigned “D” grades, indicating significant financial distress. This distress is quantified through the “Taxpayer Burden” metric, representing the amount each taxpayer would need to contribute to settle all municipal debts. In Kansas City, this burden amounts to $8,800 per taxpayer, whereas in St. Louis, it escalates to $9,800. ​

A primary factor contributing to these burdens is the underfunded pension liabilities in both cities. Unfunded pensions place taxpayers and city services at risk, leading to increased debt and financial instability. ​

The implications of such financial distress are profound. Residents may face reduced public services, increased taxes, or both, as cities strive to balance their budgets. Moreover, fiscal instability can deter business investments, stymie economic growth, and erode public trust in local governance.​ This is in addition to both cities’ struggles providing public safety.

Addressing these challenges necessitates a multifaceted approach. Cities must prioritize fiscal responsibility, ensure transparent accounting practices, and engage in proactive financial planning. Fostering economic development can help alleviate fiscal pressure, but it must be real development, not the sort we have seen for decades that merely transfers tax dollars to corporate cronies.

There is an urgent need for comprehensive fiscal reforms in both of Missouri’s largest cities. Without prompt and effective action, residents will bear the brunt of past financial mismanagement for years to come.

The post Can We Handle the Truth . . . of Our Cities’ Financial Status? appeared first on Show-Me Institute.

In December 2024, in Springfield, Missouri, the Show-Me Institute and Show-Me Opportunity hosted an event featuring Dr. Aaron Hedlund, Chief Economist at the Show-Me Institute, and Elijah Haahr, former Missouri Speaker of the House and host of The Elijah Haahr Show on KWTO.

The discussion focused on the 2025 economic outlook for Missouri and the U.S., exploring issues such as unsustainable government spending, the growing national debt, and the Federal Reserve’s role in shaping inflation, housing, and labor markets.

This episode is a recording of that event.

Listen on Spotify

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Produced by Show-Me Opportunity

The post 2025 Economic Trends for the U.S. and Missouri with Aaron Hedlund and Elijah Haahr appeared first on Show-Me Institute.

The “Green Line” is dependent on approximately $600 million in federal funds; funds I hope it doesn’t get. I suggest that cutting the national debt can start right here. As national politics affects local policy, I am hopeful that upcoming changes to federal policy will be the death of this plan. Indeed, some key voices, including Les Sterman, the past director of the East-West Gateway Council of Government, have recently called for the project to stop.

In 2004, MetroLink planners predicted there would be 80,000 boardings per day on MetroLink trains by 2025 in St. Louis, Missouri (that number excludes Illinois users). In the first quarter of 2024, there were about 18,800 actual boardings per weekday for the entire system, including Illinois (page 23 in link). (Ridership goes up slightly in the summer with baseball games, but not that much this summer, for obvious reasons.) We can just admit that MetroLink usage has been substantially less than projected. St. Louis should focus on serving the existing system as best it can instead of doubling down on failure with this latest expansion fantasy.

The “Green Line” plan only projects 5,000 boardings per day, at best. Even if that turned out to be accurate—and history suggests it won’t be—that is a very low number. Serving about 2,500 people per day (one person equals two boardings, on average) for over $1 billion is a terrible use of tax dollars. This project should not move forward.

The post Absurd Light Rail Project Marches Onward appeared first on Show-Me Institute.

These big convention hotels, entertainment districts, and sporting events don’t fail to live up to expectations in just Kansas City and St. Louis. They fail expectations all over the world.

L.A. is plowing ahead with infrastructure upgrades—expanding the rail system, modernizing LAX, and revamping the downtown convention center. These projects are fueled by a mix of federal funds, city dollars, and airport fees, with the idea that the influx of tourists will help offset the costs.

Mayor Karen Bass is pitching the Olympics as an opportunity not just to showcase L.A.’s iconic landmarks like Hollywood and Venice Beach, but also as a chance to shine a light on its diverse communities—Little Bangladesh, Little Armenia, and beyond. It’s a noble goal, but L.A. could take a massive financial hit if things go sideways.

And these big events are always going sideways.

The 1984 Olympics held up as their north star were a financial anomaly, largely because the city smartly used existing venues. Fast forward to today and the stakes are higher, with a nearly $7 billion budget hanging in the balance. LA28, the private group organizing the games, insists it will foot the bill through sponsorships, ticket sales, and global TV rights. But if costs spiral out of control, L.A. taxpayers will be left to pick up the tab. The city and state have agreed to cover any budget overruns, which is a colossal gamble.

