St. Louis County wants to follow the example of the City of St. Louis and create a land bank. This land bank will allow the county to become more aggressive about acquiring and selling property, primarily through tax auctions. If the examples in St. Louis and Kansas City are any indication, the land bank will fail in its goal of getting property back to the private sector. Creating a land bank will, however, increase opportunities for corruption and hold property off-market as a favor to politically influential developers. In case you have forgotten, here is the story on land bank corruption:

[Former Alderman] Boyd admitted accepting a total of $9,500 from Doe for his help convincing the city’s Land Reutilization Authority to accept a lower bid from Doe for a commercial property on Geraldine Avenue in Boyd’s ward. The LRA ultimately accepted Doe’s $14,000 bid. The LRA initially listed the property as worth $50,000. Boyd then worked to get a property tax abatement for Doe.

Inexplicably, the state authorized land bank expansion last year. St. Louis County is moving ahead with it. This is really the worst move the county could make and it isn’t going to end well for St. Louis County.

On the other side of the state, when St. Joseph created its land bank several years ago, the authorizing legislation included elements to help protect against corruption. It prevented people who might have a conflict of interest, such as anyone affiliated with St. Joseph city government, the land bank itself, or relatives of land bank staff or St. Joseph city government, from buying land from the land bank. Keep in mind that family members of the Jackson County Executive were able to purchase and flip land bank properties in Kansas City under questionable circumstances, to say the least. From the Kansas City Star:

No houses were built, and the company formed by Frank White’s stepsons Joseph, Darrel and Jordan Hurtt more than doubled its initial $3,700 investment by selling just four lots to a woman who lived near the properties on Montgall.

Now that it’s been several years since the St. Joe land bank was created and it has accomplished nothing, there is a bill in the legislature to remove those protections against corruption. It’s astonishing. What is the thought process here? Do St. Joseph city officials want to flip a few empty houses so badly that allowing those with inside information to profit is suddenly alright in St. Joseph? When something isn’t working under honest means, the answer is not to try it with dishonest means.  I hereby award House Bill 717 the title of the worst bill in Jefferson City this year.

The post An Update on Land Banks in Missouri: From Bad to Worse appeared first on Show-Me Institute.

One of these reforms is a subject of contention right now in St. Louis. In the 1940s, the office of the City of St. Louis Personnel Director, in charge of hiring most city employees, was made almost entirely independent of elected officials. That was understandable at the time, as that was a period of significant political corruption in American cities.

Over time, though, a wise move to limit corruption has petrified—as so often happens in bureaucracies—into a position designed to protect the status quo. Between 1942 and 2021, only four people held the job. Yes, they may have been very good at it. But it was inevitable that they became protectors of the system and of the other people within the system, particularly other city employees who live in the same social and cultural circles. If they weren’t there to protect the status quo, why else would a retired personnel director be taking advantage of intricate knowledge of city charter rules to prevent the current mayor from getting her person into the position now?

Former Personnel Director Rick Frank, who held the job for 17 years before retiring in 2021, has reapplied for his old position. And the current director, Sonya Jenkins-Gray, on Nov. 15 granted his request to be placed on an eligible reemployment list, according to Frank and a copy of the letter he shared with the Post-Dispatch.

That, Frank said, means the mayor would have to at least interview him should the personnel director position open up. And she wouldn’t be able to pick an interim for the job while that list exists.

“If her intent were to put a provisional appointment in there, there’s a problem per the charter and the rules,” he said.

Remember that a major city employee union sued to prevent Mayor Jones from being able to select her chosen person for the position during a prior vacancy.

H.L. Mencken said that “democracy is the theory that the common people know what they want, and deserve to get it good and hard.” When people vote for change, the newly elected officials deserve the chance to institute that change, within reason. That includes putting the people they want into important positions. The voters can then judge those elected officials later at the ballot box.

Civil service rules preventing mass firings after every election are good, in that democracy functions better with such rules than without them. Rules that give local government personnel directors some independence from politics in hiring are also good.

However, when these rules ossify into a system where a former city employee applies for a job in a move that looks as if he is simply trying to obstruct the hiring decisions of the mayor, I’d say the rules have gone too far and need to be changed.

The post Civil Service Reforms Can Go Too Far appeared first on Show-Me Institute.

Back in 2022, in response to the seemingly endless parade of scandals and mismanagement coming from City Hall downtown and the county offices in Clayton, several city managers in the area circulated an op-ed arguing that both the City of St. Louis city and St. Louis County should adopt a city/county manager system of government. Are they correct? Would the City of St. Louis benefit from professional, nonpartisan city management? (We will save the county discussion for later.)

As part of my new paper on municipal government in Missouri, just released by the Show-Me Institute, I reviewed the research and evidence on the use of city managers in local government. It is certainly an idea worth considering. Four of the five largest cities in Missouri use a city manager system, as do nearly all the larger suburbs in St. Louis County (if you count the closely related city administrator form).

The authors advocating for adoption of professional management argued that the change would, among other things, reduce corruption and improve the quality of public services.  Based on the research I reviewed, the first point is likely; the second is possible but by no means certain.

Overall, the academic evidence suggests that adopting a city manager would reduce corruption, improve financial reporting, lead to more broadly focused legislation (and fewer narrowly targeted measures), reduce political conflict, and increase innovative policy thinking (in ways good and bad). St. Louis may not reap all of these benefits, but it should get some of them, especially reduced corruption.

