The reality is starkly different, and we shouldn’t be surprised. Historically, the economic benefits of hosting the Olympics have been dubious, and Paris is proving no exception. Despite the €7.5 billion investment, tourism has slumped, with travelers avoiding the city due to expected overcrowding. The author of the Telegraph piece writes:

Judging by the experience of other cities, many of those supposed benefits never materialise and the host is stuck with a series of expensive developments that no one can find a use for. To take just one example, the London Stadium, constructed for the 2012 games, makes a decent ground for West Ham, but it is hard to understand why taxpayer’s cash was needed to build it.

I share this in the hopes that seeing the failed promises of big sporting events overseas will make the argument at home more palatable. These investments just don’t pan out for taxpayers, be they for the Olympic Games, the Royals, Chiefs, or Cardinals. And yes, as my colleague David Stokes wrote 14 years ago, “there is a big difference between hosting an event for which you have to build facilities, like the Olympics, and hosting an event for which you already have the requisite facilities for other purposes.” But the impact, or rather the lack thereof, remains.

Given these challenges, the author suggests a permanent home for the games. Perhaps Greece. Establishing a permanent venue could drastically reduce costs, simplify organization, and minimize corruption.

That may be a viable solution for the Olympics, but for those of us stateside, the lesson needs to be learned. These events, be they Olympics or political conventions, don’t drive meaningful economic activity. They aren’t worth expending public funds on.

The post Sacre Bleu! Sporting Events and Stadia Don’t Drive Economic Development appeared first on Show-Me Institute.

As voters in the City of St. Louis prepare to vote on whether to retain the earnings tax in April, the city is in a tight spot. The city and school district need more revenue, which comes about through more taxes. But because taxes are high and a detriment to growth (especially the one-percent earnings tax), businesses are not locating in the city and the economy is not growing. So, to attract new businesses and convince current ones to stay, the city selectively gives out generous tax incentives. These may attract some businesses and residents, but because of the incentives, they don’t provide the tax revenue that the city was after in the first place.

Are you with us so far? Count us among those who agree that poor public schools and a high crime rate are harming the City of St. Louis more than taxes. But if the economy were growing, City Hall and the board of education would have more money to hire more police officers and teachers. It’s as if St. Louis is in its own Catch-22: a problem or situation where every solution is impeded by other conflicts. Call it our Catch 1%.

St. Louis’s “solution” to the problem of losing businesses and residents over the past couple of decades has been to offer generous tax benefits to every politically influential Milo Minderbinder who asks for them. Last year alone, there were 70 million uncollected tax dollars because of various subsidies. That approach has been a failure. It has led to substantial tax subsidies for developers who do not need them, such as the St. Louis Cardinals and their Ballpark Village development. They succeed while paying significantly reduced taxes. Their subsidies have helped them drive out smaller competitors (e.g., Mike Shannon’s) who paid taxes, but now no longer do because, well, they are closed. The use of tax subsidies actually leads to a reduction in tax revenues. That’s Catch 1%.

The same thing goes for the idea that tax subsidies are intended for blighted sections of the city. Clearly, there are parts of St. Louis that are struggling, and these areas might well benefit from the use of tax subsidies. But for the most part they aren’t getting them. Why not? From an economic development official’s point of view, the incentives are misaligned. If you have tax dollars to invest, why not direct them into a thriving area surrounded by other successful businesses? You’ll look that much smarter when the development succeeds—even if it would have been just as successful without the government handout. The projects that truly need the incentives aren’t the sure things . . . and that’s the whole point of the incentives—to bridge the gap between failure and success for a project in an economically depressed area. But in St. Louis, the less a project needs a tax subsidy, the more likely it is to get one. That’s Catch 1%.

So here we are, giving out tax incentives to people who don’t need them in places that don’t need them and still funding city government with an earnings tax that limits economic growth. Could the City of St. Louis operate without the earnings tax if the residents and voters wanted to do so? Of course. Most large cities in the United States do not have local income taxes. One problem (of several) with the tax subsidies and abatements the city gives away is that they make it impossible to rely less on the earnings tax and more on local property taxes, which is how many comparable cities fund their local services. Nobody says it will be easy to phase out the tax, which brings in an estimated $159 million per year. But if voters decided to end it, during the 10-year phase-out period an overall effort toward ending corporate welfare, raising alternative (and less economically harmful) taxes, budget cuts, continued pension reforms, service sharing with other governments (as in re-entering St. Louis County), and privatization efforts (e.g., the water utility) would allow St. Louis to continue to fund necessary services. It bears repeating that most comparable cities, including Chicago, Memphis, Omaha, Tulsa, and Nashville, fund their local services without local income taxes.

