I’ve argued for the removal of parking mandates, and the logic is straightforward: when cities require developers to build a fixed number of parking spaces, they raise costs, limit design flexibility, and often crowd out the very investment they say they want to encourage.

Kansas City has also taken steps to streamline development through its use of pre-approved housing plans—also something I have advocated. By offering a set of ready-to-use designs at no cost, Kansas City reduces one source of expense in the building process. For small builders and homeowners, eliminating the costs of repeatedly checking in with city staff can make the difference between a project moving forward or not.

These changes may not seem significant, but housing shortages are often the cumulative result of small policies. Pre-approved plans will not transform the market alone, but they can help at the margin by making it easier to build modest infill housing in neighborhoods that can benefit from it.

Kansas City’s pre-approved plan program is relatively limited, both in the number of designs offered and in its role within the city’s broader housing strategy. The city has not abandoned its interventionist framework that relies on subsidies, mandates, and planning requirements to shape outcomes.

Overland Park’s “Portfolio Homes” program, for example, is more ambitious. It pairs a larger number of pre-approved designs with zoning flexibility, fee reductions, and streamlined approvals. The emphasis there is not just on providing plans, but on reducing the regulatory barriers that make housing difficult to build in the first place.

Nevertheless, these changes are good news and suggest Kansas City’s leadership is beginning to absorb some important lessons. The city also stepped away from its cost-prohibitive energy codes.

Expanding housing supply will require not just targeted reforms, but a broader understanding of how regulation adds costs. City leaders still want to tinker with the market; they need to get out of the way altogether.

The post Kansas City Takes Steps Toward Better Housing Policy 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.

The Royals, who have spent more than three years insisting they will vacate the K after their lease expires in 2030, face a conundrum: they have no new stadium site selected, no clear funding source, and no legislative momentum. Missouri lawmakers are on track to adjourn without approving any stadium funding bills. Kansas, meanwhile, has not yet extended the STAR bonds meant to lure the team across the border.

The Royals’ 2024 pitch for an East Crossroads stadium fell apart when Jackson County voters overwhelmingly rejected a new 40-year sales tax. Since then, the team has gone quiet. They have options—North Kansas City, Washington Square Park, and previously Overland Park—but each presents new complications. Land assembly, tax votes, and public skepticism loom large.

According to Friestad, the Royals do have the option to extend their lease at Kauffman for up to 10 additional years, through 2041. The provision, part of their 2006 lease, only requires 12 months’ notice and a clean track record with the Jackson County Sports Complex Authority.

That means the team isn’t nearly as cornered as some may think. And as experts in Friestad’s piece explain, the ticking clock shouldn’t pressure local officials into bad deals.

“This point just means your current agreement ends,” said Geoffrey Propheter, a University of Colorado-Denver professor who studies sports economics. “Nothing bad happens at this point.”

Indeed, Propheter compares it to a standard lease renewal in the housing market—if both parties want to keep the arrangement, they’ll find a way. That’s an important reminder in Kansas City, where both major sports franchises have long benefited from generous public terms. Royals critics, such as former City Councilwoman Becky Nace, argue that the team already enjoys the best deal they’re likely to get: a dedicated sales tax for stadium maintenance and operations, covering hundreds of millions in costs. Proposals in Kansas and downtown Kansas City would cover only construction, not ongoing upkeep.

The article also touches on the broader context. MLB relocations are rare and messy. Nashville, Salt Lake City, and Las Vegas are often floated as threats, but relocating to any of those locations would involve significant political or financial headwinds. Economist Victor Matheson called such leverage “overstated,” pointing to the Oakland A’s relocation saga—the team is now stranded in a minor league stadium with uncertain funding for a Vegas move.

What emerges is a portrait of slow-motion bargaining. The Royals’ ownership may still prefer a new stadium, but they’re learning what voters and lawmakers have long suspected: urgency doesn’t equal necessity, and options, while limited, do exist.