On the other hand, there is not enough evidence to state that professional management would significantly affect taxes and spending, city employee pay levels, or the quality of city services.

The last claim by proponents of a city manager is key. Would the adoption of a city manager improve the quality of basic governmental services? (For example, would the potholes get filled faster under a city manager?) The presumption of better service quality with professional management is common, and it may be correct. But the evidence is not as clear as its supporters would suggest. Professional management might well perform better than management by elected officials. But as one academic stated, “For decades, analysts have presumed this performance gap exists, but they have yet to empirically demonstrate that any differences actually exist.”

Discussing change in St. Louis without considering the crime problem would be an enormous omission. The prevailing assumption is that police are more insulated from public pressure (for better or worse) in cities with a city manager. But even assuming that this presumption is true, does it lead to higher or lower crime rates? Another economist researched that question and found that there was no evidence that the presence (or absence) of professional management has any effect on municipal crime rates.

Professional city management may be what St. Louis needs, and it deserves careful consideration, but it is unlikely to provide dramatic or easy solutions to the city’s many problems.

The post Does St. Louis Need a City Manager? appeared first on Show-Me Institute.

North Side Grant Project Is a Disaster

The revelations about the North St. Louis Small Business & Non-Profit Grant Program being managed by the St. Louis Development Corporation (SLDC) keep coming. The entire grant program is rife with political favoritism, but at least the places connected to politicians actually exist! It turns out some of the other recipients of the grants are not, shall we say, real entities, like this “museum” just north of the Central West End:

The museum’s website advertises a facility, historical exhibits and a passion for illustrating the history of the Mississippi River and the people who have lived on its banks. But its address leads to a brick four-family structure in a neighborhood just north of the Central West End. No one answers the door, even during advertised business hours. And the building itself is surrounded by weeds and overgrowth.

“I’ve never heard anything about that place being a museum,” said Ray Sims, a longtime neighbor of the building. “How do I get the money?”

It’s almost like word got out that the SLDC was just giving away free money and, shockingly, people started making up reasons to get free money.

Recipients of Large Tax Subsidies Under Indictment

Does the SLDC make better decisions when dealing with big-time developers instead of ordinary people? Apparently not. Last week, the heads of a major St. Louis and Kansas City development firm were indicted in St. Louis for allegedly submitting false documents regarding minority-hiring rules. While this is the first indictment of these men (everyone is, of course, innocent until proven otherwise), their questionable business practices have been well known. Yet they have consistently received massive tax subsidies for work in St. Louis and Kansas City: particularly the latter in recent years.

Five Lux Living projects in Kansas City have been approved for incentives since 2021, including a $200 million apartment/hotel at 14th and Wyandotte streets.

Is it fair of me to blame the SLDC for an act  by private citizens or companies seeking subsidies? Perhaps not, but when politicians and bureaucrats choose who gets subsidies, don’t be surprised when unpleasant actors start circling. After all, political donations and tax subsidies have a strong connection:

For instance, around the country, politicians who make these deals are more likely to receive campaign donations, and they’re more likely to be re-elected. On the flip side, companies that make political donations to relevant officials are four times more likely to enjoy subsidy deals than those that don’t, and their deals are more than 60% bigger, to boot.

Again, it’s shocking, I know . . .

Maryland Heights Uses General Taxes to Make up for Failures

It isn’t just large cities that abuse economic development policy. Suburbs do it all the time, and they don’t always do it with misplaced tax subsidies. Sometimes, cities make the mistakes all on their own.

Several years ago, Maryland Heights decided to get into the ice arena business. Not a normal ice rink for its residents, mind you; that would have been understandable. City leaders apparently wanted to act like private developers and build a massive hockey and skating complex to make money for the city. This is, usually, a big mistake for cities.

It definitely was a big mistake for Maryland Heights. The city has announced that it has again been forced to tap into general tax revenues to fund the bond payments after its predicted ice complex revenues have continued to fall short. Part of the reason revenues fell short is that both Maryland Heights and the ice complex failed to collect a sales tax for several years that was implemented to pay for the bonds. I don’t know if that is funny, sad, or both.

Cities do not have to engage in economic development schemes to succeed. Unilateral disarmament is the best option all around. Until that happens, expect stories like these to be a regular occurrence.

The post It Has Been a Great Week for Economic Development Agencies in Missouri appeared first on Show-Me Institute.

I am confident that the media will get that information, and I am as interested as anyone to learn more. But let’s be honest here–what we already know about the program makes it clear that this “grant” program smells like a racket. Let’s look at what this program is giving away as part of this $32 million “grant” program.

A former state representative is getting $1.5 million to expand her consulting company to create more affordable housing and grow the economy by two—that’s right, two—new jobs.

A former mayor is getting two grants for a total of $125,000 to expand and improve the bar he owns in the city.

Sweetie Pie’s restaurant is getting $1.5 million to expand operations, despite some recent problems with management and operations at the restaurant.

Non-profits are included too, and perhaps that is more understandable, but one non-profit that was only created after the program was announced last year is in line for over $700,000. Surprisingly, the director of that non-profit is connected to a politically influential family. I know, you’re shocked . . .

The list goes on. When the program was announced, officials claimed it was a way to invest in North St. Louis. But it isn’t investing in infrastructure or things that can benefit the public. The program simply seems to be a way to give away tax dollars to North Side businesses. That’s it. There is no way this should be legal.

