I’ve argued for years that Kansas City’s lavish subsidies distort the market while failing to deliver on economic promises. New reporting from the Kansas City Business Journal suggests the process itself may be just as broken.

Reporter Thomas Friestad reconstructed negotiations among Kansas City Public Schools (KCPS), PortKC, and Gillon Property Group over incentives tied to Country Club Plaza. The emails, obtained through an open-records request, depict a rushed and opaque decision-making process worthy of public distrust.

The original proposal reportedly included roughly $309 million in incentives over 30 years. KCPS officials objected not only to the size of the package, but also to shifting valuation methods that obscured the true public cost. The district also sought protection for voter-approved bond revenues and more time to evaluate major revisions before approval by PortKC.

That timeline is the real story.

The emails show negotiations continuing until the night before a scheduled PortKC meeting. KCPS officials argued they were being asked to evaluate a substantially revised proposal in just two business days. One consultant for the district described the timeline as “concerning even with the highest level of independent analysis.”

This is a recurring problem in Kansas City’s incentive culture. Complex tax arrangements are negotiated behind closed doors and then presented to affected taxing jurisdictions with little time for meaningful scrutiny. The result is confusion over the true public cost and distrust among taxpayers expected to finance these deals.

Kansas City has seen this pattern before. Similar concerns surrounded the Power & Light District and continue to emerge in discussions over a proposed downtown ballpark. Political machinations routinely take precedence over transparency and accountability.

Notably, KCPS did not oppose subsidies outright. District officials simply asked for clear terms, accurate projections, and adequate time to evaluate a deal that could affect school finances for decades. The fact that negotiators appeared unwilling to provide sufficient time to evaluate the deal speaks volumes.

Kansas Citians have grown understandably skeptical of these taxpayer-funded deals. Too many projects promised economic transformation and delivered little beyond long-term public cost. The Country Club Plaza negotiations are, at best, an example of rushed incompetence. At worst, they suggest an effort to push a massive subsidy package through before taxpayers and public schools could fully evaluate it.

The post Country Club Plaza Subsidy Deal Reveals What’s Broken in Kansas City appeared first on Show-Me Institute.

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

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

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

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

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

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

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

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

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

Until 2025, fire protection districts in parts of Missouri—mostly rural areas—were allowed to impose a sales tax of up to one half of one percent within their district. In the 2025 legislative session, a bill was passed to give all fire districts the ability to impose a sales tax, and also increased the maximum tax to one percent. Have any Missouri fire districts (and the smaller ambulance districts) taken the opportunity to ask voters to approve this new or higher sales tax?

Of course they have. It seems like almost all of them, especially in the five urban counties where fire and ambulance district sales taxes were previously prohibited.

Property taxes were how fire districts were entirely funded in those five urban counties. The rest of the districts also primarily relied on property taxes where the sales tax was limited to one half of one percent. That is apparently going to change. It shouldn’t. Fire protection literally protects your property, and should be paid for as such, through property taxes.

But of course, fire districts (and municipal fire departments) don’t actually fight many fires anymore. They answer medical calls and respond to car accidents, which are not so closely tied to one’s property. Here is a chart from Marginal Revolution.

If a higher sales taxes pass, the fire districts are required to reduce their property taxes by an amount equal to half of the new sales tax collections. That’s nice, I guess, but it still means a substantial increase in funds for the fire districts. Fire districts will have to justify all the new spending, which they will mostly do by continuing to send the full fire truck out for a huge number of calls that don’t require a fully staffed fire truck. While this chart and the prior one end in 2010, the changes they noted since 1985 have not reversed in the past 15 years. The number of annual fires has leveled off, simply because it gets harder to reduce something once it has declined dramatically (which is wonderful). The number of career firefighters has continued to increase, reaching 364,000 by 2020.

Fire districts, particularly the larger ones in suburban areas, are often controlled by fireman’s unions. They get their allies elected in low-turnout April elections. Yes, the fire district officials care about public safety. Nobody disputes that. But they are often intensely focused on increasing pay and pension benefits for their members. Unlike city officials who have to fund a municipal fire department along with many other city departments under an umbrella of citywide tax revenues, fire district officials only care about their fire district. They don’t have to put funding into a bigger picture. They just want to maximize funds for the district.