We’ve seen it before—the pandemic-delayed Tokyo Games ballooned to $14 billion in costs, and Rio’s 2016 Olympics cost a staggering $24 billion, with both events blowing past their budgets. L.A. is trying to avoid that by sticking with existing venues like the Coliseum and Rose Bowl. Even with these cost-saving measures, there’s no guarantee that the numbers will add up.

The reality is the Olympics often leave host cities grappling with long-term debt, gentrification, and displacement. This risk applies to the recently closed Paris Olympics. Groups like NOlympics LA are already sounding the alarm, arguing that the games could exacerbate L.A.’s housing crisis and deepen economic disparities.

The 2028 Olympics could be a golden opportunity for L.A., but recent history tells us it is more likely to be another costly boondoggle. With so much on the line, Angelenos should keep a close eye on how this plays out.

The post The L.A. Olympics Will Likely Be an Economic Failure appeared first on Show-Me Institute.

Earlier in the year, Rudi Keller wrote in the Missouri Independent:

Missouri will enter the new fiscal year Saturday in its best financial shape ever. But there are unmistakable signs that the massive surplus, now approaching $8 billion, has likely peaked.

Really? Is Missouri actually running a huge surplus? Are we taking in more than we owe?

No, no we are not.

In Truth in Accounting’s  (TIA) “Financial State of the States 2023,” Missouri ranked 25th. TIA gave Missouri a “C” grade and concluded: “Missouri would need $700 from each of its taxpayers to pay all of its outstanding bills.” Of particular concern to TIA was Missouri’s highest-ever unfunded debt to the Missouri State Employees’ Plan.

The reason for the disparity is due to how states account for debt. In cash-basis accounting, states merely account for the money they have on hand without considering their debts. If you and I were to budget like this, we’d count loans as income, ignore debt, and put off expenses until next year in order to claim a huge surplus now.

If you think that sounds criminal, you’re not alone. The IRS does not permit businesses with gross receipts exceeding $29 million for three years to use cash-basis accounting—but city and state governments may do so. As a result, according to the International Monetary Fund, “Governments have been tempted to exploit this weakness by deferring cash disbursements or bringing forward cash receipts as a means of artificially inflating their financial balance.” This is exactly what is happening in Missouri.

Governor Parson isn’t alone, sadly. Mayors and governors of both parties and all ideological stripes do the same thing. And journalists on deadline often repeat the claim without checking it. If such claims seem too good to be true, they probably are.

The post No, Missouri Is Not Running a Budget Surplus appeared first on Show-Me Institute.

Missouri is in that majority.

Missouri’s debt burden was $8.2 billion in fiscal year 2020. That’s $4,400 per taxpayer needed to fully pay the state’s bills, up from $4,300 the year before. Much of this debt burden comes from unfunded retirement obligations, for which “the state had only set aside 60 cents for every dollar of promised pension benefits and 6 cents for every dollar of promised retiree health care benefits.” This debt burden earned Missouri a “C” grade and a ranking of 24 out of the 50 states for fiscal health.

This report provides further evidence that Missouri was not in a financial position to successfully weather the economic downturn that followed the COVID-19 pandemic, something my colleague Elias Tsapelas and I have written about. Re-evaluating our tax structure and tackling pension problems (by shifting employees to defined contribution accounts, for example) would likely improve Missouri’s grade and ranking in this report. Fixing the state’s fiscal health is a big task, but it’s something that lawmakers should start to prioritize.

The post Missouri Is in Poor Fiscal Health appeared first on Show-Me Institute.

REGISTER HERE

Questions can be submitted prior to the event by emailing them to Zach.Lawhorn@ShowMeOpportunity.org

Speaker Bio:

Grover Norquist is president of Americans for Tax Reform (ATR), a taxpayer advocacy group he founded in 1985 at President Reagan’s request. ATR works to limit the size and cost of government and opposes higher taxes at the federal, state, and local levels and supports tax reform that moves towards taxing consumed income one time at one rate.

The post October 22: Virtual Town Hall with Grover Norquist – Tax Reform and America’s National Debt Crisis appeared first on Show-Me Institute.