You don’t have to take my word for it. Consider the comments of one business owner who, admittedly, did not receive funding:

“The whole process has just been problematic from day one,” said Tameka Stigers, who applied unsuccessfully for a grant to expand her hair salon, Locs of Glory, on Delmar Boulevard and has been rallying other disgruntled business owners to lobby SLDC for reconsideration. “It’s a genuine money grab from the city to give the money to their friends.” [emphasis added]

I couldn’t have said it better myself. We will have more to come on this issue, I assure you.

The post The North Side “Grant” Program is a Racket appeared first on Show-Me Institute.

Everyone wants to help kids thrive, right? Who could be against a new tax in Platte County to help kids get more mental health services? Well, we are. Politicizing charity and mandating it through law is a dangerous path to take. Platte County citizens would be well served to think twice before going down this road.

There is an ongoing petition drive in Platte County to create the Platte County Children’s Services Fund. If approved by voters, the plan would institute a new sales tax to fund mental health services for children in Platte County. It would create a new board in charge of overseeing the collection and distribution of the funds as grants to eligible children’s charities.

Charity should not be politized, yet that is exactly what this proposal will do in Platte County. Several years ago, the children’s service fund in St. Louis County became a flashpoint in the county executive’s race. The fund was slow to distribute money and had grown to a balance of $78 million. That large balance became a point of contention in the campaign, made worse when questionable activities with the funds led to the firing of the children’s service fund director and an FBI investigation. Even without that level of controversy, charities will still be forced to play politics. Board members of various Platte County charities that might receive funds will have to start taking that into consideration when they decide whom to support in various county political races. One can’t risk backing the wrong horse and putting the charity’s funding in jeopardy. It’s machine politics at its most insidious.

Any future Platte County Children’s Service Fund would be a special taxing district, and the last thing Platte County needs is another obscure taxing entity with little accountability and even less oversight. The children’s service fund in Lafayette County, on the eastern edge of the Kansas City region, provides a useful case study for those problems. The fund had operated for years with almost no oversight. Those operating it routinely engaged in improper activities, including funding charities that were affiliated with board members, funding charitable activities that were not eligible for funds in the first place, and funding a private business that wasn’t a nonprofit. After a whistleblower brought this to light, the state auditor investigated and referred the fund to authorities for possible Medicaid fraud. If you think the future Platte County children’s fund will be immune from these incidents, you should disabuse yourself of that notion.

If Platte County voters pass the new tax and create a children’s service fund, will some kids benefit? Of course some will. But citizens need to consider all the possible effects of this endeavor. Creating a new taxing agency with no oversight, entangling philanthropy with politics, and making charities dependent on government largesse is not a recipe for making life better in Platte County. Let’s allow these charities do what they were intended to do—help kids—without the heavy hand of government involvement.

The post Think Twice before Supporting a New Tax appeared first on Show-Me Institute.

I don’t mean Comprehensive Annual Financial Reports (CAFRs), or the Distinguished Budget Award that seemingly every city under the sun gets.

I mean an audit. The type of audit that gives people nightmares and, presumably, makes them more careful in their accounting and reporting out of fear.

In recent years, we have seen plenty of examples of failed accounting procedures in local government. There have been outright thefts, failures to competitively bid contracts, plenty of conflicts of interest and cronyism, and much more. I don’t think that politicians and bureaucrats in Missouri are less honest than in other states, but I do think that the huge number of small municipalities and other special taxing districts in our state gives them more opportunities for varying degrees of corruption.

We have seen local auditors who totally failed to do their jobs. Seriously, check out these links to the St. Louis County auditor’s page and be amazed at how few audits the office has actually performed over the past decade.

There is a bill in Jefferson City that expands the ability of the state auditor to preemptively begin audits of local governments when there is evidence of problems. Currently, the auditor needs to be invited by local officials or receive a petition from citizens. The former isn’t always done by local officials—for obvious reasons—and the latter can be time consuming and difficult.

This proposal, which is now on the governor’s desk, is an excellent one. It would benefit the taxpayers of our state.

Would it make local officials and bureaucrats nervous? I certainly hope so.

The post The Type of Audit We Can All Agree On appeared first on Show-Me Institute.

While I recognize the appropriate use of aldermanic courtesy in some instances, I am the last person to defend its widespread practice. Laws should be applied evenly to the greatest extent possible, and too often aldermanic courtesy just enhances the whims and personal power of the practitioners. Whether your new restaurant is allowed to serve liquor should not depend on whether the alderman likes you or not.

Recent unfortunate events in the City of St. Louis have brought the practice justifiably into question, but like a desperate gambler whose every bet is wrong, the board of alderman can’t even get ethical reform right. The board just decided to bypass the usual practice of aldermanic courtesy in the 17th Ward FOR ALL THE WRONG REASONS. The local alderwoman had been more hesitant to support tax subsidies in her ward, and she deserves praise for that (and some related criticism). So the developers who want their giveaways just found another member of the board to introduce their subsidy bill, and it is expected to pass.

The most absurd statement in the story is this one:

In any case, [Alderman Marlene] Davis said aldermen should be willing to listen to the “experts at SLDC,” who professionally vet development projects.

The idea that “experts” at the St. Louis Development Corporation actually “vet” these development subsidy requests is beyond absurd. The ease and frequency in which developers receive these subsidies, combined with the continued decline of much of the City of St. Louis, are Exhibits A through Z for why all these types of subsidies don’t work.