Everyone wants quality fire protection, and firemen certainly deserve good pay and quality benefits. But taxpayers can’t afford to maintain the very generous benefits as is, and expanding the tax base for fire districts by allowing more and higher sales taxes is likely going to end up increasing those salary and benefits substantially. Will it lead to better public safety for the people of Missouri? Maybe. Will it lead to much higher local spending? Definitely.

The post Fire District Sales Taxes appeared first on Show-Me Institute.

St. Louis County Executive Sam Page has announced that the county is raising park and recreation fees as part of an effort to address budget shortfalls in county government. This is after the county announced a reduction in recreation facility hours a while back (among other cuts) in response to the same budget issues.

The increase in fees is a good move by St. Louis County government. According to the article:

Page . . . [said] the changes stem from a comprehensive review of the actual cost of providing services and reflect “operational realities, market standards, and equity considerations.”

The most important part there is “operational realities.” (I’ll let you guess which one I think is the least important.) I covered this topic in my most recent paper in the free-market municipality series. The operating costs of recreational facilities should be funded to the largest extent possible by user fees. (Capital costs are generally funded through bonds paid back by taxes.) It may not be possible to get 100% of funding with user fees, but fees should consistently be updated to ensure that they cover as much of costs as they can.

One increase that the county announced is that ice rink rentals are increasing to $300 per hour. Building, managing, and maintaining an ice rink is very expensive, and it is not something that most of the general public often uses. The hockey teams that rent it out should pay the cost of the service, not the general public. The same reasoning applies to regular ice skaters during open ice time. The fee for a ticket and skate rental should cover the costs.

Parks are different. Nobody wants to pay a fee to take a walk in a park. That is why general taxes are the best way to pay for community parks. (Many national parks and some state parks are more “destination” type facilities where user fees should be and are a part of the funding.)

St. Louis County is doing the right thing here. I hope other cities and counties also stay on top of the fee structures to make sure their recreational facilities are capturing the right amount of money in user fees.

The post St. Louis County to Raise Park Fees—That’s Good appeared first on Show-Me Institute.

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

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

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

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

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

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

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The Reason study finds that U.S. state and local governments held approximately $6.1 trillion in debt at the end of FY 2023. That figure breaks down roughly as $2.66 trillion at the state level, $1.4 trillion among municipalities, $1.27 trillion in school districts, and $757 billion in counties.

For state governments alone, Reason reports $2.7 trillion in debt as of end of 2023, which is about $8,000 per person nationally. The methodology includes near‑term liabilities (like unpaid bills and payroll) plus long‑term obligations (bonds, pensions, and retiree health).

Missouri ranked 25th in combined state and local debt at $53.34 billion. Broken down per capita, Missouri ranked 43rd at $8,829.

Truth in Accounting’s evaluation looked only at the state budget and divided the amount by taxpayer—while Reason considered state and local debts and divided by population. TIA concluded Missouri had a Taxpayer Surplus™ of approximately $200 per taxpayer. Lastly, Reason relied on 2023 data while TIA used 2024 numbers.

The TIA result is reassuring at first glance—but that’s because it looks only at the state obligations. Reason’s analysis reminds us that local governments carry significant obligations beyond what the state government balance sheet shows.

Missouri’s fiscal position is better than many states—but neither the TIA nor Reason analyses justify complacency. Policymakers at every level of government in Missouri should focus on liabilities, funding discipline, and structural reform. This includes being mindful of the long-term commitments we have made to fund government employee pensions and healthcare plans.

A lot of attention is focused on cutting taxes, and that is worthwhile. But fiscal restraint is not merely about cutting taxes—we must rein in our spending too, and that includes long-term commitments.

The post New National Debt Analysis Offers Fresh Lens for Missouri’s Fiscal Picture appeared first on Show-Me Institute.

And we will admit, it can make us sound like hand-wringing naysayers, always seeing the glass as half empty. (In our defense, we have each spent two decades trying to successfully launch a combined six children into the world. Saying no is a big part of that. Honestly, we are both fun at parties.)

But isn’t securing population and economic growth a basic function of government?

No, it isn’t. A well-run government should not care about growing either its population or its economy.