Watch the full discussion

Brian Riedl is a senior fellow at the Manhattan Institute, focusing on budget, tax, and economic policy. Previously, he worked for six years as chief economist to Senator Rob Portman (R-OH) and as staff director of the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth. He also served as a director of budget and spending policy for Marco Rubio’s presidential campaign and was the lead architect of the ten-year deficit-reduction plan for Mitt Romney’s presidential campaign.

During 2001–11, Riedl served as the Heritage Foundation’s lead research fellow on the federal budget and spending policy. In that position, he helped lay the groundwork for Congress to cap soaring federal spending, rein in farm subsidies, and ban pork-barrel earmarks. Riedl’s writing and research have been featured in, among others, the New York Times, Wall Street Journal, Washington Post, Los Angeles Times, and National Review; he is a frequent guest on NBC, CBS, PBS, CNN, FOX News, MSNBC, and C-SPAN.

The post Virtual Town Hall – The National Debt Crisis with Brian Riedl appeared first on Show-Me Institute.

Nearly 9 in 10 cities surveyed — from smaller hubs with populations of fewer than 50,000 to the largest metropolitan areas in the country — signaled they expect a revenue shortfall. Among them, more than 1,100 cities are preparing to scale back their public services, the survey found. Almost 600 cities predicted they may have to lay off some government workers amid the crunch. And local leaders in 1,000 cities said the reductions probably would affect their local police departments and other public safety agencies.

Amid this crisis, cities such as Kansas City and St. Louis need to start picking and choosing their priorities. In the face of revenue shortfalls, are convention and visitors’ bureaus really as important as police departments? Are we really going to continue diverting funds away from schools and libraries in order to fund stadiums, entertainment districts, and luxury accommodations? Do existing municipal contracts include force majeure clauses to help cities reorient priorities in a time of unprecedented crisis?

The sponsors of the survey have called for generous federal support for cities, and the Inquirer story goes on to state:

Lawmakers authorized $150 billion in coronavirus aid for states and large cities as part of the broader $2 trillion package that Trump signed into law in March. But that assistance — half of which, Treasury Secretary Steven Mnuchin announced Monday, is now available — comes with restrictions. Even when combined with additional help offered by the U.S. government, many leaders outside the nation’s capital also see it as insufficient to keep their cities afloat financially.

While such support may be necessary, it should not allow cities to escape the consequences of their own bad behavior. Kansas City and St. Louis are high tax cities that also have high per capita public debt. They divert an ever-growing amount of money to private developers to build things that in some cases are clearly not needed.

If cities are to receive federal aid, one hopes that cities with good financial track records are prioritized. Perhaps aid should be tied to ratings of fiscal responsibility before the pandemic such as debt and deferred maintenance. Public funds should not be used to hide, or even reward, previous bad behavior.

The post Should All Cities Automatically Get Federal Help? appeared first on Show-Me Institute.

What we know:

• Medicaid eligibility criteria in Missouri are far more lenient for children than for adults – Individuals under eighteen years old qualify for Medicaid based on their family’s total income. Those whose parents make less than 150 percent ($38,625 for a family of four) of the federal poverty level (FPL) can enroll in the traditional Medicaid program. And those whose families earn between 150 and 300 percent ($38,625–$77,250 for a family of four) of the FPL can enroll in the Children’s Health Insurance Program (CHIP). The care available to individuals in both groups is identical, but those who are in the first receive the coverage free while those in the second group are asked to pay a monthly premium. While CHIP and Medicaid are separate programs, both groups are typically included in total Medicaid enrollment numbers.
• Federal law requires at least yearly income verification for Medicaid enrollees – Since people qualify for the program based on income, the federal government requires states to check whether enrollees are still eligible to receive services at least once per year. Nearly six months ago, it was revealed that Missouri’s Medicaid agency had stopped performing annual income verifications from 2014 through 2017. Missouri resumed verification at the beginning of 2018. However, some claim that the administrative burden required to verify eligibility is too high.
• The drop in enrollment is concentrated among Missouri’s children – Today, there are roughly 520,000 children enrolled in Missouri’s Medicaid program, but only about 25,000 of them are enrolled in CHIP. The majority of the enrollment drop has been among children in families making less than 150 percent of the FPL, but there has been a slight increase in CHIP enrollment. There are limitations to what net enrollment figures can tell us. The enrollment figures do not show how many people came off the rolls, how many came on, or why anyone’s enrollment status changed.

