We have all seen the television ad where the man walks into the sandwich shop and orders bread but nothing inside of it because that’s all he can afford. “Everything is so expensive these days,” he says.

That may well be how many Americans are feeling, but I only wish that were true for our government. The price tags for government’s infrastructure “improvements” are becoming astronomical, and at some point we have to recognize that this isn’t an unfortunate fact of life. The high cost is a choice, not a requirement.

Let’s start with the high-speed rail disaster in California, which was originally approved in 2008 for an estimated cost of $33 billion; the current estimate is $135—for a system that won’t have anything completed until the 2030s at the earliest. Actually connecting Los Angeles and San Francisco, as promised, is many more years away. All this for a system that hasn’t laid any track 15 years after it was approved.

It doesn’t have to be this way. In Spain, they built an entire 2,500-mile system of high-speed rail for $62 billion. That’s obviously a lot of money, but it got them an entire, advanced rail system for less than half of what California will spend for two routes at best.

Unlike high-speed rail, elevators have been around for a long time. There is nothing fancy about an elevator. Yet in New York City, a project to replace 70 elevators at transit stations cost taxpayers $5.5 billion, or about $80 million per elevator. Elevators for subways may indeed be more expensive than in office buildings, but in Germany they have managed to hold the cost to less than $10 million per elevator per transit station. Something is deeply wrong with how we fund government infrastructure in America.

Closer to home, St. Louis County is considering several options for its governmental complex in Clayton. The most expensive and most comprehensive plan—which includes replacing the main county administration building with an entirely new building among other projects—is estimated by the county to cost around $600 million. If that sounds preposterous, it should. The key part of that proposal—the new administration and public safety building in downtown Clayton, is estimated to cost $250 million for a 190,000-square-foot building. (This doesn’t even include the cost of demolishing the existing buildings.)

Currently, a 21-story residential tower has been approved by the city for downtown Clayton. It would have 299 units, some retail space, and over 300,000 total square feet. What is the total estimated cost of that project? $106 million. This residential tower would be significantly larger than the new county building, yet it would cost approximately $150 million less. Based on cost per square foot, the proposed county building is almost four times as expensive.

In Robert Caro’s book The Powerbroker, about Robert Moses, the autocratic boss of New York city and state infrastructure projects for four decades in the mid-20th century, Caro spent an entire chapter detailing the way Moses employed various interest groups to get his projects going, no matter the cost. Moses had support from a wide cross-section of interest groups because he made sure that they all made money from his projects. Construction companies, contractors, labor unions, consultants, banks, law firms, the list goes on. If any politicians started opposing his projects, there was an orchestrated campaign of pressure from all these groups to get it approved. The people who benefitted from these enormous expenditures benefited greatly and quickly. The taxpayers or commuters who paid more than they should have did so in small increments over time via higher taxes, tolls, or other fees, but they didn’t feel the higher costs all at once. So the taxpayer shakedown has continued on to the present day.

In simpler terms, the developer of the high-rise in Clayton is spending its own money to build it, where St. Louis County officials are not. The county is spending taxpayer money, obviously, and when you do that in Missouri’s largest and richest county you can get away with spending a lot of it. Taxpayers aren’t going to revolt over an extra $50 a year in taxes spread out over 365 days of sales tax on purchases or mixed in at the end of the year with a dozen other property taxes on their bill. This is why you end up with a proposal for a new county building that costs four times more (per square foot) than a new, private building nearby.

Addressing this overall problem is going to be extremely difficult. Every option for change involves cutting off someone else’s golden goose. For now, let’s just hope St. Louis County government doesn’t put the New York Transit Authority in charge of the new elevators. Then it’s going to really get expensive.

The post Government Infrastructure Costs Are Out of Control appeared first on Show-Me Institute.

What I found gratifying is that a great deal of voters, regardless of their own political views, seemed to understand that the economic impact claims made by the proponents of stadium subsidies were simply not true. Show-Me Institute analysts have been making this point since our founding.

Read Timothy Lee’s post from 18 years ago, Stadium Proposal Unfair to Taxpayers, and you will see the exact same arguments I made in 2024. The basics of good public policy do not change, they may just take a while to catch on.

The post Sometimes, Sanity Wins appeared first on Show-Me Institute.

Having both Jackson County and Kansas City build their own new local jail is ludicrous. The Jackson County jail is going to cost $301 million (at least). There was discussion of sharing facilities and some resources (such as food service) but now Kansas City is moving ahead with its own facility at a to-be-determined cost.

In the “up-is-down” government universe, the county’s jail contractor told the city council that:

J.E. Dunn, the construction company working on the new county jail, told city council last week that a shared jail would cost more in the long run, because the city would have to pay for services like food and laundry.

