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.

Now that the champagne corks have popped at Crown Center over the plans to build a ballpark there, it’s worth considering what comes next for Missouri and Kansas.

On the Missouri side, Kansas City ordinance 260339, passed on April 9, instructs the city manager to move ahead on all sorts of things regarding the deal. Section 7 provides for up to $250,000 for, among other things, “professional services, including but not limited to economic advisory services, financial advisory services, bond advisory services, legal services . . .”

That means the city is going to seek professional opinions on the deal’s feasibility. Who the city hires will tell us a lot about how committed it is to protecting taxpayers. As one person told me, “if they hire an architectural firm, we’ll know they’re not serious.”

The city has a history of relying on conflicted organizations to conduct studies, as it recently did with the World Cup. In 2016, the city paid CDFA—a trade group formed “to promote the common interest of Development Finance Agencies with respect to public policies and programs”—to measure the effectiveness of Kansas City’s subsidy culture. The laughable conclusion was “each incentive dollar invested generated $3.83 in additional tax revenue.”

In Kansas, taxpayers are still waiting on two things. First, they don’t know how big the STAR bond district will be. Previous reporting was a 293-square-mile district encompassing Wyandotte County and the western half of Johnson County. But it could be much, much bigger to make the deal pencil out. Once the district is set, the secretary of commerce is empowered to make it larger whenever he would like (see page 1) to capture more tax revenue.

Second, taxpayers are also waiting on Kansas to determine the base year, which is the year in which the state sales tax revenue is fixed, diverting every additional dollar within the district to the Chiefs’ developments. You might expect the base year to be 2026, when the legislature endorsed the measure, or whenever the project breaks ground. Or perhaps 2025, when the deal was agreed to.

But the deal actually allows the secretary of commerce to set the base year whenever he wants (see page 22). It could be set at 2015, meaning every state sales tax dollar generated over the amount collected in 2015 would go to the Chiefs.

In a deal this expensive for Kansas, the size of the district and the base year are likely to reignite howls of protest from all quarters.

As elected leaders in Topeka and Kansas City throw themselves self-congratulatory parties, the rest of us are faced with the bar tab. And the hangover.

The post Next Up on Chiefs and Royals Stadium Saga appeared first on Show-Me Institute.

A version of the following commentary appeared in the Mound City Messenger.

A bad idea doesn’t get better with age. Bad ideas aren’t wine, jeans, or your high school memories. The tax subsidies for the Post-Dispatch building redevelopment in downtown St. Louis were a bad idea back in 2019 when the development was proposed, and they are a bad idea now.

Using tax subsidies for economic development rarely benefits the public. Instead, it lowers the risk and increases the returns for private investors. Under a capitalist system, the relationship between risk and reward for investors can be a wonderful thing, but in recent decades the government has somehow decided the public should get involved in private business dealings through tax subsidies and incentives. Taxpayers in St. Louis were left holding the bag for the failed St. Louis Marketplace tax increment financing (TIF) plan, the tax subsidy package for the Renaissance Hotel that was literally sold on the courthouse steps, and numerous other failed, subsidized enterprises. Most economic development schemes are like an expensive game of musical chairs in which the taxpayer is always the one with nowhere to sit.

The tax subsidy package for the old Post-Dispatch building at 900 N. Tucker on the northern edge of downtown St. Louis was approved by the Board of Aldermen in 2019. It primarily consisted of a $12 million TIF package. The summary included with the legislation featured the normal jargon required for such bills, and it included a statement that the development “will have approximately 1,250 jobs with an average salary of $76,500.”

How has that jobs promise worked out? Well, OK at first. The most recent annual TIF report (2024) filed by the developers with the state auditor repeated the same number of 1,250 estimated jobs created. It also listed 830 jobs created so far. There are two ways to look at that number, and both are accurate. The first is that, once again, developers exaggerated their job creation in order to get the subsidies they wanted. That often happens, and it may have happened here. The second is that getting to two-thirds of the promised jobs is actually better than many other subsidized developments, and maybe the developers deserve some credit. Not enough credit to justify all the subsidies in the first place, but, you know, some.

Except that recent actions indicate that the development is highly unlikely to ever get to 1,250, and it may quickly move in the other direction. The largest tenant in the redevelopment at 900 N. Tucker is Block, formerly known as Square. As you may have read, Block recently announced that it was laying off 4,000 people companywide, almost half of its total workforce. How many of those layoffs will be in St. Louis in unknown at this time, but the company previously announced much smaller layoffs in Missouri in both 2024 and 2025, so it seems unlikely that its St. Louis office will be unscathed.