What we don’t know:

• Whether the state adequately advises eligible beneficiaries on how to maintain their coverage – The decline in enrollment began once Missouri’s Medicaid agency restarted its annual verifications at the beginning of 2018 with the help of a new automated system. With the rollout of the new system, Medicaid recipients began receiving letters in the mail informing them they would need to verify their incomes and the process required to do so. Some contend that the state did not do enough to ensure each recipient received and understood the letter. Nonetheless, coverage may be canceled within 30 days absent verification in order to remain compliant with federal law.
• How many children would still be eligible for the Medicaid program they were previously enrolled in – Some claim that many of the children removed from the Medicaid rolls were probably still eligible for coverage. The key distinction is that many might be eligible for coverage, but likely only eligible for CHIP. As mentioned previously, CHIP requires monthly premiums; traditional Medicaid is free. Without hearing from parents, should the state really enroll people who were previously receiving free coverage into a plan that requires monthly payments? The reality is that we do not know how many children removed from the rolls could have remained in the traditional Medicaid program.
• Why the children have not re-enrolled – Eventually, some parents of kids who lost coverage must have realized their kids were still eligible. So why didn’t these parents re-enroll their children? It seems the most likely answer is that many found out their children were now only eligible for CHIP instead of Medicaid, and simply chose another option instead of enrolling in CHIP. If parents find out they must pay a premium for coverage, and they are eligible for private insurance through the individual marketplace or through their employer, it would make sense that they might not opt for Medicaid coverage.

Falling Medicaid enrollment in Missouri is certainly an important topic, but it is also a complicated one. The issue isn’t whether children should have health coverage or not, but rather how the state should administer its Medicaid program to ensure optimal care for recipients while making the best use of taxpayer dollars. Policymakers should be sure they have all the facts before acting.

The post What’s Really Happening with Medicaid Enrollment? appeared first on Show-Me Institute.

Despite growing concern about Medicaid in Missouri, the issues plaguing the program are not widely understood. This report explains how Missouri’s program works and what has driven costs to where they are today.

Additionally, the report charts a path for Medicaid reform that would rein in the program’s seemingly endless growth. Through free-market reforms, Missouri’s program could empower recipients of Medicaid services and improve health outcomes, all while preserving the state’s financial future.

Click the link below to read the entire report.

The post Medicaid in Missouri and Its Budgetary Impact appeared first on Show-Me Institute.

The argument about ticket prices is so misleading that it could seem to be intentionally so. Consider this: Airlines pay rent to airports that is measured in terms of cost per enplanement (CPE)—in other words, per person boarding the plane. In 2016, Lynn Horsley wrote in The Kansas City Star,

In 2015, based on an industry measurement, the cost of operating KCI was $6.70 per enplaned (departing) passenger. With a $970 million improvement project, which is the estimated cost of a new terminal, that cost per passenger boarding would bump up to about $9.00 in 2015 dollars.

Since that story, the cost of the new terminal has more than doubled that $970 figure. Will the new CPE really be $18 or over? This chart of the top 50 airports ranked by CPE suggests that an $18 CPE would make Kansas City International the 7th most expensive airport in the country. This is the higher cost that Allegiant and Spirit Airlines say they cannot bear. According to the Star:

Matt Klein, senior vice president and chief commercial officer for Spirit, said in his letter that Kansas City’s aging airport should be updated and is “not befitting of a major U.S. city.”

“However, we believe the current investment proposal is simply … too costly for smaller new entrant carriers to bear and still deliver the value that we deliver to the community in terms of low airfares,” Klein said.

Allegiant’s vice president of airports and government affairs, Keith Hansen, wrote to reiterate the airline’s support for the project, but said larger airlines were expecting smaller airlines to shoulder an unreasonably large portion of the costs of operating the airport.

“Given that the terms for the new airport rates and charges agreement remain unknown and considering the larger carriers continue to reject equitable cost allocation, Allegiant cannot support the terminal development program at this time,” Hansen said.

So . . . if KCI is too expensive for these low-cost airlines, they may just stop serving Kansas City altogether. Less competition at KCI will mean higher fares, higher parking fees, and so on to cover the monstrous amount of debt that a $2 billion airport terminal requires. And if it is too expensive for the remaining airlines, they may also stop serving KCI. Who makes the bond payments then?