As St. Louis City voters prepare to decide the fate of the one-percent earnings tax in April, they do not have a simple choice. But the way the city has been operating for years is not working. The population is still declining, crime rates are high again, and the schools are failing too many students. If the city continues to go along as it has been for years, managed decline is about all we can hope for. Perhaps it is time to break out of the Catch 1% the city is in and do something radical.

The post Earnings Taxes and St. Louis’s Catch 1%. 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.

Who preys upon the sightless with such cruel impunity? More often than not, it is leading citizens and business organizations, taking advantage of poorly conceived laws with the stated purpose of promoting economic development.

Under Missouri laws established in the 1990s, transportation development districts (TDDs) and community improvement districts (CIDs) operate as micro-governments that direct tax revenues to private interests to use for the supposed benefit of their local communities. A primary benefit of a TDD – from the viewpoint of a single property owner or a group of owners banding together to form a district – is the ability to impose a tax on people with no vote in the matter.

Over the past two decades, more than 200 TDDs and nearly 300 CIDs have sprouted up in big cities, small towns, and suburban enclaves across the state. In 2014 and 2015, TDDs collected more than $175 million in tax revenue, according to the Missouri State Auditor’s Office. “Given that TDDs have been operating this way for nearly 20 years,” Show-Me Institute Policy Analyst Graham Renz has observed, “their collective impact is in the billions.”

Before becoming a city councilman and later mayor of Neosho (pop. 12,000), south of Joplin, Richard Davidson served on the town’s school board from 2004 to 2008. He was shocked when supporters of a TDD sought an $800,000 contribution from the school district to support the building of new roads. “We educate kids,” he told the TDD proponents. “We don’t build roads.” Later he wrote a column for the Neosho Daily News titled, “TDD Spells Trouble for Our Schools.”

The Neosho TDD was set up in 2009 to fund $6.9 million in transportation projects, with a projected $4.5 million coming from a half-cent sales tax from businesses within the district and another $2.4 million from the Missouri Department of Transportation. Like many TDDs, this is a special taxing district with no residents. Within its boundaries, the 550-acre district includes the city’s golf course, wooded areas, and mostly uncropped farmland, along with a small commercial strip with a Wal-Mart, a Lowe’s, and some other shops and restaurants. Through the half-cent sales tax, customers of those businesses have paid in excess of $500,000 a year to support the TDD’s activities.

So far, those efforts have not stimulated any new business development. But who is to say that the millions of dollars spent by the TDD on roads and transportation won’t at some point turn woods and idle farmland into valuable commercial property?

Davidson, who served as mayor of Neosho from 2010 to 2016, regards the TDD as a clear case in which the end (not so much economic development as the enrichment of a small number of private property owners) does not justify the means (taxing unseeing and unsuspecting consumers).

Community improvement districts work in a similar way. Examples include the luxurious Intercontinental Hotel on Country Club Plaza in Kansas City and the Cardinals’ Ballpark Village in downtown Saint Louis. CIDs allow both of these commercial ventures to collect a one-percent sales “tax” from patrons, which is really just an artfully disguised part of the selling price.

It is time to jettison two-decade-old Missouri laws that promote taxation without representation and provide a textbook example of what the 19th-century economist Frederic Bastiat called “legal plunder.”

The post How Missouri’s Special Taxing Districts Promote “Legal Plunder” appeared first on Show-Me Institute.

Almost all of these new taxing districts are community improvement districts (CIDs) or transportation development districts (TDDs). These CIDs and TDDs are quasi-governmental districts formed through questionable processes that allow for even just a single voter to authorize millions in spending. What’s worse is that taxpayers often have no clue these districts exist, or that they’re paying into them. The charts below depict CID and TDD growth over the past 20 and 14 years, respectively. 

Both CIDs and TDDs have bad track records in Missouri. Despite collecting and spending billions in taxpayer dollars, they often lack transparency, accountability, and other basic principles of good government. Of the 34 TDD audits the State Auditor’s office has completed over the past 10 years, a third concluded the TDDs under consideration were in bad financial shape.  And nearly all audits indicated other issues, ranging from conflicts of interest, uncompetitive bidding practices, to a failure to comply with basic accounting standards. Some CIDs have even filed for bankruptcy.

Isn’t it time policymakers in the Show-Me state rein in the growth of these taxing districts? Increasing taxes on ordinary consumers like you and I, often to pay for privately-owned projects we’ll see no return on (e.g., the proposed Chesterfield Ice Complex, City Foundry project, or over-budget Loop Trolley), is not sound economic or fiscal policy. When it comes to taxes and taxing districts, often, less is more. 