I am not judging the company about the layoffs. If artificial intelligence is making some employees obsolete (the company’s stated reason for the move) then those people should be let go so they can do something else with their lives. That’s the creative destruction of capitalism. But this situation is a perfect example of why cities and counties should not give subsidies to private companies based on promises of employment, growth, renewal, or whatever the vibe of the moment is.

Numerous economic studies have disproved the belief that tax subsidies lead to economic growth. If tax subsidies worked, the City of St. Louis would already be awash in riches. Tax incentives have been piled on top of tax subsidies under every acronym under the sun for decades. None of it has worked. The city should focus on keeping tax rates level and low for everyone, not high for most and low (because of special exemptions) for the politically connected. A reliance on subsidies rewards cronyism, over-promising, and political grandstanding, but it doesn’t lead to real economic success. Just ask the Block employees who may be laid off soon.

The post Tax Subsidies Are a Mistake We Can’t Seem to Learn From appeared first on Show-Me Institute.

The package of subsidies offered to the Kansas City Chiefs by the Missouri Legislature during last year’s special session was bad.

But that bill was not nearly as bad for taxpayers as what is being offered to the team by our neighbors in Kansas. House Bill 2793—the Kansas Sports Authority Act—offers the team, well, it seems, everything.

The bill sets up a Sports Authority to administer the site of a new stadium. That in and of itself is not unique. The Truman Sports Complex, in which the Chiefs and Royals currently play, is administered by the Jackson County Sports Complex Authority. But the power and portfolio of what is being considered in Kansas is breathtaking. Consider the following:

• The authority board includes “a representative of the professional sports team” using the facility as a voting member. This means the Chiefs would have a vote on such things as negotiating its lease, financing, and operations. Having the team oversee itself is a crazy conflict of interest and uncommon in other similar authorities if not absolutely unique, for obvious reasons.
• But the Chiefs aren’t merely one of several votes on the authority. The bill allows additional sports facilities to be placed under the authority if the governing body requests it and the Chiefs also recommend it—giving them an unusual role in expanding the authority’s jurisdiction. This provision may exist because team ownership wants to make sure nobody else can siphon away public funds.

• The authority’s powers “shall not be exercised in a way that conflicts with the terms and conditions set forth in the STAR bond agreement dated December 22, 2025.” This means the authority is locked into the already-negotiated agreement with the team, limiting its ability to adjust terms later.

The three items hand the Chiefs an incredible amount of power. The bill gives the Chiefs a voting seat on the governing authority, binds that authority to the STAR bond agreement the Chiefs negotiated, and gives the team an effective veto over whether additional sports facilities are added to the authority.

But wait, there’s more!

• Contractors must use competition only “to the extent reasonable and practicable in the authority’s sole discretion.” This is a significant weakening of competitive bidding requirements, increasing the risk of opaque contracting and favoritism.

• The authority is exempt from multiple statutes including the Kansas Civil Service Act and the Kansas Administrative Procedure Act, removing the standard hiring, rulemaking and administrative oversight safeguards that normally apply to public entities spending public funds.

• The authority must submit annual reports and testify if legislative committees request it. But this so-called oversight is largely after-the-fact reporting, with no routine legislative approval required for major contracts, bonds or development agreements.

• You read that correctly: the authority may issue special-obligation bonds for stadium construction and infrastructure. Although not legally state debt, political pressure often arises if revenues underperform, creating potential taxpayer exposure. If you doubt this, read up on the fiasco over Platte County and the Zona Rosa shopping center.
• In addition to capturing the increase in sales taxes in the approximately 300-square mile STAR bond district, the authority will be exempt from paying state and local sales and use taxes on purchases of materials, machinery, and services used to construct or equip the facility.

• “Insofar as the provisions of this act are inconsistent with the provisions of any other law, whether general, specific or local, the provisions of this act shall be controlling.” Yeah, that’s in the bill. The authority’s statute is designed to override conflicting state or local laws, potentially weakening local regulatory control.

• And what happens when the stadium is completed and paid for? Nothing. The statute does not include a sunset provision or dissolution trigger. That means the authority could become a permanent quasi-government entity in perpetuity.

• But at least the authority’s power is limited to the stadium, right? Nope. The authority’s purpose includes not just sports facilities and infrastructure used for it, but any “civic, community, athletic, educational, cultural and commercial activities.” “Commercial activities” seems like something that could cover, well, anything.