According to the ideas of Charles Tiebout, cities (and other local governments) compete with each other for residents based on the services the governments offer and the taxes they impose. Cities that provide quality public services at reasonable tax rates will naturally grow, as more people choose to move into those communities. That increased demand will increase housing prices which, combined with zoning rules, generally prevents the city from growing more than its residents want to. Cities that provide poor services at high taxes will see population decline, for obvious reasons.

The forced need for growth—from a government point of view—only becomes necessary when the books are out of balance. Government leaders often push important financial obligations out into the future—hoping to pay tomorrow for what they purchase today. Those ballooning debts on the horizon make them susceptible to all the journeyman consultants and their economic impact chicanery that only makes the situation worse.

Instead, cities should understand their role is to play host to economic activity, not engage in it themselves. The folks who referee the kids’ soccer games at which I spent many Saturday mornings are not players in the game. Nobody asks them to make calls in a way that helps a particular team or drives up the combined score. Quite the opposite—we are alarmed by the idea that a referee may act on a team preference.

To turn planning and spending over to local elected leaders risks overreach and overspending. Overreach because elected leaders want to be seen as bold visionaries dreaming of “what could be” in order to capture the imagination of voters. Overspending because, well, concern about risk is greatly reduced when the consequences of failure are so widely and thinly spread.

As Heywood Sanders, a professor at the University of Texas at San Antonio, said at the Kansas City Library in 2015:

Don’t do what everybody else is doing. Okay? Period. There is an old saying that goes along those lines, “don’t think if you’re doing exactly the same thing that everyone else is doing except not quite as big or good or well, that it’s going to be any different.”

Private actors understand this. Why would they invest in a new convention center for Jefferson City or Springfield if they are just going to be the latest in a long line of cities to do so?  How does that make sense or play to either city’s strengths? It doesn’t—so they turn to elected leaders, who are swayed by the possibilities and unencumbered by the risk of investing their own money. Who cares if it works tomorrow—it feels good today!

If a city is to grow, the best our elected leaders can do is to make sure all the obstacles are removed and the rules are clear and evenly enforced. Everything else, including growth and winners and losers, needs to be determined by the players on the field.

The post What’s a City to Do? appeared first on Show-Me Institute.

The most interesting tax issue on the Harrisonville ballot is a local gas tax. Local gas taxes are a little-used option for funding roads for municipalities. Harrisonville would be the eighth city in Missouri to enact such a tax for its roads, according to Show-Me Institute research. Not surprisingly, many of these municipalities are located along major highways where people frequently stop for gas. In the same way that Prussia was called “an army with a country,” Foristell and Matthews could be considered truck stops with their own cities.

Local gas taxes require a 60 percent threshold for voter approval. The funds raised by the tax can only be spent on roads within the city. Obviously, getting 60 percent of the vote for any new tax is difficult, and that is likely one reason local gas taxes are so rare. Foristell, for example, needed multiple attempts before voters approved its gas tax.

Funding roads with user taxes like a gas tax is good public policy, and this includes local roads. It is smart policy to connect the cost of driving with the act of driving as much as possible. When you pay for roads with unrelated taxes, such as a property tax, a general transportation sales tax, or a targeted transportation development district (TDD) sales tax (which sounds like a transportation tax but is often just a form of corporate welfare), you subsidize increased driving by lowering the relative cost of driving.

As electric vehicles become more common, adjustments to the gas tax system will have to be made. But in the short term, more cities should consider adopting very low gas taxes in order to fund local roads. This table has more information on the local gas taxes implemented by Missouri cities:

While not every municipality can raise hundreds of thousands of dollars a year, it is worth considering in any municipality with a gas station. Similarly, the state should consider lowering the threshold for voter approval of local gas taxes to the standard 50 percent plus one.

The other two taxes and bonds being considered are much less beneficial. Harrisonville already has a local sales tax rate of 2.375%, and it is asking voters to raise it another 0.25%. However, the ballot wording is very confusing. The ballot says, “Shall the city of Harrisonville, Missouri impose a city sales tax of one and one quarter of a percent?” That would seemingly indicate a tax increase of 1.25%. However, the city website says it is only a 0.25% increase, leading to a total tax of 1.25%. But that conflicts with the other city website (link above), which lists the city sales tax at 2.375%. It may be that the city general sales tax is being increased, but then the city is clearly misleading voters as to the current sales tax rate by saying it is just 1% when it is 2.375%.