Kansas City Mayor Quinton Lucas has floated a revised package between $1.2 billion and $1.4 billion for either a new stadium or a Kauffman renovation, though specifics remain scarce. Meanwhile, voter fatigue and fiscal realism continue to grow.

The takeaway is clear: a looming lease expiration should not be confused with a deadline for action. Kansas Citians rejected a rushed deal last year. If there’s a better one to be had, it will take time, transparency, and trust to get there.

The post Royals May Stay at Kauffman Amid Stadium Inertia appeared first on Show-Me Institute.

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

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

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

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

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

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

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

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

A version of this op-ed was published in the Columbia Missourian.

Missouri and Kansas are no strangers to border conflict. No, we’re not talking about the chaos that inspired ‘The Outlaw Josey Wales.’ The fear today is over cross-border job poachers. However, that doesn’t justify giving Fidelity Security Life Insurance $12.7 million just to stay in Kansas City. No one gets a gold medal in a race to the bottom — but politicians will waste endless taxpayer dollars trying to tell you that they’re ‘winning.’

The post The Kansas-Missouri Border War Isn’t Over appeared first on Show-Me Institute.

A proposal approved by the Overland Park City Council and the Kansas Department of Transportation to add two tolled lanes to U.S. Highway 69—one in each direction—will go before the Kansas Turnpike Authority for final approval. Local officials cited increased traffic from an expanding population, which is only expected to continue growing, as the need for such an expansion. Rather than paying for the project directly out of the city’s budget, officials want to use tolling to pay for the construction.

The lanes would be tolled electronically, with drivers either being billed from a K-Tag transponder or by having their license plate scanned. The prices to use these lanes will vary, with prices highest when road usage—the “demand” for roads—is highest. The original four lanes on the highway will continue to be toll-free, so drivers concerned about the cost won’t have to pay for a lane they don’t end up using.

Missouri policymakers also should consider using tolling to finance new highway lanes, particularly in areas where traffic is expected to increase beyond what the current system can handle. Congestion pricing, as this policy is also called, reduces travel times and can also help reduce local air pollution as fewer vehicles are idling on the road.

I hope the benefits of Overland Park’s tolled lanes won’t go unnoticed in Missouri. There are a lot of reasons why tolling is a policy that deserves to be explored in the Show-Me State as well.

The post Overland Park Considers Adding Tolled Lanes to Expand Highway appeared first on Show-Me Institute.

The author of the Brookings Institution study referenced above does not know about Kansas City proper, or more specifically about downtown Kansas City. The Downtown Council itself apparently can’t provide worthwhile numbers either. Trying to piece together the data requires investing a lot of time and resources going through Census data at the county level. Until someone does that in 2019, we can rely on a 2016 paper for the Show-Me Institute by Wendell Cox, “Kansas City—Genuinely World Class.”

In Figure 3 on page 6, Cox offers us the chart at the top of this post. As you can see, populations have not grown in the urban parts of the Kansas City but rather in the areas outside the city proper. In fact, the urban and near-in suburbs are shrinking. This is expected to continue. Cox writes:

According to the Mid-America Regional Council, population growth will continue to be concentrated in the suburban counties. Between 2010 and 2040, it is projected that approximately 45 percent of the population growth will be in Johnson County, which will make up the bulk of the 55 percent of metropolitan area growth that is projected to occur in the Kansas suburbs. The Missouri counties are projected to constitute 45 percent of the metropolitan area growth, with Cass County accounting for 18 percent and Jackson County for 11 percent (Figure 4).

Lots of organizations spend a lot of money trying to attract people and jobs to Kansas City. All them have an incentive to show that all that money—in many cases tax dollars—is well spent so that their budgets will be expanded. Successes seem rare and the data aren’t promising. But if city leaders are serious about attracting residents and jobs, we need to have a serious conversation about what is working and what is not.

The post Follow-up on Kansas City Population Trends appeared first on Show-Me Institute.