Kansas State Senator Mike Thompson claims that this measure will set up an unaccountable  “shadow government.” That seems like an over-the-top claim, but the provisions of this bill suggest he is at least directionally correct.

The post Kansas Sports Authority Lets Chiefs Play as Home Team, Referee and Rulebook appeared first on Show-Me Institute.

When Congress created Opportunity Zones in 2017, the goal was simple: use tax incentives to steer private investment into distressed communities. Investors could defer or eliminate capital-gains taxes if they reinvested those gains in designated census tracts.

The hope was that these incentives would spur development and expand opportunity in struggling neighborhoods. But new research suggests the program may suffer from the same problems as Tax-Increment Financing (TIF).

In a recent paper from the National Bureau of Economics, “Understanding the Employment Effects of Opportunity Zones,” the authors examine employment outcomes through 2023. They find that jobs located within Opportunity Zones did increase modestly. But most of those gains appear to come from nearby communities rather than representing new economic activity. Sound familiar?

The authors estimate that job growth inside Opportunity Zones is largely offset by job losses in adjacent low-income tracts. Their overall conclusion is that the program mainly results in a “spatial reallocation of jobs and households” rather than broad economic gains.

The distribution of those jobs also matters. Most of the new positions in Opportunity Zones are filled by workers who live outside the zones—often in more affluent neighborhoods. Meanwhile, the economic circumstances of existing residents show little improvement. Employment among residents rises slightly, but median earnings and poverty rates do not change significantly.

These results should sound familiar to longtime readers of the Show-Me Institute. I’ve argued that programs like TIF often fail to generate new economic growth. Instead, they tend to shift development across neighborhoods or municipalities. Projects still get built, but just in a different place.

The evidence on Opportunity Zones suggests something similar may be happening at the federal level.

Investment incentives can influence where development occurs. But that does not necessarily mean they create new economic opportunities for the people policymakers mean to help.

TIF is TIF is TIF, even at the federal level.

The post Are Opportunity Zones Just Federal-Level TIF? appeared first on Show-Me Institute.

Thomas Friestad at the Kansas City Business Journal wrote recently that an engineering firm (Gannett Fleming TranSystems, formerly GFT) is moving its offices to the H&R Block building in downtown Kansas City.

Longtime Show-Me Institute readers will recognize H&R Block as a poster child for the false claims that economic development subsidies drive job creation. But this latest news only makes the point more relevant.

The TIF project was adopted in July 2006 and will last for 23 years, through 2029. For the duration of that time, all the additional property taxes and half the increase in sales and income (earnings) tax generated at the site are returned to the developer to offset the costs of developing the site. According to the latest report from the Missouri Auditor’s office, as of April 2023, this subsidy has redirected $23.5 million in property taxes and another $73.4 million in sales and earnings taxes away from the basic services they would have otherwise supported (schools, roads, libraries, etc.), instead sending the money back to the developer.

GFT moving into the H&R Block building means that a portion of the taxes it pays, most notably the 1% earnings taxes levied on each employee, will now also be redirected away from basic services to the developer to pay down the cost of the H&R Block building.

A lot of time is spent talking about how Kansas City loses revenue when businesses leave the city. We need to remember that due to our generous subsidy culture, we often lose revenue even when companies remain.

Side note: One can immediately imagine a scenario wherein developer landlords in TIF districts lower their rents because they know they will capture the additional tax revenue, thus undercutting properties that actually pay taxes. These deals are no way to run a city.

The post The TIF that Keeps Taking appeared first on Show-Me Institute.

How has the project worked out? Did the promises of redevelopment of this part of the city and a great return on the public tax investment pan out? Or did the warnings and concerns of people like Institute analyst Audrey Spalding prove correct?

Of course, Northside has been a total failure, and Audrey and others were correct.

The latest update on almost 20 years of policy failure is that a batch of McKee’s properties (which taxpayers bought for him) is being seized by the city via eminent domain. More of his properties may face the same fate soon. In this particular case, the properties are needed for the National Geospatial Intelligence Agency (NGA) project, so the eminent domain seizures are for legitimate public use. The city tried to buy these properties from McKee, but no agreement could be reached on price, so the city is taking them. The final price paid for them will almost certainly be determined by a court.

Everything you need to know about why economic development using subsidies is a road to failure is wrapped up in this story. The entire project began not based on market forces, but on the forces of lobbyists, lawyers, and politicians. It was sold as a way to save parts of north St. Louis from decades of poverty and blight—conditions that were created in part by government policy in the first place. The entire Northside redevelopment project has been a colossal failure from the start, and the city and state should never have authorized tax subsidies for it. In the state’s case, it created a brand new law just for McKee to do this.