This sales tax rate increase is particularly high considering that Harrisonville also levies a moderately high property tax rate. Other cities with extremely high sales taxes tend to have very low property tax rates, such as Ashland. Whether they want the tax increase or not, Harrisonville residents should know they are living in a city with very high total municipal taxes. In particular, Harrisonville should remove some of its 1% TDD sales taxes, which would make its local sales tax almost 5%, if voters approve the tax increase.

Finally, voters are being asked to approve a bond issue for the Harrisonville municipal water and sewer system. This blog post is long enough, but suffice it to say residents of Harrisonville would be better served by privatizing their municipal utilities instead of continuing to go further into debt for them.

The post Harrisonville Goes for a Local Gas Tax appeared first on Show-Me Institute.

The state tax commission (STC) stepped into the below-market mess and required Platte County to increase its assessed valuations to a more accurate level. The county and the STC agreed to an across the board 6.8% increase on residential property in Platte County. This agreement is exciting to me, and yes, I realize it is weird to be excited by something like that. But I have been calling for years for counties to stop individually assessing every property and to do it using an average-based system. As I explained in my recent testimony before a House committee on property taxes:

Missouri should eliminate the practice of sending thousands of assessors out into our neighborhoods every other year to assess residential property. In the current system, each county assessor uses sale prices of comparable homes or other, less accurate, methods to assess every home in the county. The county’s average rate of increase—which is used for tax rate–setting purposes—is determined only after all of the homes are reassessed. I believe the process should be reversed.

. . . This article could serve as a starting point for the Missouri State Tax Commission as it worked with county assessors, local realtors, and online real estate resources to determine average county increases (or decreases) in valuation for each reassessment cycle.

Each residential, commercial, or agricultural property in a county could then be adjusted based on the county’s average for that particular class or subclass of property. The various tax rates could then be adjusted based on that average, and the vast majority of homeowners would be subject to the same resulting increase (or decrease) in their overall property taxes. This would eliminate wide discrepancies from house to house that undermine faith in the current system and sometimes lead to high tax increases for some homeowners even when the overall assessment increases are modest.

The final part is really the key. If everyone sees the same residential increase, then everyone’s tax rates can be rolled back the same amount as dictated by the Hancock Amendment, and everyone will more or less see the same, small property tax increase.

There is one potential flaw in the plan, which Platte County may be experiencing this year. If taxing districts find ways around rolling back their tax rates, then the idea doesn’t work. And from what I have been told by knowledgeable sources, school districts have started to aggressively move funding from their general service funds to their debt service funds. The latter is exempt from rate rollback requirements. I have been told that two school districts in Platte County are going to do this. (I hope that’s wrong.) I know of one school district in Lebanon that was planning to do it but instead “compromised” and moved most of the general fund rollback to the debt service fund but did allow a very small overall decrease in the total fund.

These are just a few specific examples, but I hear about it happening all over Missouri. However much ignoring the tax rate rollback by raising the debt service rate may be happening, it is wrong. School districts (or any government bodies) should not do this, and state government needs to amend the laws to make sure it can’t happen going forward.

The post Platte County Agreement Could Be a Model for Missouri appeared first on Show-Me Institute.

I attended the city council meeting where the relevant bill was introduced. Supporters of the proposal offered two different reasons why this was a good move for the city. First, supporters said the leases for the businesses in the building would pay the costs of the purchases, so the city would come out ahead. According to the Chesterfield city manager, the current leases “would mean the building would create no annual cost for the city.” This reminds me of the famous story of when former St. Louis Mayor Vince Schoemehl told some veteran members of the St. Louis Board of Aldermen that the new convention center downtown would not cost the city anything, and longtime alderman Red Villa responded with, “Well then, why don’t we build two of them?”

The other reason why supporters like the purchase is because Chesterfield could use some of the building for its own future needs, such as a police substation, civic center, or parks department headquarters (all these examples were given at the meeting). But here is the problem: If you use the building for city offices or needs (which may be the more defensible position), then you don’t have the paying tenants who will cover the price of the purchase for the city. Yes, the building’s parking lot would come in handy for some events at the nearby park, but, as opponents noted, that is just a few events each year.