The post Missouri’s Troubling Sales Tax Mosaic appeared first on Show-Me Institute.

I am surprised there aren’t more skeptics, especially given how poorly the city’s development department, the St. Louis Development Corporation, assessed the Cardinals’ incentive request (despite later endorsing it). The second phase of the Ballpark Village development scored a 24 out of a possible 40 points on the city’s incentive rating system. In other words, the request for incentives received a 60% grade. Nevertheless, the incentive is moving ahead through the approval process.  

Proponents of the project might respond that the city and school district are forecasted to see increased revenues even after accounting for the incentive package, so the subsidy won’t have negative impacts like TIF and abatements have. But this objection misses the mark in two ways. First, the initial phase of Ballpark Village received TIF, so it has already negatively impacted taxing jurisdictions. Secondly, the revenues for the $16 million will be generated by a kind of special sales tax district known as a community improvement district (CID). That means ordinary folks like you and me—consumers—are going to pay extra taxes so that the city doesn’t take a financial hit . . .  and the Cardinals don’t take a financial hit. But who should public policy be crafted for: the government, wealthy corporations, or the people?

As the incentive proposal moves through the legislative process, the St. Louis Board of Aldermen should weigh the costs and benefits of subsiding yet another pie-in-the-sky, “transformative” development. The research tells us these incentives don’t boost the economy. Why don’t city aldermen pay attention to their own Development Department’s ratings?

The post When Scoring a 60% gets you $16 Million appeared first on Show-Me Institute.

So far, Mayor Slay has mentioned raising the city’s parking fees to fund the expansion. While this suggestion may appeal to transit activists, parking fees won’t be nearly enough to pay for 31 miles of new MetroLink track. The city’s entire parking division collected just over $16 million in revenue last fiscal year. But the City and County dish out more than $120 million a year just to keep MetroLink running. Even if parking division revenues doubled (or tripled, or quadrupled), expanding MetroLink would still be far out of reach.

The math on parking fees is indisputable, and points to the possibility that the city will be counting on the rest of the region to make the MetroLink expansion happen. The city is looking to Saint Louis County taxpayers, and perhaps others around the region and state, to help pay for the expansion. In fact, the expansion likely cannot move forward unless county taxpayers pay more. But much of the north–south route is far from many county residents, and the county already contributes roughly four times [see p. 67] what the city does in terms of transit funding.

What will it take to expand MetroLink? Assuming Metro, Saint Louis’s transit agency, issues 30-year bonds at current interest rates, expanding MetroLink will require roughly $60 million each year (not including increased operating expenses). To come up with that much money, the city would need to increase parking fees, and both the city and the county would need to impose an additional sales tax, likely of 0.5%. Such an increase would put many local sales tax rates far above 10%. While the mayor and rail proponents may not want to mention such large taxes increases, it’s difficult to see how Metrolink expansion can move forward without them.

As the City pushes big transit plans, taxpayers throughout the region should ask themselves if expanding MetroLink is really worth the cost. Despite the unfounded claims of transit activists, MetroLink has failed to spur development, create jobs, or turn our region into a magnet for the “creative class.” Can we really afford another $1.4 billion?

The post Parking Fees Alone Cannot Fund MetroLink Expansion appeared first on Show-Me Institute.

The team is asking city officials to impose an additional 1% sales tax on Ballpark Village to help fund the second phase of development. This tax is estimated to generate $16 million. But why does a project like Ballpark Village, which by many accounts is doing quite well—albeit at the expense of other businesses—need yet another subsidy? Is there a good reason why ordinary Saint Louisans should cough up more of their cash just so a successful business can expand?

In short, no—there is no good reason. All the subsidy does is increase the profits of a hugely wealthy corporation. One of the biggest proponents of the subsidy, 7^th Ward Alderman Jack Coatar, even admits the project would move forward (albeit on a “scaled-down” scale) without the subsidy. So why are city officials trying to put taxpayers on the hook for yet another development?

Proponents of the subsidy might object that the additional sales tax is self-imposed, and so only Ballpark Village costumers will actually pay the tax. While that’s true, we should ask ourselves why there should be an extra tax in the first place. That is, if the project is so great, why don’t the Cardinals just increase their prices by 1% instead of securing revenue via taxation?

And while the Cardinals promise the project will create 2,500 jobs, we shouldn’t get our hopes up (as the Business Journal cautions). Many of those jobs are temporary construction jobs, and the definition of a “new job” is somewhat slippery. New jobs could be jobs that moved in from just outside city limits, or jobs that a tenant at Ballpark Village claims would have left the city if not for the subsidies the project could receive. But moving jobs from, say, Clayton to downtown Saint Louis doesn’t help our regional economy, and there is so way to prove what a business tenant would have done if not for the subsidy. In short, the “Net New Jobs” clause touted by city officials as a way to protect taxpayers appears to be just a fig leaf that will not ensure that taxpayers actually get a return on their investment.