I would hope the city and state would learn a lesson from the failures of tax incentives and subsidies from this project. I doubt very much that they will. As Orwell said, to see the things in front of one’s nose requires a constant struggle—a struggle that politicians rarely have any incentive to engage in.

The post Live By the Sword, Die By the Sword appeared first on Show-Me Institute.

In Kansas, Sales Tax and Revenue (STAR) bonds are a state-level form of tax-increment financing, similar to taxing districts created by municipalities in Missouri. The state issues bonds to pay for development costs and then repays that debt using only the additional state sales taxes generated inside the project district. The claim is that the project’s shoppers—not general taxpayers—will cover the cost.

The sheer size of the STAR bond being considered for the Chiefs is staggering, and Kansas leaders will likely need to be creative to satisfy the risk being taken by potential bond buyers. I don’t envy them in that task.

The tax question is another issue. The STAR bond will determine the base year of sales tax revenue. You might assume that the base year would be 2025 or 2026, but it could conceivably be 2020 or 2015. But whatever the year, once that dollar figure is determined, everything collected anywhere in the approximately 300-mile district in excess of that dollar figure will be dedicated to pay for the Chiefs’ projects for 30 years. Mind you, the cost of delivering public services will continue to rise due to inflation or, say, due to huge infrastructure projects developed to support the stadium. But the sales tax revenue to pay for those needs is frozen at the base year level.

What then happens?

In Missouri we got the answer in 2016. Due to Kansas City’s profligate subsidy culture, property tax revenue, which libraries depend on, was flat. And so the Mid-Continent Library system sought an increase in property taxes. In doing so, the library observed:

[T]ax incentives and abatements by local government have impacted the revenue that would generally result from the growth of the Library’s tax base. The Library’s budget has been essentially flat for the past 8 years.

Advocates of subsidies often argue that they are free, because they are paid for with funds that wouldn’t exist anyway. This is exactly the argument Kansas Governor Laura Kelly makes ad nauseam. But as we learned in Missouri, that just isn’t true.

Kansans might not see tax increases going to the Chiefs’ project, but they are very likely to see tax increases because of the Chiefs’ project.

The post Kansas’s Coming STAR Bond Tax appeared first on Show-Me Institute.

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The post Does the Math Work on Kansas STAR Bonds for the Chiefs Stadium? appeared first on Show-Me Institute.

David Stokes, Elias Tsapelas, and Avery Frank join host Zach Lawhorn to outline what a responsible plan to eliminate Missouri’s income tax should include, from revenue triggers and spending restraint to rethinking other taxes. They also break down St. Louis County’s Bill 182 expanding prevailing wage and DBE mandates, Independence’s proposed TIF package for a new Wally’s gas station and what it says about corporate welfare, Missouri’s early literacy crisis and reforms like a universal third grade reading screener, mandatory retention, and banning three cueing, and what they are watching next on prefiled tax bills, data center policy, and rising property tax bills across the state.

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Timestamps

00:00 Introduction to Missouri’s Income Tax Elimination Plan
02:52 Strategies for Reducing Income Tax Reliance
05:19 Understanding Missouri’s Tax System
08:26 The Importance of Competitive Tax Policies
10:53 St. Louis County’s Prevailing Wage Bill Discussion
13:45 Economic Implications of Tax Subsidies
16:24 Independence’s Wally’s Gas Station Development
19:28 The Flaws in Tax Increment Financing
20:20 Addressing Early Literacy in Missouri
27:54 Looking Ahead: Legislative Priorities

Produced by Show-Me Opportunity

The post Eliminating Missouri’s Income Tax, Subsidies for Gas Stations, and Early Literacy Reform appeared first on Show-Me Institute.

On November 4, Jefferson City voters will decide on a proposal to renew the city’s seven percent hotel tax. The proceeds from the tax will help fund a new conference center for the city. Supporters of the new conference center have claimed it will create 370 new jobs and generate over $100 million in economic growth. Exaggerated estimates such as this one have been made on behalf of convention and conference center projects all around the country for decades, and the historic evidence is clear that Jefferson City voters should be dubious of such claims.