Then there is the belief by the city that they won’t have to pay property taxes on the building, leading to a higher profit margin for the city (stated by a member of the board and elsewhere). That is a very dubious argument. There is plenty of case law that says if a tax-exempt entity owns property but that property is not used for tax-exempt purposes that property taxes are still owed. (Scroll down here for citations.)

If one believes that buying and operating a commercial office building is the proper role of local government, then I wonder what limits there would possibly be on the role of government? If a municipality can do this, what can’t it do? That’s the scary part.

The post Municipalities Should Not Be Commercial Landlords (I’m Looking at You, Chesterfield) appeared first on Show-Me Institute.

On June 10, 2025, Patrick Tuohey, senior fellow at the Show-Me Institute, testified before the Missouri House Economic Development Committee during a special session focused on proposed stadium subsidies for the Kansas City Chiefs and Royals. In his testimony, Tuohey argued that the proposed funding package is based on a false sense of urgency, fueled by non-competitive offers from Kansas and a misleading June 30 deadline. He questioned the economic value of the proposed subsidies, highlighted concerns about taxpayer risk, and warned against allowing professional sports teams to play local governments against each other.

Read his submitted testimony here: https://bit.ly/4kXtdII

See the recording of the full hearing here: https://house.mo.gov/MediaCenter.aspx

The post Testimony of Patrick Tuohey Before the Missouri House Economic Development Committee June 10, 2025 appeared first on Show-Me Institute.

Somebody much smarter than I am is going to have to explain to me how sending this money to a private entity does not violate this section of Missouri’s constitution:

No county, city or other political corporation or subdivision of the state shall be authorized to lend its credit or grant public money or property to any private individual, association or corporation . . .

Stick with me here. This is county tax money being granted to a private business. Unless words no longer have meaning, this move by the council is legally dubious at best.

There has long been a fight about earmarks in the federal government. With earmarks, members of Congress can simply request that funding be added in for projects they wish, outside of the standard merit-based or competitive funds allocation process. This money for farms in north St. Louis County is an earmark, for all intents and purposes. Yes, it went through the legislative process, but it has not been subject to any of the other rules for how local governments spend money, such as competitive bidding.

Turning St. Louis County’s annual budget of more than a billion dollars into a grab bag of pet projects is the last thing we need for local government in Missouri.  I hope the county executive vetoes this bill and I hope his veto is sustained.

The post Earmarks Come to St. Louis County appeared first on Show-Me Institute.

Spoiler alert: It’s taxpayers. Taxpayers foot the bill.

The scale of these data centers is staggering. As Friestad reports, the energy demand from these facilities is equivalent to 100 Walmarts or 40 hospitals​. Their massive electricity needs—driven in part by artificial intelligence—have led Evergy, the regional utility provider, to plan two new natural gas plants and expand renewable energy production by 3,000 megawatts over the next decade​.

While Evergy insists that existing customers won’t subsidize these projects, some experts aren’t convinced. The Missouri Office of Public Counsel warns that the increased demand could drive up energy prices across the region​. Even if Evergy builds enough capacity, ratepayers may still bear the costs of maintaining infrastructure that primarily benefits tech giants.

Kansas City approved up to $8.2 billion in tax incentives for Meta alone, a package more than three times the city’s annual budget​. Google has also secured generous tax benefits, though the full scope is still unclear​.

These incentives were pitched as a way to boost local schools and communities. But as Friestad’s reporting shows, and as regular readers of this blog have come to expect, the expected windfalls have been slow to materialize. The Smithville School District, which was promised rising tax revenues, has instead seen a fraction of what was projected. In 2024, Meta paid just $86,839 in property taxes to the district—far short of the more than $1 million in annual payments initially forecast​. Construction delays and city permitting issues have further postponed expected revenues.

The pieces highlight an important debate: Did Kansas City need to offer such massive subsidies at all? Economic development officials argue that data centers wouldn’t come without them, but others suggest that factors like cheap land, energy access, and infrastructure play a much bigger role​.

A broader trend is at play. At least 36 states now offer incentives for data centers, creating a nationwide bidding war​. Critics like Good Jobs First director Greg LeRoy argue that these subsidies often do little to sway a company’s decision, while shifting tax burdens onto residents​.

And while data centers bring major investments, they don’t create many full-time jobs—typically around 100 per facility, despite requiring billions in public support​.