This project offers no real guarantees to the city or to taxpayers. The only guaranteed winner is a billion-dollar corporation. Does that sound fair to you?

The post It Takes a Village to Raise a Subsidy appeared first on Show-Me Institute.

“The entire region should be outraged by this because what happens in the central business district, the economic engine and heart of the St. Louis region affects us all. It affects our national reputation. It affects what businesses consider St. Louis when exploring options for their headquarters. Most importantly, it affects each of our families. Downtown St. Louis is the region’s Downtown. We all own it. We all deserve to feel safe visiting the many assets that can only be found in the heart of our city.”

Of course, violent crime is nothing new to Saint Louis, and downtown is far from the most dangerous neighborhood in the city. However, safety problems in the CBD tend to generate much more response than similar crimes in other areas do. Saint Louis leaders are eager to defend the “heart” of Saint Louis, and to call on the whole region to support the downtown.

But what exactly is Saint Louis’s CBD the heart of? Certainly not the region’s population. As we’ve written before, Saint Louis’s downtown actually has a lower population density than areas farther away from the core, like the Central West End. Furthermore, the region’s population is extremely dispersed, with large sections of the population living more than 20 miles from city hall. The Saint Louis metropolitan area is region with more than 2.8 million residents, only a few thousand of whom live downtown:

What of the CBD’s status as the business heart, or the economic engine, of Saint Louis? Today, less than 1% of the region’s annual payroll comes from businesses in the CBD. If we look at the zip codes that contain Saint Louis’s CBD, we find that areas in Saint Louis County, specifically Chesterfield and Creve Coeur, contain more businesses, contain more employees, and generate higher payroll than downtown. Looking at the maps below, we don’t see an economically dominant CBD surrounded by bedroom communities; instead we find dispersed areas of high employment. These areas include a broad central corridor that contains the CBD (but also Clayton and the Central West End) and a highly productive corridor in West County along I-270 that has more businesses and higher payrolls. The Saint Louis economy is so geographically dispersed that it might be difficult for a person not familiar with the region to locate downtown from economic data alone:

What of culture? The Saint Louis CBD has the Arch grounds. It also has the Scottrade Center, museums, libraries, theatres, and a sculpture garden. And of course, it has Busch Stadium, home to the Saint Louis Cardinals. For decades, the Saint Louis region as whole has poured tax money into amenities downtown, from the Dome formerly known as Edward Jones to the Arch grounds. Even as population and business activity left downtown, very few publicly funded civic projects were considered for any area but downtown (Forest Park being a notable exception). If public monuments, sports stadiums, and astro-turfed urbanism are all there is to culture, certainly downtown is unrivaled.

Whether or not Saint Louis’s downtown is truly its cultural heart, the region is undeniably diverse and dispersed. People live all over and work all over the map. To look at the region realistically (and plan for it effectively), we have to understand that St. Louis’s CBD is just one neighborhood among many, and we need to stop pretending that it has the economic and demographic dominance it did at the turn of the 20th century. Whether the problem is crime or economic growth, we’re unlikely to find a way forward when we can’t admit where we are.

The post Saint Louis’s Central Business District: The Heart of What? appeared first on Show-Me Institute.

The Edward Jones Dome in downtown Saint Louis is another story. Praised as state-of-the-art when it opened in 1995, the 100 percent publicly financed dome is on the verge of abandonment several months shy of its 21st birthday.

The future of the St. Louis Rams – the dome’s current occupants – will be decided in the next couple of days as the NFL owners club considers two competing plans for new stadiums in the Los Angeles area – one of them put forward by Stan Kroenke, the owner of the Rams, who wants out of Saint Louis.

Whatever happens, the Saint Louis dome’s playing days as a football stadium are probably over. It stands as a monument to wishful thinking – a telling example of the fallacy that public officials can accelerate a city’s growth or reverse its decline by “investing” large sums of money in a giant sports complex.

When the dome was first proposed and developed, its backers – including two Saint Louis mayors, business and civic leaders from the city and county, Missouri legislators, and the editorial board of the St. Louis Post-Dispatch – described the project as a much-needed shot in the arm for downtown Saint Louis. They claimed it would create thousands of jobs, generate hundreds of millions of dollars in new business activity, and more than pay for itself through the additional tax revenues it would create for St. Louis City and County and the state of Missouri.