Between now and November, Jefferson City residents who visit St. Louis should drive by the largely empty dome attached to St. Louis’s downtown conference center to see how these conference center promises often play out. That dome was a part of a large convention center expansion in the 1990s. The same promises of growth, revenue, and utopia were all made when St. Louis voters approved a hotel tax increase back then. Now the dome is mostly empty, and the regional body that manages it is struggling to pay for its upkeep. You can also visit the site of the taxpayer-subsidized convention center hotel that went along with the project. You can only visit the site of the hotel, not the hotel itself, because the hotel failed and was foreclosed on long ago.

Like a Cold War general in a Kubrick movie or a carpenter with a box full of nails, local tourism agencies have the same solution for every problem. Economic recession? Expand the convention center. Economic growth? Enlarge the convention center. Global nuclear war? Definitely gonna need a bigger convention center to commiserate in.

The renewed hotel tax isn’t the only public money being used as part of this plan. State tax dollars are being pursued in the legislature, and the conference center may receive local tax subsidies.

Supporters of the conference center plan in Jefferson City would likely say their plan is not as grandiose as a major convention center and dome project in St. Louis, and they are correct in that regard. However, there are plenty of examples of more comparable projects that have failed to reach the level of activity anywhere near was promised. Haywood Sanders is a researcher and writer with the University of Texas–San Antonio who has studied convention center expansions for decades. He has documented how cities and tourism agencies systematically inflate projections to get these projects approved. Sanders has cited the actual and underwhelming numbers of very comparable projects in Overland Park, Kansas, and St. Charles, Missouri. Overland Park opened its convention center and hotel in 2002. Project supporters had projected $36 million in annual hotel revenue by 2012, but the reality was much lower, coming in at under $20 million.

Sanders explains that the convention and conference-center industry peaked in the early 2000s and shows no signs of returning to the success it had back then. With a major convention area nearby in Lake of the Ozarks, a new center in Jefferson City will face intense competition for these limited conference opportunities.

Taxpayers should not be on the hook for conference centers whose overstated benefits, small as they will be, will largely go to private entities. Jefferson City is the capital of the Show-Me State, and the claims being made by convention-center supporters should be met with a healthy dose of skepticism by voters.

The post Jefferson City Residents Should Be Skeptical of Conference Center Project appeared first on Show-Me Institute.

In 2001, a group of very libertarian-minded activists launched the Free-State Project, which encouraged thousands of libertarian believers in minimal government to move to New Hampshire. The overall success of the project has been limited, for a variety of reasons, but if imitation is the sincerest form of flattery, then I’d like to see people in Missouri flatter the Granite State and try to do a similar thing here in one of our many cities.

What would such a limited-government, free-market oriented municipality look like in Missouri? To start with, it should be modeled on successful, small-government municipalities like Weston, Florida, and Sandy Springs, Georgia, which provide many local services by contracting with the private sector. It should not be based on the more radical, no-government “utopias” like Grafton, New Hampshire, where the removal of almost all government services led to an increase in bear attacks.

How many limited-government activists would it take to create a free city in Missouri? Not very many. There are hundreds of existing municipalities here with less than a hundred residents where, at most, a few dozen show up to vote in local elections. If, say, 50 true free-market believers moved into one city, what types of changes could they make to create that desired free city?

To start with, they could remove all municipal planning and zoning rules and replace them with private contracts managed by property-owner associations where allowed. Those property-owner associations could manage issues like short-term rentals, trash collection, and home-based businesses.

Municipalities, especially small ones, could focus on contracting with larger cities or counties to provide many services, like policing or building inspections. The new free city could contract with private companies to provide many other services, like trash collection and recreation management. It could similarly contract with nonprofits for some other services where profit opportunities are limited, such as animal shelters. If it had municipal utilities, it could privatize them into regulated, private utilities. The free city could reduce local code requirements, permitting rules, and occupational licensing to the largest extent possible. The important ones, like fire codes and elevator inspections, could be kept, while arbitrary or obsolete regulations, like television repairman licenses and pool-table taxes, could be thrown out.

None of these examples are farfetched. Every one of the above examples is already in place in a city somewhere in Missouri. Private utilities provide water, gas, and electricity to millions of Missourians. Cities contract with counties and other cities for services all over the state. In St. Louis County, every municipality (88 at last count) contracts with the county for at least some inspection services. Nonprofits provide important services to the public, like Pinnacles Youth Park near Columbia, and operate many animal-care facilities. Private businesses operate city-owned golf courses and manage municipal swimming pools throughout the state.

How would a free city fund these services? It would maximize private contracts between residents and companies and enact user fees to the largest extent possible. Low general sales and property taxes could fund the rest, along with revenues shared from other sources, like the gas tax. Importantly, such a city would avoid special deals such as tax abatements or tax-increment financing, for some businesses or people. Making the sales and property tax bases as wide as possible would allow the rates to be as low as possible for everyone. This free city would absolutely avoid the errors of a local income tax such as exist in Kansas City and St. Louis.