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

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

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

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

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

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

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

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

We’ve argued this basic fact for years, and some of the better-known pipers have even changed their tune (but not without charging the townspeople nonetheless). According to a recent study published by SmartAsset based on Pew Research data, Kansas City, Missouri, is not in the top 25 destinations for millennials. Overland Park, Kansas, ranked 14th.

More noteworthy, SmartAsset previously released a study indicating that two Kansas City suburbs ranked in the top 25 places in the United States where millennials are buying homes. Olathe, KS ranked first (!) and Overland Park 11th in the entire country. Kansas City, Missouri—despite our entertainment district, Sprint Center, streetcar, and subsidized corporate headquarters and high-rise luxury apartment buildings—did not appear anywhere in the top 25.

None of this should be surprising. We know that millennials are looking for exactly what previous generations wanted: homes in the suburbs, cars, and good schools. Yet Kansas City leaders persist in telling us we’re a millennial magnet. We aren’t.

There is no shortcut to growing a city; no magical policy that can reverse national demographic trends. A better investment, as Show-Me Institute analysts have argued for years, is for government’s action to be broad and neutral: keep taxes low for everyone, maintain infrastructure, deliver necessary city services, and ensure quality education. Maybe those aren’t as appealing as shiny new construction projects, but they are more successful.

The post Millennials *Still* Prefer the Kansas City Suburbs appeared first on Show-Me Institute.

The 25-million-visitor claim comes from the 2016 Tourism Economics report prepared for VisitKC by Longwoods International and the U.S. Travel Association. A copy of the report is available at the link at the bottom of this post. The study defines Kansas City as “a five county region in Kansas and Missouri—Johnson and Wyandotte in Kansas; Clay, Jackson, and Platte in Missouri.”

This means the 25 million visitors visited not only Kansas City, Missouri, but Kansas City, Kansas; Overland Park; Olathe; and Independence. It includes the Cabela’s at the Legends Outlet, which for a while was the number one tourism attraction in the entire state of Kansas, and since then has only added attractions such as Sporting KC’s stadium.

The report divides visitor spending by the five different counties, with Jackson County, the home of Kansas City (and Independence) receiving just under half. It is reasonable to conclude that only half of the 25 million visitors are coming to Jackson County—and even fewer may be visiting Kansas City proper. After all, the five-county area has a population of 1.8 million, while Kansas City has only 480,000.

For an administration that talks about dealing only in facts, the 25 million visitors claim is misleading at best. People are right to be skeptical of such big claims, and city leaders should do a better job of ensuring their accuracy.

The post Tourism: When Kansas City Is Not Kansas City appeared first on Show-Me Institute.

Moving from a $7.65 minimum wage to a $15 wage by 2020 is a huge increase, and something that is not even supported by all the usual liberal pundits. Matt Yglesias wrote in Vox of the effort in St. Louis,

In St. Louis, people are much more likely to adjust to a higher cost of employing people by employing fewer people. The most relevant precedent for a big hike in a relatively poor jurisdiction may be Puerto Rico, where an effort to match the US federal minimum wage led to a rise in unemployment and increased migration to the mainland United States. St. Louis is richer than Puerto Rico, but moving a person or a job across the St. Louis city line into the suburbs is a lot easier than migrating from Puerto Rico to the US mainland.

Here is what will happen in Kansas City if the wage is increased: Employers who rely on minimum wage employees will seek to avoid the higher labor costs by hiring fewer people and investing in technology. We’re already seeing the latter in fast food restaurants that rely on kiosks for ordering. With fewer jobs available, the competition for them will grow, and those with the fewest job skills—who are also those with the greatest need for that first job—will be harmed the most. There just won’t be enough work for them. This is true is most places that require an increase in wages.