In a 1993 editorial, the Post predicted a “downtown resurgence” and only worried that the riverfront might become “a gridlock of automobiles overlooked by a garish strip replete with pulsating electric signs and the amplified voices of barkers luring people aboard (casino) boats.”

Today the St. Louis riverfront is emptier than ever.  Over the last two decades, the city has continued to lose both population and jobs, while St. Louis County and the state as a whole have also experienced subpar economic growth. There is no sign of any dome-centered economic growth.

The Edward Jones Dome was desperation’s child.  In 1988, after the St. Louis Football Cardinals took flight for Phoenix, Arizona, leading figures in the city became serious about building the new stadium that the departing owner Bill Bidwill (not wanting to share space with the baseball Cardinals) had craved.  Enlisting the help of Saint Louis County and the state of Missouri as partners, they gambled on building a stadium entirely on spec – not knowing when, or even if, they would be able to attract another NFL franchise to replace the Cardinals.

Surely, the thinking went, a metro area of our size (two and half million people) and with our willingness to open the public purse strings, should have no trouble attracting one of two NFL expansion franchises then coming up for grabs.

That was a big mistake. In late 1993, the NFL awarded the new franchises to Charlotte, North Carolina (with the now #1 seeded Panthers in this year’s NFL playoff), and to Jacksonville, Florida.

Thus, there was great joy in Mudville when Georgia Frontiere, the widow of longtime L.A. Rams owner Carroll Rosenbloom, elected to move the Rams franchise from an aging stadium in Anaheim to a new one in her old hometown of St. Louis.  As the dome was nearing completion, she saved political and civic leaders from the embarrassment of having a football stadium but no team.

Corralling the Rams was hailed as a great victory for the city and state – but was it a good deal for taxpayers?

Plainly it was not.  The Rams shared no part of the cost of building the dome, yet they have paid an annual rent of $250,000, or just 1 percent of the $24 million that the city, county, and state have paid to service the debt on its construction . . . and will continue to pay ($12 million from the state and $6 million each from the city and county) for another five years. That means taxpayers are still on the hook for another $120 million – money that would otherwise be available for public services ranging from fire and police protection to education, roads, and infrastructure.

In addition, the lease agreement allowed the freeloading tenant to demand major improvements at public expense, and gave the team the right to opt out of the lease ten years early – in 2015 – if the city and state failed in their contractual duty to keep the dome in the top tier of NFL stadiums.

That is the option that Mr. Kroenke deployed at the beginning of last year when he announced his intention of moving to Los Angeles.  For a while, the response from city and state officials was déjà vu all over again.  St. Louis Mayor Francis Slay and Missouri Gov. Jay Nixon joined forces in trying to raise some $400 million in public assistance to go toward the building of a new $1 billion-plus riverfront stadium to keep the Rams in St. Louis.

But now it seems the air has gone out of that spheroid. There seems to be a growing realization (even in St. Louis) that if a team thinks it can make a whole lot more money in one city – with no subsidies – than it can in another – even with copious subsidies – it probably makes sense for all concerned to let the team go where it wants.

The post Deflate-gate in Saint Louis: Air goes out of a plan for a new subsidized football stadium appeared first on Show-Me Institute.

No joke. The Saint Louis media was not always as harsh on the Kroenke as they are now. Back when he was part of a task force to get an NFL team in the early 90s, many in the Saint Louis press tried their best to praise Kroenke. When he was pushing for an expansion team, Kroneke’s now-derided woodenness was described thusly:

He seems to be that rare individual who is comfortable with himself, and that makes us feel comfortable with him. After all the recent noise pollution, Kroenke's confident, understated manner is pleasing to the ears.

The very act of finding Kroenke, a Missouri native prepared to shell out tens of millions to attract a new team, was praised as a deft maneuver. Any possible faults were then overlooked . . . because football. As one Post-Dispatch writer put it:

"He wants to buy us a football team," I said to my kids. "He wants to bring the Lambs to St. Louis. I sure like him."

When Saint Louis finally bought the Rams, Kroenke was hailed as a victorious warrior. When the NFL voted (21 to 3) to block the Rams’ move to Saint Louis, the newspapers eagerly (and now very ironically) lapped up Kroenke’s promise to get the team here anyway, with litigation if necessary. After enough side deals were cut and the lease, now universally derided, was inked, the Post-Dispatch praised Kroenke as a “quiet source of steady strength.” The praise was so lavish that when the Cardinals faced an ownership crisis in 1995, Post-Dispatch columnist Bernie Miklasz wrote:

The good news is that maybe Cardinals fans will get what they deserve, when all of the brokering is completed: a caring, interactive owner. That person is out there. (HELLO, STAN KROENKE?)