Taking on such a large amount of debt to build a new single-terminal airport includes a significant amount of risk—not just for the airlines and bond holders, but for the airport and the city itself. Giving taxpayers the impression that all of this is free is irresponsible and suggests a lack of candor from policymakers.

The post KCI Airlines Links New Terminal Costs with . . . Service appeared first on Show-Me Institute.

Success? How does Mr. Burt define success? According to his LinkedIn account, Burt was the vice president of Sales and Services at the Baltimore Area Convention and Visitors Association from March 2005 through December 2008. During that period, Baltimore taxpayers subsidized a new Hilton Hotel to the tune of $300 million. It opened in August 2008. Attendance at conventions in Baltimore has remained flat, and according to The Baltimore Sun, the convention center lost over $5 million in 2014 and again in 2015. The President of the City Council suggested selling the hotel, saying, “The hotel has been a drain on the city since it opened. We floated $300 million in bonds for it, and since it opened, we’ve been constantly losing money.”

Would Kansas Citians consider that a success?

From January 2009 through August 2010, Burt joined the Indianapolis Convention and Visitors Association as the senior vice president of sales and services! Indianapolis also expanded their convention center during that time. According to the Indianapolis Business Journal, the project has failed to meet expectations.

Attendance for state and national conventions in 2009, before the construction was in full swing, was 459,944. Attendance in those two categories in 2012 was 483,164, a slight increase from three years earlier—before the expansion.

Is that success?

From August 2010 through June 2014, Burt was vice president of sales and services for Destination DC, the “the official destination marketing organization for the nation’s capital.” DC was also in the process of building a hotel: the 1,200 room Marriott Marquis adjacent to the Washington Convention Center. It opened in April, 2014 and convention-related hotel room nights in 2014, 2015 and 2016 are all lower than the peak of 512,000 in 2011—before the hotel opened.

More success?

People who crisscross the country spending taxpayer dollars may think that every new construction is a success. But that is not the case for the taxpayers and city councils left holding the bill for underperforming hotels and convention centers. Kansas City’s own past is littered with unfulfilled convention promises, yet each one was supposedly a success. Taxpayers have every right to wonder how much more of this kind of success they can afford.

The post A New Convention Hotel Is Not Necessarily a Success appeared first on Show-Me Institute.

Just two weeks ago, Moody’s Investor Services, one of the nation’s premier credit rating services, revised Kansas City’s credit outlook to “negative.”

The negative outlook reflects the growth of the city’s pension obligation and, when coupled with the elevated debt burden, the increase of fixed costs outpacing revenue growth. Continued leveraging of the tax base or unabated expansion of the pension obligation will place downward pressure on the rating.

This comes as Kansas City leaders are asking voters to approve another round of debt, backed by an increase in property taxes, to pay for the sort of maintenance that the city should be paying for with our already-high property, sales and income taxes.

The problem is that city leaders keep throwing money at things like subsidies for downtown development and large consulting contracts instead of dedicating funds to basic services. Frequent borrowing and an increasing debt load mean lower credit ratings and higher borrowing costs—the city seems locked in a payday loan–like cycle. Moody’s seems to recognize this even if policymakers don’t, and citizens may have to take matters into their own hands if this cycle is to be broken.

The post Moody’s Issues Negative Outlook for Kansas CIty appeared first on Show-Me Institute.

Everyone paying attention to Kansas City politics knows that we’re facing an $800 million bond vote on April 4. Previous blog posts here have made the case that the city’s representation of it as a 20-year bond is inaccurate. Now let’s consider the costs.

Anyone who has borrowed money understands that there is a cost to doing so—interest. This additional cost is a consideration in deciding whether to borrow in the first place.  So how much will it cost Kansas City taxpayers to borrow $800 million over 40 years? According to the city’s Finance Department, when the debt is finally settled in FY2055, taxpayers will have paid out over $1.28 billion. The city’s own spreadsheet is available at the link below.

Kansas City’s own website also offers the following infographic, in which the “average annual” cost to someone who owns a $100,000 house is only $6. 