Overall, a Missouri free-city project would create a municipal government system not all that different from those in many rural, unincorporated parts of Missouri. It would just be in a more urban or suburban setting. It may seem unrealistic to expect hundreds—or even dozens—of people to make such a move based on political philosophy. But as a model of quality, low-tax local government, it is perfectly realistic. While no city may have enacted all of these ideas, each of them has been enacted with success somewhere. We just need the right number of people to put it together all at once.

I vote we try it somewhere near the Lake of the Ozarks.

The post The Free-City Project for Missouri appeared first on Show-Me Institute.

Almost certainly. (And I’m only adding the “almost” because it is being litigated over and you never know how it will turn out.)

This isn’t the first time grocery stores have been targeted by special taxing districts simply because developers want the significant money they generate. In Wentzville, a Schnucks store was forcibly included in a CID that was used to help fund a Walmart development. If that sounds insane, it is. One grocery company, Schnucks, was forced to levy a special tax against its will to benefit one of its main competitors.

In St. Louis, an existing CID board tried to expand the CID’s boundaries to include another  Schnucks, primarily to get access to all of the money it generated. Schnucks opposed that one, too, and good for the company. As the company explained in a letter to elected officials:

It is our position that addressing the problem goes beyond additional cleaning, and we would encourage the City to tap into funds available to address these issues, rather than institute an additional tax on citizens who are buying their needed groceries for their families.

Grocery stores are not large ATMs with food in them that special taxing districts can extort whenever they feel like it. Good for Hy-Vee for fighting back in Lee’s Summit, and good for Schnucks to have opposed these ideas previously. Special taxing districts like CIDs and TDDs are, in the vast majority of cases, nothing more than vehicles for corporate welfare. They are bad enough even when all the property owners agree. But compelling grocery chains to participate in them against the will of the stores is just the sour cherry on top.

The post Hy-Vee Wants to Give the Heave-Ho to a CID appeared first on Show-Me Institute.

Port districts exist, in theory, to build and manage port facilities along rivers. When they actually focus on that job, I have no complaints. But in reality, many of the port districts are focused on other things, such as granting tax subsidies or engaging in government corruption. (The latter is less common, thankfully.)

The City of St. Louis’s port authority legitimately operates port facilities along the Mississippi. However, it is also substantially engaged in the granting of tax subsidies, usually for businesses that have absolutely nothing to do with rivers or shipping. For example, the port authority passed a one-cent special “port” sales tax for the St. Louis soccer team to be charged at the soccer stadium that the team gets to keep for its own purposes. (The soccer team has stated that it will use those funds to fix groundwater issues, so I guess it’s at least related to water.)

That was the city’s first “port” sales tax. Now there is a hotel, retail, and condo redevelopment downtown that also wants in on the game. The Jefferson Arms redevelopment has also requested a “port” sales tax of one percent. This is on top of the tax-increment financing subsidy it has already received, as well as the state and federal historic tax credits it got, and the community improvement district and transportation development district extra sales taxes it has applied for and will likely receive. Could it be that the developer wants to socialize the risk and cost, while privatizing the profit?

But a strange thing happened when the developer and its consultants tried to get the sales tax approved by the port authority. The port board said, “Wait, not just yet.” (Trust me, I wish I could say it said “no,” but the vote was tabled, not defeated.)

As Commissioner William Kay Jr. noted at the hearing: “If all three districts are approved, the Jefferson Arms building would have the highest sales tax rate in the city at 12.67%. We’ve got the CID, we’ve got the TDD—the tax rate right now will be 11.67%,” Kay said. “That’s the high mark for the city. I do not think the port authority needs to get into the business of subsidizing these projects.”

Let me reiterate: the Jefferson Arms project has nothing to do with a port. The use of port authorities to create one more tax subsidy opportunity in St. Louis, Kansas City, or anywhere else is terrible public policy. It’s great to see one agency say “not yet.” Hopefully, that “not yet” becomes a “no” in the future, both for this instance and many other subsidy proposals around the state.

Furthermore, the state legislature should remove the ability of port districts to issue tax subsidies or institute new sales taxes. Ports should be funded with user fees to the largest extent possible, and should not be another tool in the corporate welfare toolbox.

The post Denied Entrance at the Port of Call appeared first on Show-Me Institute.