These tax subsidies are there for the taking. A few aldermen, such as Ms. Pihl, occasionally try to push back somewhat. So what happens then? You just find another member of the board to go around the member who won’t rubber stamp your handout. If this is how we are going to reform aldermanic courtesy in the City of St. Louis, then bring back the crooked assessor.

The post Aldermanic Discourtesy appeared first on Show-Me Institute.

When elected officials intentionally ignore the law, we often react with a mixture of anger and helplessness. Abetted by their government lawyers, whose jobs exist at the pleasure of their only client, elected officials invent arguments to justify going around the plain meaning of ordinary words. It’s enough to make the most moderate of political hearts jump online and order home-delivery of pitchforks in bulk.

We have seen too many examples of this recently in St. Louis. For example, the statutory definition of the earnings tax for the City of St. Louis states that it can be collected “. . . for work done or services performed or rendered in the city.” [emphasis added throughout] Yet city Collector of Revenue Gregory F. X. Daly has interpreted those words during the pandemic to include people working remotely from their homes outside of the city for businesses within the city. Such a determination is preposterous.

You don’t like it? You have the audacity to think people should enforce the laws as written? Tough luck. Sue him. War is Peace.

The legislature has failed in an effort to further tighten the law to clarify that it does not include remote workers. That is unfortunate, as it will embolden Daly and others to engage in more of this, and it should not have been necessary in the first place.

St. Louis County Executive Dr. Sam Page is getting a Ph.D. in this line of governing. He took the position knowing the county charter states that “the county executive’s entire time shall be devoted to the duties of the office.” In the vernacular of 1950, when it was written, that passage clearly meant that the county executive could not have a second job, but Page kept practicing medicine part-time anyway. As admirable a profession as medicine is, the charter did not include an exception for admirable work.

Going from the sublime to the absurd, Dr. Page later attempted to appoint former County Executive Charlie Dooley to the St. Louis Regional Convention and Sports Complex Authority. The governing statutes for that board state that nominees “may be appointed by the chief executive of the county with the advice and consent of the county council.” Dooley’s appointment was rejected by the council. (I think he should have been appointed, but that’s another issue.) Page appointed Dooley to the board anyway, with Page’s county counselor justifying it all with legal gymnastics that would have made Simone Biles beam.

You don’t like it? You think the county executive should follow the charter and laws? Tough luck. Sue him (which the council did, in a legislative fashion). Ignorance is Strength.

The county council and county voters have addressed these issues with charter changes, both past and upcoming. But it should not have to come to that.

During his brief time as Governor, Eric Greitens attempted to pay some of his cabinet members more than allowed by state law by quietly funneling the additional salaries through other departments. This was blatantly illegal, but the Greitens administration did it anyway until the legislature caught on and put a stop to it. Until then, it was two plus two equals five.

You think the Governor should follow the law and pay his people within the legal range? Tough luck. Impeach him (which the legislature did, albeit for other, more salacious actions).

President Trump routinely ignored the law to do whatever he wished. Spending money on his ballyhooed border wall without congressional approval and imposing a 25 percent steel tariff without any legal authority are just two examples out of many.

You don’t like it? Tough luck. Impeach him (which they also did, twice). Freedom is slavery.

It’s bad enough when the government lies. It’s worse when elected officials demonstrate how little they think of our democracy and the rule of law by flouting the very laws they are supposed to enforce or enact. The regrettable actions described here are part of a process that is degrading trust in our institutions and our democratic process. As a philosophical libertarian, I appreciate a healthy skepticism of government. Seeing government for what it is instead of taking its benevolent facade at face value is fine by me. But we should all be concerned about the breakdown of the basic regard for the law as it is written. If you don’t like the law, don’t ignore it. Change it by engaging in the hard work of democracy.

But while we are doing that, is it too much to ask that we all agree two plus two equals four?

The post “Stop,” or I’ll Yell “Stop” Again appeared first on Show-Me Institute.

In 1977, the Chicago Sun Times newspaper bought a bar. They didn’t just buy it to serve people drinks. They bought it—under a fake name—for the purpose of loading it up with video and audio recording equipment to expose the rampant political corruption in Chicago. For months, as the bar went through the standard process of getting permits, licenses, and so on, the operators recorded the unending stream of bribe requests, kickback demands, and more that were (and arguably still are) commonplace in Chicago.

Even though news of corruption in Chicago was hardly earth-shattering, the series of stories released in 1978 caused a sensation. Rarely had the political cancer been so clearly documented via media, and the constant brazenness of the corruption startled the people of Chicago, who until then may have thought they’d seen everything.

Which leads us to last week’s news about the federal indictments of three St. Louis City aldermen on corruption charges. I may work at a think tank, but I know a little about bribery attempts. Back in 2001, I got a first-hand look at an attempted bribe for then-County Councilman John Campisi. He had just finished a meeting with a taxicab operator who, as he departed, left a brown paper bag on the Councilman’s desk. Suspicious, Campisi asked me (at the time a council aide) to come to his office so that we would both be present when someone (me) opened the bag. Sure enough, the bag had a bribe in it. The next year, that taxicab operator, another councilman who had arranged the meeting, and a few other county employees involved in the racket were convicted of bribery. That was the biggest scandal Clayton had seen until Steve Stenger decided to turn the 9th floor of the county building into a live-action RICO performance.