The second item is particular to Kansas City and will further diminish job opportunities for poor and low-skill workers. Middle class kids from Overland Park, where the minimum wage is $7.25, will suddenly have an incentive to cross State Line Road to earn $12, $13, and perhaps even $15 an hour. (Remember, 44.6% of those earning minimum wage or less come from households that earn three times the poverty level.) Many of these kids will have work experience and skills that make them more appealing to employers. If you’re going to pay a higher wage, you will want a better employee.

There will be pressure on Overland Park employers to raise wages to keep workers on their side of state line. And Kansas City workers may then have to commute to Kansas to get the lower wage jobs that are suddenly available, but they may not have the access to transportation that their wealthier suburban job-seekers have. Kansas City’s urban poor will find themselves with fewer job opportunities locally and no good way to get to the jobs that are available to them outside of Kansas City.

There is no shortcut to creating an environment for more jobs and higher salaries—government cannot create wealth and success by fiat. Instead, local governments need to focus on delivering basic services efficiently and cost-effectively and on limiting taxes and business regulation.

The post A Minimum Wage Increase and the Unintended Consequences for Kansas City appeared first on Show-Me Institute.

This information is valuable for families who want to ensure their children are assigned to good schools. And it’s also an illustration of what is, unfortunately, the most common form of school choice: moving.

According to a survey conducted by the National Alliance for Public Charter Schools, 31 percent of parents said they moved to their current neighborhood so that their children could attend a specific school. Among families whose annual income was less than $50,000, however, only 25 percent of parents moved to a specific school district. For those making more than $150,000, it was 36 percent.

As lawmakers consider education savings accounts, charter schools, and course access this legislative session, many of their constituents have expressed doubts about these school choice initiatives. Certainly, we should consider such programs carefully; but we should also realize than many families in Missouri already practice school choice by moving out of one district and into another.

James Shuls, the Show-Me Institute Distinguished Fellow of Education Policy, called this “School Choice by Mortgage”:

Parents with the financial means can move their families to neighborhoods with good schools or they can afford private school tuition. The problem with our current system of school choice is that it leaves many parents with no options. The wealthier a family is, the more choices they have, while the most disadvantaged are left with little or no choice.

School choice programs like ESAs and charter schools are not meant to disrupt quality public schools where parent and student satisfaction is high. Rather, these programs are designed to provide opportunities to families who don’t have the means to buy a home in a good district or pay for private school tuition. Regardless of what neighborhood a family can afford to live in, shouldn’t their children have access to a quality education—whether it is at a public, charter, or private school?

The post School Choice for Those Who Can Afford It appeared first on Show-Me Institute.

While we wait for hotel cost estimates and earnings projections, it is worth reflecting on previous convention hotel efforts in and around downtown. Hotel consultants have provided inflated estimates in the past.

Overland Park: Projections for their convention hotel were off by about 40 percent. A June 2010 issue of The Pitch published:

Original projections called for Overland Park’s convention hotel to earn more than $110 per available room. Actual number: $67.50.

Kansas City, MO: In 2009, when Kansas City was considering a convention hotel, the hired consultant, HVS, estimated that the average daily rate (ADR) for hotels in Kansas City in 2016 was going to be $162.72. Today it is $121.37, far short of the projection.

Kansas City, KS: The Pitch also reported on the money pit that is the Hilton Garden Inn:

The [Unified Government] hired a consultant to project how much money the hotel would make when it applied for the HUD loan in 1999. The consultant predicted that by 2005 the Hilton Garden Inn would hit $3 million from room revenues alone. Actual financial records show that the hotel has stooped below that $3 million figure. In 2006, the hotel reported only $2.2 million in room revenues. The hotel itself has always operated at a loss, and every independent audit of the hotel project since 2006 has sounded the same warning: The Hilton Garden Inn is a money loser and can’t stay afloat without subsidies from its owners.

It appears earnings projections run about 25-40 percent higher than reality. That is quite a margin of error. As we consider a downtown convention hotel, we must keep in mind that projections are rarely met.