That seems like a bargain! However, the graphic is incomplete as it only represents the cost of a single 20-year, $40 million bond. The April 4 election would approve 20 such bonds, issued each year until FY 2036. Start stacking these per-bond costs and you’ll get an idea of the cost to taxpayers. After the last 20-year bond is retired in FY2056, the total amount of taxes paid would be $2,400, not $120.

The city’s infographic is telling 5 percent of the story. The timeframe of the debt is 20 times longer than what the graphic shows, and the cost to taxpayers is 20 times greater. Voters need to know this before being asked to hand over more than a billion dollars.

The post The GO Bonds Will Cost You Much More Than You’re Being Told appeared first on Show-Me Institute.

The study’s methodology rates five things: spending, long-term obligations, pension contributions, and changes in local unemployment and property values. Of the 116 cities, Irvine, California, performs the best. New York and Chicago come is 115th and 116th, respectively. Kansas City and St. Louis, with populations much smaller, rank 101st and 112th, respectively.

What really hurt Kansas City’s score were its long-term obligations, or debt, which stands at 170% of total revenues. In St. Louis the debt is over 200% of total revenues. According to a 2013 Show-Me Institute study (see Figure 9) Kansas City has $296.24 in debt per person while St. Louis has $328.16 per person—the most of our Midwest peer cities.

This is nothing new. In March 2015, WalletHub released a study in which Kansas City ranked 61st out of 65 cities in terms of spending efficiency. The Mayor’s own Citizens Commission on Municipal Revenue 2012 report cites high debt as a problem and offers, “Because current debt levels are high compared to peer cities, the impact on the City’s credit rating from issuing additional and significant levels of debt must be of primary concern.” The report showed that Kansas City had the highest debt per capita of ALL the peer cities they considered, including St. Louis, and well over the national average (see Page A-17).

A Moody’s Investor Services report from January 2016 indicates that Kansas City’s direct net debt per capita is $3,675. Not only is this higher than any of Kansas City’s peer cities, but it is $500 more per person than St. Louis and $1,400 more per person than Denver, the 2nd- and 3rd- highest indebted peer cities!

Despite this very high debt level, Kansas City leadership is seeking public support for $800 million in additional debt to provide for the infrastructure maintenance the city has neglected for years. This would only exacerbate the city’s financial challenges. The problem is not that the city brings in too little revenue—Kansas City is a high-tax city. The problem is that the city seems to waste this money on economic development schemes that do not accrue to its financial benefit, while neglecting basic services. The solution to this problem is not more of the same.

The post Kansas City and St. Louis in Bad Financial Shape appeared first on Show-Me Institute.

The Kansas City Star editorial board, not entirely surprisingly, supports the bond, and concludes its editorial with:

The district’s current debt service levy of $1.29 per $100 of assessed valuation won’t retire for about 20 years. Approving the bond issue in August would extend the debt levy 10 more years. Because of the extension, taxes that residents and businesses pay to the school district will neither go up nor down whether the measure passes or fails, officials say.

Two years ago, my colleague James Shuls addressed this very argument. He wrote,

Bonds work in much the same way and school districts can “refinance” to extend the term of the bond. They market this to the public as a “no tax increase” bond issue and claim that your payment will not go down or up whether the issue passes or not. Your tax payment will not change, but you will be paying for a longer period of time.

The bond issuance may be the exact right idea to meet North Kansas City’s needs. Shuls suggests calling such efforts “no tax levy increases” because, in fact, the new bonds will require the expenditure of more tax dollars. Proponents know better, and would be more credible if they just leveled with voters rather than spin fanciful yarns.

The post North Kansas City Proposes A “No Tax Increase” Bond Issue appeared first on Show-Me Institute.

In fairness, my colleague Joe Miller recently wrote that there are some reasons why a city might rightfully consider building a new terminal. The cost of current maintenance may be more expensive than a modern replacement, or a new terminal may be needed to accommodate increased traffic. Neither of those apply to MCI. While our traffic is up moderately, no one is arguing that we need to build for increased capacity. In fact, the new terminal proposal from the Aviation Department would reduce the number of gates we have now.

No one is arguing that the costs of maintaining the current MCI are prohibitive, either. Supporters of a new terminal seem to have strictly cosmetic concerns.

As for doing what we want airports to do, MCI is serving admirably. Consider the recent developments.