If Saint Louis’s media had spent less time heaping praise on any attempt to get an NFL team, and more time looking critically at of the final deal’s merits, maybe we wouldn’t be in the mess we’re in now. 

The post On Rams Relocation, Saint Louis Media Is as Fickle as Stan Kroenke appeared first on Show-Me Institute.

Last week, Student Life, a WashU college paper, published a story about the Rams stadium. For the story, the author interviewed five WashU faculty from different disciplines. The faculty spoke nearly unanimously against using public money to fund the stadium. Here are some of the faculty’s comments, as reported in the article, the Longest Con:

“It’s really hard to see this as overall a good idea. It’s going to be very expensive…That’s not a very good way to spend government money.”—Glenn MacDonald, an economics professor in the Olin Business School

“We’ve known since the mid-’70s that sports teams don’t bring fast economic benefits, certainly nothing that offsets the kinds of credits they’re getting…Ten times a year, 12 times a year, you get a huge influx of people in, [but] that’s it.”—Sunita Parikh, an associate professor of political science

“What it does is it destroys the area so it vanquishes the blight that it identifies by just knocking everything down,” and “decimates the existing urban character.”—Michael Allen, a University College coordinator and American culture studies lecturer

“I think it’s pretty clear to anyone that spends any time here…that this town’s civic sporting identity is Cardinals first, second, third, fourth, fifth, down through 10, then Blues probably and then Rams. So they’re already the low man on the totem pole… I think it’s kind of silly that some people in cities feel like they need to measure their city by how many teams from the Big 4 leagues they have”—Noah Cohan, a recent Ph.D. and adjunct instructor in English who studies the relation of sports fandom to identity and politics,

The only WashU faculty member interviewed who supported the stadium plan, Rich Ryffel (senior lecturer of finance in the business school who helped finance the Edward Jones Dome), admitted a stadium was “not a good public investment. In other words, if the public puts in a dollar, they’re not going to get a dollar out of it.”

In other news, stadium proponents are touting the final initial design (which I guess is kind of like jumbo shrimp?) of a planned stadium. It will even have a new brew pub. Will policymakers heed the advice of experts or opt for beer and circuses? 

The post Washington University Faculty Oppose Public Dollars for Stadium; Planners Promise Brew Pub appeared first on Show-Me Institute.

Why the need for entrance fees or higher taxes? The district’s institutions, like the zoo, art museum, and history museum, face mounting expenses. For example, just from 2011 to 2014, the art museum’s operating losses grew from $20.2 million to $25.5 million. The zoo’s expenses have also been rising steadily. Add to that ambitious plans for capital improvements (like a gondola over Interstate 64/US 40), and the desire for more revenue is understandable.

The Zoo Museum District depends heavily on property tax revenue. The district’s museums receive the vast majority of their support via property taxes. The zoo, even with private supporters and charges for services, still relies on tax revenue for almost 40 percent of its budget. That property tax, (8 cents per hundred dollars of assessed value in Saint Louis City and County) is maxed out.

Supporters of reform want to broaden the district’s revenue base. They argue it is unfair that Saint Louis City and County taxpayers bear the entire burden of supporting these institutions. Only an estimated 39 percent of zoo visitors come from Saint Louis City and County. Twelve percent are from Saint Charles and Jefferson County, and 37 percent are visiting from outside the Saint Louis area altogether. Mr. Uchitelle’s proposal to make zoo and museum goers pay some sort of entrance fee would allow visitors to jointly invest in these destinations. After all, admission fees are the norm at other popular institutions in Saint Louis, like the Cardinals (obviously), the Botanical Garden, and even the Jewel Box. In other cities, zoos (including the country’s most visited) and museums charge entrance fees without losing their appeal.

Still, to many the idea that zoo or museum improvements should be paid by those who use them is an anathema. They argue that residents at large, regardless of whether they enjoy or approve of the institutions, should have to ensure zoo visitors always get free admission. And because some residents of Saint Charles County and Jefferson County use the zoo, the “fair” method of increasing revenue would be to charge all the residents of Saint Charles and Jefferson County.

There is nothing wrong with putting the question on the ballot in neighboring counties, but convincing residents in Saint Charles and Jefferson County to pay for a luxury hotel and gondolas in Saint Louis City via local property taxes is going to be a hard a sell, “fairness” aside. If the zoo really needs more money for large-scale improvements, perhaps they should take the idea of fairness to its logical conclusion and raise the money from people who actually visit, wherever they might come from. 