The post KC Convention Hotel Estimates Are Notoriously Wrong appeared first on Show-Me Institute.

Stay above the line and you gained jobs; drop below the line and you’ve lost them. And to be clear, the Kansas City, Kan./Kansas City, Mo., designations here are references to the Metropolitan Statistical Areas that compose the Kansas City metropolitan area; indeed, the data used here is appropriately broad and provides a fuller picture of Kansas City’s regional economic picture by including other large Kansas and Missouri cities along and around the border — from Overland Park to Platte City and beyond.

In the past, we’ve talked about how jobs have moved, or simply disappeared, from Kansas City’s city center in the past decade. These BLS figures provide further meat to those bones, showing that when it comes to job creation and growth, the advantage right now appears to be very much in Kansas’ favor. The question is, how long will Missouri let that undesirable status quo remain?

The post The Kansas/Missouri Economic Border War, In A Graph appeared first on Show-Me Institute.

Health Outcomes Sciences, a health care software firm that started recently in Kansas City, is relocating to Overland Park and plans to expand its workforce from 13 to 37 employees over the next five years. …

The firm is seeking assistance from the Kansas PEAK program, which allows employers to keep up to 95 percent of their employee state income tax for up to seven years. Fiorito also said other factors figuring into the decision included the 1 percent city earnings tax charged in Kansas City and the new office’s proximity to where most of the company employees reside in Johnson County.

The Show-Me Institute has written extensively about the damaging effects of Kansas City’s and Saint Louis’ earnings taxes. In 2006, our chief economist, Joe Haslag, explained the impact of an earnings tax with this example:

[S]uppose that City A has no earnings tax, while City B has a 1 percent earnings tax rate. Other things being equal, the regression suggests that we should expect City B’s city-to-MSA per capita ratio to be 5.1 percent lower than City A’s city-to-MSA ratio. To put that in dollar terms, the average per capita income in 1990 was $13,076. Holding MSA per capita income constant, a 1 percent increase in the earnings tax rate translates to city per capita income falling by $667.

Translation? Even a 1 percent tax can be an ample incentive for workers to move out of a higher tax jurisdiction. That is a problem, especially if a city wants to retain its talent and grow its tax base. In the case of Health Outcomes Sciences, the workers were already outside the city. The business appears to have followed them out of town. And in case you were wondering, the Show-Me Institute has published a how-to for eliminating the earnings tax in Kansas City, appropriately titled “How to Replace the Earnings Tax in Kansas City.” Worth a read, particularly today.

There are many factors that go into a business’ decision to move from one state to another, but it is pretty clear that the earnings tax is not a negligible consideration. Kansas City should do a serious review of its own tax policies.

The post Another Missouri Company Leaving for Kansas, Citing, in Part, Kansas City’s Earnings Tax appeared first on Show-Me Institute.

We have reached absurd levels of tax incentive parrying on the western side of the state. Teva’s current location is an 8-minute drive down the highway from its new location at the corner of College and Nall. As the crow flies, that is a move of fewer than 4 miles.

View Larger Map

It is clear that Missouri’s economic development status quo has been neither effective nor efficient, so I would propose a new plan: Do not participate in the taxpayer-funded tax incentive bidding wars that have companies being traded like baseball cards and have seen the state hemorrhaging tax dollars over the last decade. Simply state the reason why companies should stay in, and come to, Missouri clearly for all companies who want to find a predictable, business-friendly, and stable economic environment to set up and maintain shop.

How about ending the corporate income tax? I have noted in the past that swapping development tax credits for a wholesale elimination of the corporate income tax would be a far better approach to developing the state’s economy. As my colleague Michael Rathbone has noted, only three states in America do not have a corporate income tax or a gross receipts tax. Corporate income taxes are among the worst taxes you can institute if you are looking to pursue policies that promote economic growth. The transition could be accomplished in no small part by scrapping a development plan that has failed for more than 10 years.