• In 2014, MCI picked up service from Spirit Airlines, and Seaport Airlines added service. Southwest announced that service to Ronald Reagan National Airport in Washington, D.C. has been approved.
• In 2015, Spirit started offering direct nonstop flights to Los Angeles. Allegiant Airlines will be flying nonstop to Florida from MCI, and Southwest offers new direct service New York LaGuardia, and Orange County, California. American Airlines added nonstop flights from Kansas City to Miami.
• And in 2016, Frontier Airlines will add flights to Atlanta, Chicago, and Philadelphia. Southwest recently expanded service in the form of direct flights to San Antonio.

In January, the Star catalogued some of MCI’s gains, including that annual traffic has grown each year since 2012 with the terminal we have now. Supporters of a rebuild point to possible (but by no means certain) increases in traffic as a result of a new terminal. But as Miller concluded in 2014:

To sum it up, the airlines (and common sense) say that building an expensive new terminal will not increase demand for air travel. Quite the contrary, the higher costs to airlines and passengers may mean fewer flights. Even if we agree with business leaders that MCI requires more amenities, certainly there is a cheaper way of providing these than a $1.2 billion new terminal plan. The cost is so much greater than the supposed benefits that the plan looks more like a vanity project than a sound investment.

In short, Kansas City’s airport is doing well. It has won high marks for its convenience; we’re unlikely to suffer the long waits seen at other airports because MCI does not use the TSA for security. Importantly, airlines seem eager to come and expand their service (despite their claims to the contrary). It is unlikely that Kansas City could improve on this. In fact, in taking on mountains of debt we risk losing the competitive advantage that many of us now take for granted. 

The post MCI Is the Envy of its Peers appeared first on Show-Me Institute.

Right now, residents of the Ladue school district pay 39 cents per $100 of assessed value of their property to service the existing debt of the school district.  The April 5 ballot measure would double that, to 78 cents per $100 of assessed value.

According to Zillow, the median home price in Ladue is $814,000. Because Missouri assesses home value at 19% of market value, the proposed tax increase is a $603.17 hike per year for the median home owner. Half of homeowners will pay more than that.

Ladue is a lovely place for a variety of reasons, but one thing that makes it so attractive to residents is that it takes advantage of the high value of its property by charging a relatively low rate of property tax. As my colleague James Shuls pointed out in talking about the proposed levy increase in St. Louis, Ladue’s levy is well below the St. Louis County average, but it is still able to generate a lot of money for its schools.  It’s an ideal situation.

Ladue should think long and hard before mitigating its competitive advantage over neighboring municipalities. Are there other efficiencies that it can find? Could it take on less debt, or wait until it has paid off what it has already incurred?  Is it buying new bells and whistles that aren’t associated with better student learning? The answers to these questions would tell voters whether they are getting additional value for their money.

The post Should Ladue Take on $85 Million in Debt? appeared first on Show-Me Institute.

Kansas City borrows a lot, too. We spend more per capita on servicing our debt than every peer city we examined except St. Louis (the other peer cities we looked at were Tulsa, Oklahoma City, Omaha, Indianapolis, Denver, and Louisville). Because cities with higher incomes are better able to handle debt, we also looked at the city income-to-debt ratio. The results weren’t flattering. Kansas Citians earn $5.28 in income for every $1 of debt the city carries. Louisville and Tulsa had much better ratios, ($35.92 and $17.66 for every $1 of city debt, respectively).

The City borrows money for lots of things. For example, a few years ago the city borrowed $10 million from the airport just to cover the costs of TIF commitments. Kansas City issued bonds to help pay down its debts for the Power & Light District; this reduced annual payments in the short term, but increased the total amount of the debt. As a result of existing debt, the city cannot pay for basic services such as tearing down dangerous homes—and so it must borrow again to generate the $10 million needed.

Despite lofty city rhetoric against payday loans, we seem to be managing city funds using a similar model. Even the Mayor’s own Citizen’s Commission on Municipal Revenue reported in 2012 that the city’s debt ratios, among other things, “raise red flags.” Their report found that Kansas City has debt levels higher than all the peer cities it considered.

Right before Detroit declared bankruptcy it was borrowing money to cover employee bonuses. Kansas City hasn’t gotten to that point yet, but things are not looking up. Is this any way to run a city?

The post Kansas City Deep in Debt appeared first on Show-Me Institute.