As they have with entertainment districts, hotels, and sports stadia, Kansas City leaders are making a massive bet on data centers, banking on future economic gains. But as the Kansas City Business Journal’s reporting makes clear, the immediate costs are real, and the benefits remain uncertain. Will the promised revenues materialize? Will taxpayers ultimately bear the burden of subsidizing these projects?

The people of Kansas City should demand answers. If policymakers want to keep handing out billions in incentives, they owe the public clear, transparent explanations of when—and if—the promised returns will actually arrive.

The post Kansas City’s Data Center Boom: Another Costly Gamble appeared first on Show-Me Institute.

When the Emperor was trying to convince Anakin Skywalker to come over to his side in a regional political dispute, he famously told him, “I can feel your anger. It gives you focus. Makes you stronger.” Right now, we could use some of that well-focused anger when deciding on local tax increases in Missouri.

I get it. People hate property taxes. That’s not just conventional political wisdom—there are actually data to back that up. In one poll, 69% of respondents said their local property tax was too high, and 59% said it was unfair. In another poll taken regularly through the years comparing Americans’ views on taxes, the property tax was historically the least-popular tax. However, in the most recent poll (2023), the federal income tax (34%) edged out the local property tax (29%) as the “worst tax.” If you are almost as unpopular as the most hated tax, you are very unpopular. But the property tax does not deserve such contempt.

Other than a small cadre of hard-core political leftists, nobody really “likes” taxes, thankfully. People should be ambivalent about parting with their own money. They should want to get value for their tax dollars and expect that they be spent effectively. Most of all, they should be hesitant to pay higher taxes just because politicians want them to.

Not surprisingly, people like to tax other people more than they like to tax themselves. Because of our Hancock Amendment, residents get to vote on almost all tax increases in Missouri. I have closely followed hundreds of local tax increase campaigns around the state, and every campaign for a new sales tax, new hotel tax, or earnings tax renewal follows the same playbook. “With this tax increase, we can make sure those shoppers/tourists/commuters (pick one)  pay their fair share.” Convincing voters that other people are going to help fund their new service is a great way to get voters to fund what the government wants and not what the people need. Voters are more discerning on property tax increases because they know they are going to pay for it, and that’s a good thing.

Municipalities in Missouri depend less on property tax revenues than cities in any other state. That fact would probably surprise many readers. Cities depend heavily on various sales taxes, and our two largest cities depend primarily on local income taxes that also apply to nonresidents. The local governments that depend entirely on property taxes do so because they have no other choice under state law. Trust me, if they had a choice, every school district in the state would be operating a new casino with its own special sales tax right next to the high school.

All taxes impact economic growth. Poorly constructed tax systems that waste money on ineffective projects or corruption are bad for growth. Well-constructed systems that efficiently fund important public needs are good for growth. The trick is to get more of the latter and less of the former. The property tax goes to the local services that people see and use every day. When those services are well run, the tax is capitalized into higher home values, which everyone wants except at tax time. When those local services are poorly run, it hurts the value of your home, which everyone hates (also except at tax time). While any tax can be harmful if set too high, economic research indicates that local property taxes at reasonable levels harm economic growth less than other taxes, particularly destructive local income taxes.

If a local city or school district isn’t providing the services you want for the taxes you are expected to pay, it isn’t that hard to move to a different community. Families move for better school districts all the time. Older people regularly downsize to smaller homes with the resulting lower taxes and, often, within lower-performing school districts (e.g., The Gatesworth in University City). Variances in services and quality in a property tax system give people options to choose what is best for them and their families at different points in their lives. (The senior citizen property tax freezes expanding around the state remove that pressure in a contrived way that hurts communities just as much as it may help individual seniors.)

None of this is to say that the property tax system in Missouri doesn’t need reform. It’s a two-part system: assessments and taxes, and the assessment part definitely needs improvement. Electing the assessors in Jackson County and the City of St. Louis is a good place to start. Agricultural property taxes are all out of whack. The taxes on farmland are too low, while the taxes on grain, livestock, and farm equipment are absurdly inefficient. Local governments probably spend more money calculating the livestock taxes than they receive by collecting them. Business property taxes need reforms to protect commercial property from the same flaws of sales, hotel, and earnings taxes: voters targeting businesses to fund services that primarily benefit residents.