Stop picking winners and losers. Missouri and Kansas officials are playing a game of economic futility when they chase companies and escalate the “targeted” tax incentive bidding wars. Both states need to wise up, but especially if Kansas continues on its path, Missouri needs to change the game — and not play on the old terms anymore.

The post Another Company Leaves Missouri For Kansas; Time To Stop The Madness appeared first on Show-Me Institute.

There has been a lot of talk from legislators and others about how tax subsidies are an important policy tool that states can use to keep jobs within their boundaries. In recent weeks, both AMC Theaters and Jack Stack Barbeque made news because the companies moved from Kansas City, Mo., to nearby locations in the state of Kansas.

Previously, Missouri’s Department of Economic Development (DED) used the promise of more than $12.5 million in tax credits to lure the corporate headquarters of Applebee’s across state lines into Missouri.

But to what end? Jobs in the region are down, and the loss is nearly the worst in the country.

I was curious to see how the Missouri and Kansas bidding war fit within the job loss news. So, I looked at the Kansas City core metropolitan statistical area (the area that lost more than 12,000 jobs). I then checked the three companies that made news when they moved across state lines to see from where they moved and where they relocated. These three companies’ relocations resulted in elected officials calling for the use of tax incentives to lure companies from one state to another.

Jack Stack Barbeque: The company is located in downtown Kansas City, Mo., and announced plans to move just across the state line to Overland Park, Kan. It is not clear whether tax incentives will be awarded to the company. Both locations are in the Kansas City metro area.

AMC Theaters: The company announced that it was moving from downtown Kansas City, Mo., to Leawood, Kan., also just a short few miles. The state of Kansas reportedly offered about $47 million in tax incentives, or more than $100,000 for each job. Both locations are in the Kansas City metro area.

Applebee’s: The company moved its headquarters from Lenexa, Kan., to Kansas City, Mo., just across state lines. The state of Missouri offered about $12.5 million in tax incentives, or about $35,000 per job. Both locations are in the Kansas City metro area.

In the grand scheme of things, all of the taxpayer money used to lure one company or another a few miles doesn’t really matter when it comes to the health of the region. The Kansas City metro area still lost more than 12,000 jobs, including those jobs that moved across state lines. Moving companies a short distance merely rearranges the deck chairs, it doesn’t accomplish anything productive.

In fact, given the administrative costs of running tax incentive programs, the Kansas City metropolitan area actually loses when the states attempt to lure companies away. We take tax dollars from the private sector to give to bureaucrats in the public sector whose job it is to figure out (i.e., use discredited economic modeling to guess at) which companies to attempt to lure across state lines. The money certainly could be put to better use, especially in light of some of the DED’s recent failures.

It’s time to stop playing petty economic development games and work instead on implementing public policies that have been shown to encourage economic growth, rather than shuffle it around.

I know it’s September, but a good place for us to start would be the list of New Year’s Resolutions for Missouri Public Policy that Policy Analyst Christine Harbin put together last year. Maybe there’s still some time to get started.

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Let’s start in Kansas City, where the city council appears set to establish new code requirements for doors. That’s right — doors. Apparently, the incentive we all have not to get robbed isn’t good enough in KC; now you’ll be subject to mandates to install special doors on new homes, which will raise the cost of housing in KC (although probably only marginally). At least they got rid of one bad part of the proposal:

[Councilwoman Cathy] Jolly brought the idea to the council in April, but encountered resistance from some council members who worried that some of the new code requirements would give a competitive advantage to an Overland Park company that specialized in a device to reinforce door frames.

Jolly insisted she was not trying to play favorites, and the latest version of the ordinance deleted language aimed at a particular device or specification.

I still think the reinforced door requirement is unnecessary, but at least the most “rent-seeking” aspect of the proposal was removed.