A part of me is delighted with the bribery charges. I have spent years decrying (including in the pages of this newspaper) the abuse of precisely the two things that appear to be at the heart of the corruption charges: tax abatements and the city land bank. Rest assured, I am going to update my talking points on these two issues, and trust me when I say that audiences pay a lot more attention when the lead is “politicians take bribes” than when the lead is “studies show . . .”

But on a more serious note, a much larger part of me is angry and depressed over the allegations. While everyone is innocent until proven guilty, the main question I ask is not about the guilt or innocence of these three politicians, but whether we have a system that enables corruption in St. Louis and the rest of our state (paging Tom Pendergast, please). I have to think the answer is a very dispiriting “yes, we do.” The ease with which tax subsidies, abatements, and so on can be handed out has long made them susceptible to this risk.

The tax subsidy rot is not limited to the minnows. Never forget that, for all Governor Eric Greitens’s flaws and self-inflicted wounds, the tax-credit industry apparently mobilized a political hit squad for him after he had the audacity to kill their golden goose in the low-income housing tax credit program. And while large-scale developers around the state may be smart enough to ensure their payments to elected officials are done as perfectly legal political donations instead of unreported cash-in-a-bag, one strongly suspects that the abuse of tax-increment financing (TIF), special taxing districts, and other forms of corporate welfare is greased by the legal version of just what got the three aldermen indicted. I have no doubt that some of the people at St. Louis’s country club bars who are most appalled by bribery charges in the city are standing next in line to get their own special tax credits or floodplain TIF deals.

The stench of corruption, both now and in the past, carries with it very real harms for our region. So back to Chicago: Studies have shown (see, I can’t avoid that phrase) that corruption costs Illinois $550 million a year. That represents the cost of not only the direct bribery, but, much more so, the decreased economic growth and lost investment that result from the fear of corruption. Ask yourself: would you think twice about investing in Mexico now? Of course you would. The endemic violence and corruption would make any rational person think twice. The same thing is true for cities and states known for corruption in our own country. Under Steve Stenger, some bidders undoubtedly thought twice about bidding on St. Louis County projects, knowing as they did that a winning bid was not going to be finalized until the county executive received a large campaign donation. Accounts of corruption in the City of St. Louis give residents and investors one more reason to keep themselves and their money out of the city. That’s the last thing the city needs right now, but that’s what it has.

As is often said, when the business of buying and selling is controlled by the legislature, the first thing to be bought and sold will be the legislators. Good government types (of which I am one), must do more than simply call for “electing better people.” We need to remove the incentives and opportunities for corruption. In the latest instance in the city, we should respond by completely eliminating the ability of politicians to dole out tax subsidies, credits, and abatements. Gambling addicts shouldn’t hang out in casinos and hope they aren’t tempted. The problem of corruption in our community will continue until we reduce the involvement in government in our daily lives and shrink the number of things that can corrupt politicians in the first place.

The post Corruption Allegations: Disappointing but Hardly Surprising appeared first on Show-Me Institute.

I find this very troubling.

Let’s backtrack a bit. Alderwoman Pihl, and Mayor Jones, have been very explicit about their desire to create more affordable housing in St. Louis. (St. Louis doesn’t actually have an affordable housing problem, and even if it did, government low-income housing programs would not be the way to remedy it; but that is a post for another day.)

In pursuit of that objective, Alderwoman Pihl appears to have a habit of “requesting” donations to affordable housing from developers who have projects in her ward. According to the Post-Dispatch story, Pihl also “requested,” and received, $1.8 million from the Steve Smith City Foundry in return for her support for its development project adjacent to the Aptitude site.

Now, I have made no secret of my distaste for the tax subsidies that municipalities routinely grant to developers that supposedly incentivize them to build certain projects. And I suppose if St. Louis is going to continue that practice, it makes sense to get as much as possible from the developers in return.

Yet, if the Post-Dispatch article is to be believed, Aptitude isn’t requesting any tax subsidies, which suggests that the alderwoman is using her control over development in her ward to exact funds from a private developer—not to pay for public expenses directly associated with the Aptitude project, but as a cost of doing business in the city.

In my opinion, that’s wrong. If the Aptitude project is consistent with previous rezoning requests and similar changes within that area of the city, it ought to be approved without requiring any supposedly voluntary contribution. Most importantly, the project will add housing options to the city, which will lead to an increase in affordable housing, even though the housing being built in this project is on the more expensive side.

I’m not suggesting that the alderwoman is making these requests to feather her own financial nest. I think she’s trying to accomplish a goal consistent with the duties of her office.  But practices like this are characteristic of countries without the rule of law; once they become routine, they lead inevitably to threats and backroom deals and eventually outright corruption.

Here are a few questions for our leaders. Why is it necessary to alternate between bribing private corporations with tax subsidies and extorting “contributions” from them? Why should private development projects, or public goods like affordable housing, turn on the success or failure of deals negotiated by individual lawmakers? Might it instead be possible to improve the city by creating good policies, incorporating them into law, and applying the law consistently for the benefit of the public?

In other words, why not try some good government for a change?

The post Asking Developers to Make “Voluntary Donations” is Troubling appeared first on Show-Me Institute.

The Institute paper, written by myself and Elias Tsapelas, looked at political campaign giving in Kansas City and found that:

The number of donations made to the campaigns of public officials who have decision-making power for TIF awards appears to increase in the election cycle in which developers apply for a TIF and then fall off in the election cycles afterward.

Companies might describe political giving as a sign of good corporate citizenship, and that may be true. But the fact that the contributions drop after a tax-increment financing (TIF) plan is awarded suggests something more akin to a quid pro quo.