Why do people have a particular disdain for property taxes? Perhaps it’s because it’s the only tax many people pay all at once, so it seems to hurt more. Perhaps people buy into the silly argument that you never really own property if you pay a tax on it. Whatever it is, the fact that people dislike the property tax means voters are more careful about approving property tax hikes than other types of tax increases. As a result, governments need to make stronger arguments and show results to justify property taxes in the first place. The “focused anger” of voters, to paraphrase the Emperor again, is precisely why cities and counties in Missouri should depend more on property taxes, not less.

Hopefully, though, we will stop short of going fully over to the dark side. I can’t even imagine how high the taxes on a fully operational Death Star would be.

The post Everyone Hates Property Taxes, Which Is Why We Should Depend on Them More appeared first on Show-Me Institute.

That one item is substantial. According to a paper in the December 2024 issue of the National Tax Journal, the total revenue loss to the federal government was $4.3 billion due to the 57 stadia built since 2000 that have benefitted from subsidies.

If that tax break is eliminated, team owners will demand that states make up the difference.

We know that these subsidies fail to generate a return on investment for taxpayers. They don’t drive economic development and their economic impacts are overstated. Maybe they make a metro area feel good about itself—but even then the benefits are too small to justify the costs.

Missouri has a lot on its plate right now with efforts to cut spending and income taxes so that Missouri is a more attractive place to live and work. More and greater handouts to billionaires should not be a priority.

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There are a few key features in this first phase:

• Adults 21–49 will be able to renew their licenses online every other renewal period.
• If you lose your driver’s license, you can go online and get a new one every other time.
• No need for new drivers to bring a physical copy of a Missouri State Highway Patrol driver test to the DMV.
• New computers, scanners, and customer tablets will be added.
• 175 new workstations at 275 license offices will help reduce wait times.
• 10% of administrative fees will continue to fund technology upgrades until a “modernized, integrated system for vehicle titling and registration, liens on vehicles (dealing with loaned vehicles), driver’s licenses, and identification cards” is established.

The second phase, which is slated for July 2026, will focus on reform in the taxing and titling process. After these two phases, only one percent of administrative fees will be remitted to maintain the new system. This funding mechanism has similarities to a user fee, which is a good approach to funding services. However, it is not a true user fee, as it is possible to buy a vehicle without directly benefiting from the new DMV services.

In the first days of the system, there were long delays with an influx of customers and workers getting acquainted with the new system. This is not a great sign, and we should continue to monitor the situation to see if wait times improve.

As of now, the price tag for this new system is $63 million, but the entire system upgrade (both phase 1 and phase 2) as a whole could cost more than $100 million. In Nevada, similar upgrades were slated to cost around $125 million, but may balloon to potentially over $400 million. Hopefully, prices will not skyrocket and the new system will provide an efficient system for Missourians. In the meantime, Missourians should keep an eye on this process to ensure that our government makes wise use of our tax dollars and keeps a tight rein on the project to avoid wasteful spending.

The post Missouri’s (Hopefully Successful) DMV Makeover appeared first on Show-Me Institute.

TDDs are often abused by private developers as a means to expand corporate welfare under the pretext of “infrastructure improvements.” Most TDDs are created simply by the signatures of the property owners (often just one developer) who want to establish them. The TDDs are then governed by a board (affiliated with the property owner) that treats the tax funds as private money rather than public tax dollars. Missouri state auditors have consistently documented problems with TDDs for the past two decades.

Kirkwood city leaders deserve credit for putting this TDD to a vote of the entire city. They also made the right choice by ensuring that city leaders will have primary control of the future funds. Kirkwood residents can be confident that the taxes raised would be properly accounted for and spent on public needs, not private wants.

The main argument against this TDD is that sales taxes are not, generally speaking, the preferred way to fund transportation projects. Kirkwood should consider a local gas tax (which is allowed, yet admittedly rare in Missouri) before it commits to a sales tax for its roads. And, while nobody wants to hear it, property taxes are a better way to fund sidewalks in a community. General sales taxes are a way to push local costs onto visitors instead of having local people pay for the public services in their own neighborhoods.

Kirkwood voters face a tough decision tomorrow, but whatever the result of the vote, residents will benefit because the most harmful aspects of TDDs have been properly addressed by the city.

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