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For instance, in Saint Louis, fares are $2 for the bus and $2.50 for the MetroLink. In Kansas City the bus costs only $1.50, aside from a few more expensive routes. Monthly passes offer a steep discount in both cities, and reduced fares are available for the young, the elderly, the disabled, and students.

Low transit fares are generally sold with two arguments. First, and most common, is that public transportation provides transportation to those with little or no income. Higher fares would therefore be a tax on the poor. But not everyone who uses transit is poor. In Kansas City about 78 percent of transit users are above the poverty line (79 percent in Saint Louis). Moreover, wealthy transit users are more likely to use high-capital-cost rapid transit, so they end up receiving a larger subsidy than poorer riders. In Saint Louis, MetroLink ridership is greatly buoyed by well-off passengers using the rail to get to Busch Stadium or summer festivals (the Cardinals effect is noticeable). They too hardly meet the criteria of a group in need of cheap tickets.

To justify subsidizing the well off, many public transportation advocates use the second argument for low fares: high transit ridership is in the public’s interest. They claim that getting people out of their cars and on to transit is good for the environment and good for congestion, thus worth subsidizing heavily. More than a few have advocated getting rid of fares altogether.

However, low transit fares have not gotten people to ditch their cars; less than 5 percent of Saint Louis and Kansas City residents use transit to commute, and those numbers aren’t increasing much. And the low fare revenue makes it difficult for public transportation to make the investments that might make transit more attractive to more residents. That is why even some transit advocates are calling for higher fares.

Saint Louis and Kansas City could set up a system with much higher standard transit fares with lower prices for those below the poverty line. In addition, tickets to stations near sporting events could be more expensive on game days. By looking for ways to make riders pay for more of what their service actually costs, transit agencies might be able to provide better services without going to the general taxpayers for aid. That could be better for everyone, whether they use transit or not.

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That’s right, this story is not about the Rams; it’s about the St. Louis Football Cardinals circa 1988. Then, as now, NFL teams still would prefer that the public subsidize new stadiums, with the possibility of leaving town as the not-so-veiled threat. Saint Louis and Missouri officials hope to oblige, presenting a plan to spend more than $400 million on a new stadium for the Rams.

Saint Louis is a great sports city with enthusiastic support for professional teams (especially the baseball Cardinals), and many local leaders and residents take pride in being an NFL city. However, government officials here and around the country argue that pro sports franchises boost regional economies and spur urban regeneration.

Unfortunately, it just isn’t so. Cities have been funding stadiums for decades. The vast majority of economic research shows little evidence that these subsidies have yielded any economic benefits or growth in tax revenue. Speaking about the plan to subsidize a new stadium for the Rams, one University of Chicago economist said, “. . . building a football stadium is probably one of the worst expenditures of taxpayer dollars there is.” As for urban regeneration, while stadiums can ride a revitalization trend, there is no evidence that they create them. The issue with stadiums is that they tend to divert entertainment dollars that were already being spent in the metro area. Unless the teams draw in many tourists, which is not the case with most teams (including the Rams), NFL stadiums do not have a significant impact on the regional economy.

In the case of Saint Louis, officials do not even need to read up on the economic literature, they can simply look at the results of the Edward Jones Dome, Saint Louis’ current stadium. Originally conceived as an effort to keep the Football Cardinals (now playing in Arizona), the Edward Jones Dome was entirely publicly financed. When it opened in 1995, it was considered state-of-the-art.

Only 20 years later, the Edward Jones Dome, on which the city still owes money, is maligned as outmoded. The arrival of the Rams had no noticeable effect on tax revenue, aside from a small increase in income tax receipts. As for urban regeneration, the area immediately north of the stadium, known as the Bottle District, is an empty lot. There has been no dome-centered growth.

Nevertheless, public officials and representatives still talk as if a new riverfront stadium will cause urban regeneration and generate hundreds of millions of dollars of new state tax revenue. If regeneration means parking lots (which will surround the stadium), then they may have a point.

Even assuming the best case—that Saint Louis is blessed with a football team that holds home-field advantage through two playoff games leading up to the Super Bowl—does anyone really believe that having 10 great tailgate parties a year outside a new riverfront stadium is the key to Saint Louis’, or any other city’s, economic revitalization?

Common sense tells us “no.” So too does past experience, along with an abundance of economic literature.

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“The question” is as much a part of the Saint Louis identity as the Gateway Arch, Cardinals baseball, or Gooey Butter Cake. Last year, I decided that I’d take a stand against high school-based judgments by asking a question myself: What high school do you think I attended?