A new study by Cailin Slattery at Columbia and Owen Zidar at Princeton/NBER also links economic development incentives to political campaign activity. They find:

The interaction between an incumbent governor and an election year is highly correlated with increases in incentive spending, suggesting a strong role for political determinants of incentive provision. In the raw data, per capita incentive spending increases by more than 20% in half of the cases in which it is an election year and the Governor is up for re-election versus one-fifth of the cases otherwise.

This study also finds, as do many other serious studies of economic development incentives, a “lack of clear spillovers and equity benefits.”

If a particular public policy shows no substantial benefit to taxpayers, and yet seems to rise and fall based on relationships to political contributions and campaigning, it is reasonable to conclude that there are darker motives at play than the public good. Isn’t it about time Missouri and its various municipalities rein in these incentives in the name of good and efficient government?

The post TIF for Tat Two appeared first on Show-Me Institute.

That might not be true.

Kansas City Councilmember Scott Wagner appeared on KCMO Talk Radio with host Pete Mundo (Wagner’s segment starts at 5:14) on February 14 and discussed this very point:

Mundo: So [new terminal contractor] Edgemoor is saying that to basically get this deal going in any type of reasonable time frame we need you, Kansas City, to basically loan us money or loan yourself money to get cash on hand to start this project? Is that the deal?

Wagner: Basically that’s the deal and you’ve got really two things. On the one hand [Edgemoor says,] “we’ve got to repay our loan of 23 million dollars,” because they took out a loan to start doing their work. So they’re saying, “We need you to make us whole by giving us $23 million.”

Mundo: That’s absurd, I mean that’s absurd…

Wagner: Well honestly that’s the deal that the city signed last year, which I didn’t vote for, but eight people on the Council did. And they [Edgemoor] were very clear, they said “We’re going to spend $23 million and we expect to be paid for that.”

Mundo: The city put it to a vote, they said there was going to be no taxpayer dollars used for it. And then they agree to this after the vote, that says, “yes we will pay back $23 million?” That’s-that’s not a good look, Councilman.

Wagner: I can’t disagree with what you just said.

Sadly, this sort of bait-and-switch has become commonplace with the new terminal project. As a result, Kansas City is providing a lesson to the country about how not to deal with transparency. Kansas Citians and indeed everyone in the region deserve much better than this.

The post Lies, Damn Lies, and Airport Politics appeared first on Show-Me Institute.

We’ve built a new entertainment district along with several luxury apartment high-rises, corporate headquarters buildings, and hotels—including an 800-room convention hotel. We’re trying to build a new single-terminal airport, revive the 18th and Vine Jazz District, and expand the streetcar. There is also talk of building along the riverfront, possibly including a new sports stadium!

But along with building structures, we’re also building a reputation—and not a good one.

Perhaps you have also heard about a years-long, nation-leading spike in homicides, an underperforming Kansas City Public School District, and a nonexistent affordable housing policy. Maybe you’ve read about blighted structures on the East Side collapsing under their own weight. You may be aware that the police department has about 10 percent fewer uniformed officers than it did before the homicide rate jumped.

These things are related. Our leaders are falling over themselves to offer generous tax incentives to everyone from Amazon to Burns & McDonnell to Cerner while city services are being starved of tax revenue because those companies are no longer paying. Recently, both the Kansas City Library and Mid-Continent Public Library turned to taxpayers to make up for funds lost to such subsidies. Sometimes service providers like the Community Mental Health Fund are less able to help those in need.

Like a crazed Christmas shopper, we’ve paid for much of this development spree armed with credit and questionable judgment. Kansas City’s leaders were warned about high levels of debt in 2012 in the Citizen’s Commission on Municipal Revenue. But since then our debt per capita has only risen, and last year city leaders sought and were granted 40 more years of debt.

If you’re looking for a metaphor from the season, it might be that we’re hanging a lot of shiny ornaments on a dry, dying Christmas tree.

Proponents argue that without generous subsidies, wealthy corporations could not afford to build their luxurious headquarters buildings. Beyond the question of why taxpayers should support such things, the research from around the country tells quite another story. A 2018 study from The Upjohn Institute for Employment Research concludes in part, “for at least 75 percent of incented firms, the firm would have made a similar location/expansion/retention decision without the incentive.”

Another cost of these burdensome baubles on our community Christmas tree is they make it harder for us to keep the tree itself alive and healthy. Consider the time and attention spent on the new airport terminal or the convention hotel that might have been used addressing housing policy or the homicide rate.

We are diverting money and seeing no real gain. So why do city leaders keep doing it?

One reason might be explained by another Christmas metaphor: gift giving. A Show-Me Institute study of tax-increment financing (TIF) projects in Kansas City from 2002 through 2018 found that developers’ campaign contributions to city council and mayoral candidates increased in the years leading up to their TIF applications and then dropped off in the years after TIF was awarded. This finding suggests a TIF-for-tat arrangement between developers and city leaders, and it could help explain why an economic development policy universally decried as suspect remains popular—and increasingly so—in Kansas City.

The final days of a year are often a time to take stock and reflect. As Kansas City prepares for local elections, we need to focus more on the real issues affecting our municipal tree—crime, infrastructure, education, and debt—and less on the distracting and ultimately unsuccessful policies of economic development subsidies.

The post Kansas City’s Christmas Tree appeared first on Show-Me Institute.