Secrecy isn’t standard practice. The Economic Development Corporation—which oversees the TIF Commission and other incentive bodies—does not require NDAs.

These agencies also hold more public meetings, solicit community input, and include representation from schools and libraries. Mayoral appointments to the TIF Commission must be confirmed by the city council. In contrast, the mayor appoints PortKC board members unilaterally.

This lack of transparency disserves the public. While developers might prefer NDAs when pursuing public subsidies—which is a separate concern—here, it’s the public agency itself insisting on secrecy. That’s even more alarming.

PortKC has other problems, some of which I detail in a recent column for The Kansas City Star:

A series of audits from 2021 through 2024 flagged serious internal control problems, including one where the finance director had full authority over journal entries, deposits and account reconciliation — with no oversight. Port KC has repeatedly promised to fix these issues and repeatedly failed to act.

PortKC’s transparency problem is compounded by persistent failures in oversight. A string of audits from 2021 through 2024 flagged major internal control issues. In one case, the finance director had sole authority over journal entries, deposits, and account reconciliation with no checks in place. PortKC acknowledged the problem and pledged reform but never followed through.

The 2024 audit revealed yet another compliance failure: the agency hadn’t verified whether its development partners were barred from receiving federal funds—a basic federal requirement known as “Suspension and Debarment.” Given PortKC’s increasing intake of federal money, this oversight is especially serious.

These aren’t isolated lapses. PortKC also failed to properly vet Lux Living in 2022. The pattern is clear and ongoing. With long-standing problems still unaddressed, the question is no longer whether something will go wrong, but when.

These issues matter more than ever. At the time of my Star column, I noted PortKC might be involved in financing a downtown park for the Royals. That’s now more likely: the Kansas City Business Journal reports that tax-free bonds via PortKC are under discussion.

Meanwhile, city officials are exploring ways to approve deals without a public vote. Combine that with PortKC’s built-in secrecy, and the result is troubling: public funds deployed without public oversight.

The post Why Is PortKC Keeping Secrets? appeared first on Show-Me Institute.

On June 10, 2025, David Stokes, director of municipal policy at the Show-Me Institute, testified before the Missouri House Economic Development Committee to express concerns about the property tax provisions included in a special session bill.

Stokes warned that the proposed property tax caps, added on the Senate floor without a public hearing, are constitutionally questionable, economically harmful, and likely to trigger long-term unintended consequences. He argued that freezing or severely limiting property taxes in certain counties will increase pressure on other revenue sources, such as sales taxes and state income taxes, and lead to greater use of tax districts like TDDs and CIDs. He also raised concerns about fairness and uniformity, noting that identical homes could be taxed at dramatically different rates simply based on how long someone has lived there.

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 David Stokes Before the Missouri House Economic Development Committee June 10, 2025 appeared first on Show-Me Institute.

A Free-Market Guide for Missouri Municipalities is a multi-part series by David Stokes, director of municipal policy at the Show-Me Institute, offering practical, free market–oriented reforms for improving local government across the state. Each installment focuses on a core area of municipal policy—combining real-world examples, historical  context, and academic research to help cities, towns, and villages better serve residents and taxpayers.

The second installment, A Free-Market Guide for Missouri Municipalities, Part Two: Taxation, examines the sources of municipal revenue in Missouri and evaluates the state’s heavy reliance on sales and income taxes. It makes the case for rebalancing local finance by placing greater emphasis on growth-oriented taxes like property taxes and more targeted sources such as user fees, while reducing reliance on volatile and distortionary taxes. Topics include land taxes, special taxing districts, user fees, local gas taxes, and the economic consequences of tax subsidies like TIF. The report offers practical recommendations to make local tax systems more stable, transparent, and conducive to long-term prosperity.

The post A Free-Market Guide for Missouri Municipalities, Part Two: Taxation appeared first on Show-Me Institute.

First Ward Councilman Tom Oldham commented that he feels that Chapter 353 is a great tool, as evidenced by his visits to Elm Springs, a community that also took advantage of the Chapter 353 program. Elm Springs went from blight to beauty as a result, Oldham said.

(Note: I assume he meant Excelsior Springs, which has a 353 plan, and not Elm Springs—I can find no municipality in Missouri with that name.)

Did a 353 urban redevelopment plan really turn Excelsior Springs (or Elm Springs?) from blight to beauty? Of course not. Granting some properties in a designated area a tax abatement if they undergo the required legal process isn’t going to grow the economy. If you want to cut taxes, great—cut taxes for everyone, not just a designated few. The idea that politicians are qualified to pick the right companies or properties is absurd.