From there, it got interesting. “Ladue, Incarnate Word, Lafayette” are just a few school names that I heard. The variety and wide range of schools was interesting to hear, but no one came close to the school I actually attended. The truth is that I graduated from an often-underperforming, low-income public high school just below the Saint Louis City line. In 2013, only 20 percent of graduates had completed a four-year degree, according to the Department of Elementary and Secondary Education.

For many students who attend a high school within their zip code, their school often is not a reflection of who they are. They must fit in, instead of choosing a school that fits. With school choice, a high school becomes less of a description about where the student lives and how much money the student’s family has, and more about what makes the student unique.

Join us in Saint Louis or Kansas City to learn more about how educational options allow students to be themselves. If you plan on attending, use the hashtag, #letmebeme, for all event-related tweets.

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According to the L.A. Times, Rams owner Stan Kroenke plans to build a new football stadium in Inglewood, California. If the plan is approved by local voters, it would clear one major hurdle for moving the Rams to Los Angeles. The mayor’s office in Saint Louis maintains that it will not get into a bidding war with Los Angeles over the Rams (the proposed stadium in Los Angeles would be built without tax dollars).

The sentiment coming from the mayor’s office is encouraging. Cities should not be spending public money in order to keep/lure professional sports teams. Now don’t get me wrong, I don’t want the Rams to move. However, Mr. Kroenke obviously feels that Los Angeles is a better venue for his team than Saint Louis. Considering that new stadiums tend to cost more than a billion dollars, the amount of public subsidies needed in order to change Mr. Kroenke’s mind probably would be astronomical. If subsidies were provided, what would taxpayers get in return, an economic adrenaline shot? Not really. Would keeping the Rams here do wonders for the city’s brand, as some have argued? I doubt it. Even when Mayor Slay brags about Saint Louis to the rest of the country, I don’t see the Rams mentioned anywhere (the Cardinals are a different story).

Sports often binds people, families, and communities together. There is no more popular sport in the United States than football, and I enjoy looking back to the time when I was a kid and I went with my father to watch Rams games (believe it or not, there was a time when the Rams were worth watching). Unfortunately, it appears that Saint Louis could end up losing yet another pro football sports franchise. That’s not an appealing prospect, but if public officials hold the line and refuse to grant any more taxpayer support to the Rams, then they should be commended and we should be thankful for their discipline.

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Beyer contends that public subsidies to developments such as Ballpark Village mean that there wasn’t enough demand in the first place in order to justify investing in them. I agree. I also believe that using subsidies to finance these projects will be of limited economic benefit because they will just shift spending from other local establishments. A waitress who works at one area restaurant told me that her co-workers in Kiener Plaza are expecting a permanent 10 percent reduction in revenue now that Ballpark Village has opened. This example is only anecdotal, but it falls in line with what economists find when they examine public subsidies for similar types of developments, such as sports stadiums. They find that a lot of the economic benefit these developments bring to cities comes at the expense of spending elsewhere in the economy. Little to no actual wealth is created.

The government should not be picking which development gets public money and which does not. Instead, it should be focused on providing public goods such as basic infrastructure and public safety. Ballpark Village looks like it is going to be a great success, as most people thought it would be. Forcing taxpayers to subsidize the development, however, is not justified and is improper.

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Read the full testimony:

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Imagine your great uncle passes away and leaves you a huge sum of money, but there is a catch. To get the money, you have to spend $30 million on Missouri’s public education system and make a demonstrable impact on student achievement. Contrary to the plot of the 1985 comedy “Brewster’s Millions,” your great uncle demands results. Would you follow Missouri Budget Project’s advice and put the $30 million into the state’s foundation formula for public schools to make up for the funding gap?

If so, you could probably kiss your riches goodbye. You might be better off following Monty Brewster’s lead and organizing a baseball game against the St. Louis Cardinals. You could invite disadvantaged students to watch the game on a field trip. After all, one study has shown that “poor” readers with more knowledge about baseball outperformed “good” readers with relatively little knowledge about baseball.

All levity aside, there is little reason to believe that pumping more money into the funding formula will lead to improved results.

Let’s imagine that you do put the money in the formula to fill the “underfunding” gap. In the table below, I display how much Missouri schools would get from your great uncle’s generosity. In this graph, schools were sorted into deciles based on the percentage of students scoring proficient or advanced on the state’s math exam (districts were weighted for size). As you can see, you would be giving almost as much money to the highest-performing schools as you would to the lowest-performing schools.

If you would not invest your own money in this manner, why would you invest taxpayer money this way?

I have never denied that Missouri is underfunding the foundation formula; the state is. This does not mean that the formula is infallible. The formula is flawed and is in need of change. It is time to stop asking how much money we can spend on schools and start asking how we can spend our money more effectively, so that we can truly improve the lives of students.

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