While Kohler’s piece is worth reading, you might want to start with the ethics committee report. The report, which is available through a link at the bottom of this post, lists 14 findings in the executive summary on page 3. In short, the committee found that the County Executive’s personal staff negotiated a lease with Northwest Crossing that failed to properly represent the county and did so against the advice of the career professionals who usually conduct such negotiations. The staff is accused of misleading others about the costs and the process by which the contract was negotiated, and that additional costs for the lease were paid through budgetary sleight-of-hand. The committee also found that the Executive and his staff refused to provide documentation when asked.

The deal appears to have exposed county taxpayers to a lot of additional costs. The Post-Dispatch concludes that the lease “will cost taxpayers at least $69 million and could run as high as $77 million.” Skeptics might write this off as mere bureaucratic bungling, but the ethics committee report suggests darker motives.

Because the committee lacks the resources to further investigate, it recommended the full St. Louis County Council refer the matter to both the U.S. Attorney for the Eastern District of Missouri and the Missouri Attorney General.

Irrespective of whether a crime has been committed, the report makes it clear that the County did not have in place the type of basic policies necessary to ensure transparency, accountability, and integrity. Taxpayers should be asking why not.

The post St. Louis County Council Ethics Committee Issues Stinging Rebuke of County Executive appeared first on Show-Me Institute.

CIDs are special districts that levy extra sales, property, and other taxes to fund various, supposedly public, improvements and services. The law governing CIDs makes it possible for landowners—or a single landowner—to form a district and impose sales taxes often without residential voter approval.

Unsurprisingly, CIDs sometimes direct taxpayer funds toward projects aimed at achieving private, rather than public, goals. In Kansas City, the luxurious InterContinental Hotel charges an extra 1% through a CID to help pay for the renovation of its guestrooms. In Saint Louis, the Cardinals established a CID to help fund construction of the second phase of Ballpark Village, and in Chesterfield the stores of St. Louis Premium Outlets charge extra taxes to cover help cover the cost of their development. What business would turn down an additional 1% profit? 

And the pennies add up. According to reports filed with the State Auditor’s office, CIDs across the state have collected more than $146 million since 2014. As Missouri’s CID law has been on the books since 1998, CIDs’ toll on the public may be in the billions.

And as bad as that sounds, it significantly understates the impact CIDs have on Missouri’s tax burden. Because of poor reporting on CIDs, reports for many years are missing or filed months or even years late (if at all). In fact, the original plans for CIDs are seldom posted publicly online, so their cumulative impact on taxpayers is hard to pin down. The transparency issues are obvious. Funding improvements with a CID can be much like using a company credit card and never submitting your receipts.

The source of the problem with CIDs is a lack of accountability, particularly in districts with no residents. In these districts, developers can impose a tax without allowing consumers any say in the matter. When a CID’s only constituents are the developers it’s benefiting, there is no independent check on revenues and expenditures. Throw in a lack of state oversight and CIDs become a too-good-to-be-true opportunity for politically savvy developers and business owners. It’s no wonder the number of CIDs across the state has exploded from one in 2000 to 275 in 2016. During this period, 99 CIDs were established in Saint Louis City and County alone, most of which are still operating.

So what can we do? Apart from eliminating CIDs altogether, the first step is to tighten CID reporting standards so data on revenue and spending are easily accessible to the public. The State Auditor or Department of Revenue could compile and publish the information annually. The second is to prohibit landowners from imposing sales taxes on an unsuspecting public. The current law authorizes private interests to tax the public with little or no accountability.   

Common-sense reforms like these could help stop the needless abuse of taxpayers that Missouri law currently authorizes. 

The post Why Haven’t We Fixed This Law Yet? appeared first on Show-Me Institute.

Could the airport just be a legacy project? Two years ago, then–Aviation Department Director Mark VanLoh made it seem that way when he told the Northland Regional Chamber of Commerce, “You don’t have [all the information] yet. We don’t even have it yet. I know what I want because I want a new airport.” He just wanted it.

VanLoh is gone, but the strange enthusiasm for a single terminal continues. The new plan is just as over-the-top as the old one. The justifications for the spending come and go—claims of EPA mandates, TSA concerns, and airlines’ refusal to expand services—but the project itself remains the same: a $1.2-billion single terminal that is actually a downsizing of what we have now.

What is new in this round of the discussion is the financing and no-bid contracting. But regardless of who finances and builds the airport, the risk to Kansas City comes from the possibility of increased fees to airlines and passengers. Right now, Kansas City’s airport is very cheap for airlines, and travelers benefit with lots of flights from here. Increase the costs to airlines, and we risk losing that competitive advantage. Other airports have suffered after building new terminals for just that reason (Consider Cincinnati, Sacramento, or San Jose.).

The good news is that the city is no longer claiming that the airlines agreed to finance the project. This was never the case, despite incorrect claims from the Kansas City Star and the Kansas City Business Journal. In truth, the airlines merely agreed to pay higher rent for a new terminal while reserving their right to renegotiate once the terminal is built. They did not issue or back any debt; they accepted no risk.

Proponents of a new terminal are fond of telling us that the new terminal idea is not a Taj Mahal. In fact, they’ve been using that curious term over and over again for years (see the Google search here). The Taj Mahal, of course, is a 400-year-old elaborate mausoleum in India built to house an emperor’s wife. Such determination to settle for nothing less than a new terminal, however, combined with the candor of Mark VanLoh and the out-of-hand dismissal of cheaper alternatives, suggests that this is exactly what the new terminal is: a modern monument to political ego—not what is best for Kansas City.