On to St. Louis. Before I criticize, I shall praise. There was an insanely obvious example of rent-seeking this month as the fire sprinkler industry attempted to get a county code passed that would require a comprehensive fire sprinkler system in every new home built in the county. I give both the sprinkler industry and the union credit for not even trying to deny the obvious benefits to them. The next item will get no such credit. The article features this quote from the president of the Home Builders Association of St. Louis & Eastern Missouri:

“The sprinkler industry has been basically advocating mandatory sprinklers in all new homes for probably 20 years and realized, ‘We can’t sell this to the general public, so let’s focus our efforts on convincing the fire service community,'” he said.

Mike Mahler, business manager for the 500 members of Sprinkler Fitters Local 268, conceded [the] point but said that did not mean residential sprinklers were not a good idea.

“We got the ball rolling on this because this is a great product,” Mahler said. “We educated the fire marshals: Here’s what sprinklers can do, here’s how they can save lives. And the fire marshals carried the ball from that point on.”

I commend the St. Louis County Council for removing this requirement from the new building code. Mandatory sprinklers are not needed for safety in the county and were properly taken out of the bill.

But on the other hand, the council seems set to approve a new licensing requirement for residential HVAC workers in St. Louis County. The city of St. Louis just passed the same requirement in April. Jefferson County is supposedly going to consider it later this year. Wherever it passes, it’s bad. This type of licensing requirement is a totally unnecessary handout to current HVAC contractors who want to push current and future competitors out of their way. It is “rent-seeking” at its worst. I testified against the bill yesterday at a committee hearing. At least two of the councilmembers asked some terrific questions of the public works director, and appear set to vote against it — although it will still probably pass. One of them summed up the real reasons behind the move in the a Post-Dispatch article about the licensing proposal:

“There is no evidence of a dangerous situation,” [Councilman Greg] Quinn said after the committee meeting. The licensing “was not generated by the public. It was generated by the industry to protect itself from competitors and increase profit,” he said.

To sum up, the makers or installers of doors, fire sprinklers, and heating and air conditioning units have all sought protective measures from local government. The same thing happens all the time at the national level, and it is one of the most depressing aspects of democracy.

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I ask because of this article in today’s Kansas City Star about snow-removal efforts in Kansas City. The short answer for why snow removal is taking a long time in Kansas City is simply that there are too many roads and too little staff:

For example, Kansas City plows more than 4,200 lane-miles of main arterials and residential roads, compared with 1,800 lane-miles in Overland Park. During the last round of storms, Overland Park had 125 people involved in snow operations, compared with about 200 to 250 in Kansas City.

Staffing cuts and shortages haven’t helped. Since 1998, Kansas City’s street maintenance staff has dropped from 174 to about 110.

For the record, the reasons they give are entirely acceptable to me, and I have no reason to believe they are not all doing the best they can. Anyone who loves political history like I do knows how much local officials can be judged by these things, though. Just ask Jane Byrne.

This leads me to an open question about local government staffing. Cities and counties in Missouri could have at least a few workers who are trained in multiple fields, and can move from department to department as the needs change. Here is a possible schedule:

1. December–February of each year: Streets/highways, primarily as snow plow and salt truck drivers.
2. February–August of odd-numbered years: Assessment divisions, though not as primary assessors. (This has been done by St. Louis County in the past, although mostly just to get lots of people to physically eyeball properties that computers determined rose in value by more than 15 percent.)
3. Memorial Day to Labor Day every year: Parks Department, while the pools are open and the parks and golf courses are busy. 
4. November–December every year: Revenue Department, collecting checks as everyone pays their property taxes.
5. Other potential opportunities include working for the Revenue Department on the delinquent tax sale day, the Police Department for parades, protests, etc., and the Health Department for emergency preparedness procedures.

I predict everyone will hate this idea. Libertarians and unions would finally agree on something. I don’t actually support it, because it would be turned into an excuse just to hire more government employees in total, but it would not be a bad thing if we could have a small number of government employees able to assist in multiple fields as seasons and needs change.

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