Economist Dick Netzer once mocked the exaggerated claims of success by economic development officials and politicians by writing, “Who needs oil wells, when a state can be another Kuwait just by increasing the budget of a tiny agency?” Those claims of subsidy success often border on the absurd. I once heard a Clay County economic development official claim that “all of the growth” in the town of Liberty—a fast growing, exurban community north of Kansas City the likes of which have been growing across the nation for decades—was due to a tax increment financing (TIF) package. All of it, he stated with certainty, as if suburbanization didn’t exist until Missouri’s TIF law was passed in the late 1980s.

Economists Alan Peters and Peter Fisher studied tax incentives closely and concluded that they work about ten percent of the time (as measured by job creation), and the other 90 percent are simply a waste of money. They added that, like the Clay County official mentioned above, economic development officials often credit all new employment and growth to tax subsidies.

The City of Saint Louis has been using tax incentives like 353 urban redevelopment plans, Enterprise Zones (EZs), TIF, and other subsidies as redevelopment tools for over half a century. How has it worked out? Colin Gordon, in his 2008 book Mapping Decline, documents the decline of the City of Saint Louis. The book’s research is exhaustive. The dominant theme of the book is the use of urban renewal tools and tax subsidies—and their absolute, total failure. From his conclusion:

The overarching irony, in Saint Louis and elsewhere, is that efforts to save the city from such practices and patterns almost always made things worse. In setting after setting, both the diagnosis (blight) and its prescription (urban renewal) were shaped by—and compromised by—the same assumptions and expectations and prejudices that had created the condition in the first place.

The dirty little secret that nobody seems to want to recognize is that 353 Plans, EZs, TIF projects, , tax abatements, and other subsidies do not work. They don’t succeed in growing the local economy, be it urban, suburban, or rural. The panoply of subsidies that come into play when a large area is declared blighted can have a number of adverse side effects. They shrink the local tax base, introduce more cronyism and favoritism into the economy, encourage more government planning of the economy, and increase the chances of eminent domain abuse. As a famous Swedish economist once said:

It is not by planting trees or subsidizing tree planting in a desert created by politicians that the government can promote . . . industry, but by refraining from measures that create a desert environment.

The Chapter 353 urban redevelopment plan didn’t help grow Excelsior Springs. It didn’t help grow St. Louis, nor any of the other cities that have such a plan. It won’t help grow Sedalia, either, but it will be great for the politically connected parties who get the tax subsidies they are after.

The post Sedalia Doesn’t Need a 353 Redevelopment Plan appeared first on Show-Me Institute.

This is just the latest example over the years of City Hall favoring wealthy, connected corporations with taxpayer subsidies and special treatment.

Port KC CEO Jon Stephens framed the incentives as a “small, supportive element” aimed at ensuring Kansas City retains high-quality jobs. The project promises to add 150 jobs with an average salary of $126,000 while retaining 600 current employees. Yet no precise value for the tax exemptions was disclosed. Its not clear if PortKC attached performance requirements to the deal, but Friestad indicates there was no such discussion of it among the commissioners when the subsidies were approved.

Readers may recall Stephens backed subsidies for an independent baseball team in Kansas back when the team couldn’t pay its utilities. If nothing else, he is consistent in his apparent desire to redirect taxpayer money to private corporate interests

Such a deal is nothing new for JE Dunn. The company received a lucrative incentive package when building its headquarters in 2009. That project fell under the East Village tax-increment financing plan, redirecting $19 million in public funds for a parking garage, demolitions, and blight removal.

This latest deal follows a familiar script in which major corporations, including Cerner, H&R Block, Burns & McDonnell, and Commerce Bank have secured public funding for their private office projects. Research has indicated for years that such incentives do not significantly impact corporate decisions on location.

Port KC has repeatedly played a central role in funneling public dollars into private hands. Its recent involvement with JE Dunn reflects a long history of negotiating deals that often leave taxpayers holding the bag, such as the millions each year taxpayers must fork over to cover bond payments on the Power & Light District owned and operated by Cordish Company. (Stephens is a former manager of that project.)

As Kansas City grapples with persistent infrastructure needs, ballooning public debt, and limited funding for essential services, its continued reliance on subsidies for corporate renovations raises questions about priorities. For now, Kansas Citians can only watch as the city’s public funds are diverted to underwrite private gains.

The post KC’s Corporate Welfare: JE Dunn’s HQ Renovation Gets Public Support appeared first on Show-Me Institute.