The post Kansas City’s Airport: A Monument to Political Ego appeared first on Show-Me Institute.

Consider what that focus, mostly from the Governor’s and Mayor’s offices, accomplished. The plan to spend some $400 million on another stadium in downtown Saint Louis faced significant opposition. Most state legislators were not in favor of state support for the plan. Both the city and county had ordinances requiring votes before public money could be used on a stadium, and the public’s support was anything but guaranteed. The Saint Louis City Board of Aldermen was divided.

But that didn’t stop the committed leadership. The governor and the RSA moved to unilaterally extend state support, cutting out the antagonistic legislature. The RSA sued the city and succeeded in getting the ordinance requiring a public vote struck down. When the county executive said they’d have a vote with or without an ordinance, the Governor’s stadium task force dropped Saint Louis County out of the funding scheme. After lengthy negotiations, the Saint Louis City Board of Aldermen signed off on the stadium financing plan.

The only obstacle stadium backers did not overcome was the resolve of Rams’ ownership to move the team, which was ultimately decisive. If Saint Louis’s regional leadership had had their way, taxpayers would be handing hundreds of millions of dollars to Stan Kroenke. The only thing that saved Saint Louis residents from making a terrible investment of public dollars were the votes of thirty NFL team owners.

The “accomplishments” of the stadium task force expose what’s broken in Saint Louis regional governance. Common-sense reforms, like simplifying the city’s business code, languish in the Board of Aldermen. The sewer system is so out of date that city streets have a habit of collapsing. Fire and police departments are so broke they are using duct tape to fix equipment. No one has answers for a continuing lack of safety throughout the metropolitan area. With these problems, there is little will to push through change, and there is never enough money.

But when the NFL might leave town, suddenly regional leaders found $400 million between the seat cushions for yet another big-bang development project. And the political will was there too, no matter how the public felt about it—and regardless of the sad history of similar projects in the city, and all the economic evidence saying it was a bad idea. That’s how the region’s policymaking process played out, with misplaced priorities and half-hearted respect for the democratic process. With that kind of leadership, is it any wonder Saint Louis has a lagging economy?

The post Rams Move Exposes Broken Policymaking Process in Saint Louis appeared first on Show-Me Institute.

In a special and "disastrously run" Tuesday meeting, the TIF Commission voted 6 to 2 to move ahead with a deal that would have taxpayers subsidize a project by a wealthy developer so she could charge high rents to a successful architectural firm in a tony part of town. It would have been a 6 to 5 vote, but three commissioners representing Jackson County and the Kansas City Library walked out in protest. (Actually, it could have been 6 to 5 against, but Mayor James replaced one of the commissioners who didn't toe the line.)

Speaking of the decision to revisit a previous vote, the representative for the school district said, 

It is very apparent that this rush to bypass the prior decision of this commission, with no regard for the reasons for the delay, is an effort to stop parents of KCPS students, community groups and the voting public from putting this use of taxpayer dollars on the ballot in April. There seems to be a level of politics at play here that is disheartening.

TIF policy, as frequent readers of this blog know, was designed as a way for municipalities to encourage development in economically declining or blighted areas. In Kansas City, however, "the TIF process is dominated by developers and their attorneys, who dominate campaign contributions to elected officials."  In that respect it is another form of reverse Robin Hood, taking from the working class and poor to give to the wealthy.

How long will it last? One can hardly know. The newspaper of record has its own tax break, so one wonders if it can be counted on to report fully on the matter. Petition efforts have been undertaken to require public votes not only on this TIF deal, but also on the convention hotel TIF. City Hall is fighting those efforts, too. (Cindy Circo, the head of the TIF commission, didn't even bother to hear public testimony before the vote.)

If City Hall is working so deliberately to thwart public input and reward their cronies, who will speak up for the people?

The post Kansas City’s War on Voters appeared first on Show-Me Institute.

City officials should pull the plug on a little-known perk that allows [Kansas City Council member Quinton] Lucas and 28 other people to park for free in the public garages at Terminals B and C. The passes are awarded by the Aviation Department’s parking division.

In advance of their editorial, The Star requested the parking pass records from the Aviation Department on September 4. On September 8 the Department responded with the list on which the editorial board based their September 11 column.

The Show-Me Institute was also looking into this data, but we also requested a copy of all passes issued since January 2011. The second list we received included additional names the Aviation Department did not share with The Star. They included passes issued to:

·         John McGurk, former chief of staff to Mayor James,

·         Buffy Smith, current staffer to Congressman Sam Graves

·         John Diehl, former Missouri House speaker,

·         Paul LaVota, former Missouri senator, and 

·         Tom Dempsey, former Missouri senator.·          

All of these passes were voided at 9:05 a.m. on September 8, right before the Aviation Department provided The Star with a list of active passes.

(Links to both lists provided by the Aviation Department can be found at the bottom of this post.)

It's unknown why the Aviation Department did not fully comply with The Star's straightforward request. What they withheld hardly amounts to much: a few recently-resigned state officials and some staffers. But it appears that their first instinct was to obfuscate; they didn't share the whole picture when asked. If the Department wants to be a credible source of information about the need for a new terminal, or much of anything else, they must be more transparent about their operations.

The post Aviation Department Withholds Information from the Star appeared first on Show-Me Institute.