Will Kansas City not have to pay for food or laundry at the new facility they are going to build by themselves? Because I don’t think that is going to be a very appetizing or ambrosial jail without food or laundry.

Local governments sharing jails can absolutely work to save tax money and still provide the necessary safety and justice functions jails are there for. Regional jails are common in Virginia, and the U.S. Justice Department released a very favorable report on this practice a while back.

I don’t know who or what to blame here. Contractors running amok and running the show? Political disputes between the two bodies? Quietly disruptive employees who actively oppose service sharing and cost savings because they reduce the number of government jobs? One local elected official is putting the blame squarely on the latter, and I commend him for his blunt comments:

Jackson County Legislator Manny Abarca IV said it’s ridiculous the city and county couldn’t work out an agreement. “It’s a waste of taxpayer dollars to build two facilities that are naturally gonna have similar shared services that we could’ve combined,” he said. “As a taxpayer I’m very upset that this is the outcome.”

Abarca said it seemed like city and county staffers stalled on the project, “long enough to make this impossible to move forward.”

I am delighted that both Kansas City and Jackson County have all of this extra tax money to throw around. Now I don’t have to take the city seriously when it says it can’t afford to operate without an earnings tax.

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Apparently, the problems that led to the initial postponement of the project have been overcome as the plan for the $27 million development with retail, restaurant, and office space is moving forward. The land for the proposed development was only annexed into the City of Springfield in June 2021.

The obvious question is: Why would the city annex an area only to spend millions of taxpayer dollars subsidizing the development of the land?

I’ll admit that the area seems to be in pretty bad shape, so it may legitimately be considered “blight,” a designation that would qualify the project for TIF. (Blight designations for TIF projects are frequently not legitimate.) But there are other programs intended for environmental remediation that the land’s private owners could pursue that are much less harmful to taxpayers.

Economic development incentives such as TIF put taxpayers on the hook to increase private business profits. While passing this TIF proposal may make Springfield lawmakers look like they are “fixing” this eyesore, it’s at the expense of taxpayers. Lawmakers should focus on keeping tax rates low for everyone instead of playing favorites and artificially lowering them for a chosen few.

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However, reality paints a different picture. For option A, the trolley shut down in December 2019 because hardly anybody wanted to ride it. Neither ridership nor ticket sales exceeded 10 percent of what the Loop Trolley Company predicted.

Option B is an example of what economists call the sunk cost fallacy. The sunk cost fallacy is when an individual keeps doing something that isn’t working just because he’s already invested time or money into it. It’s like buying a movie ticket, realizing that the movie is terrible after ten minutes, but deciding to stay anyway because you already bought the ticket. The money is a sunk cost. The movie will not magically get better just because you paid for the ticket.

Similarly, taxpayers have already spent $51 million on the trolley. The trolley made less than $33,000 in its one year of operation, meaning that for every dollar the trolley made, it received over $1,500 from taxpayers. It suffered numerous construction delays, routinely cut its operating hours, and its extended construction harmed the local businesses it was supposed to help.

It strains credulity to think another $1.2 million of taxpayer money will somehow make the Loop Trolley successful. It’s even less logical to think that this $1.2 million is necessary because of the first $51 million taxpayer dollars.

If backers of the trolley want to find private investors to support the trolley because investors think it’s a worthwhile idea, that’s one thing, but trying to make taxpayers the investors is a different story. Several members of the East West Gateway Council of Governments just recommended that the full body vote for approval of the $1.3 million in federal funds at their October 27 meeting. However, members of the East West Gateway Council of Governments should make sure to look at the big picture before committing any more taxpayer money to the Loop Trolley.

The post The Loop Trolley and the Sunk Cost Fallacy appeared first on Show-Me Institute.

Truth in Accounting’s report ranks the country’s 75 most populous cities by their taxpayer burden (or surplus for a few cities), a number calculated by dividing the money needed to pay the city’s bills by the estimated number of city taxpayers. A larger taxpayer burden means a larger rank number.

According to the report, Kansas City went into the pandemic in poor fiscal health, with a $1.7 billion debt burden. This equates to a taxpayer burden of $11,300 per person and lands Kansas City at 57th in the country. St. Louis City is in even worse shape. Financial decisions have left St. Louis with a debt burden of $1.3 billion and a taxpayer burden of $14,600 per person. St. Louis ranks 63rd out of the 75 cities in the report. Missouri’s two largest cities both received a D grade for fiscal health.

All the cities on this list, including Kansas City and St. Louis, have balanced budget requirements, meant to “prevent elected officials from shifting the burden of paying for current-year services to future-year taxpayers.” As explained in the report, “if a city has a balanced budget requirement, then spending should not exceed earned revenue brought in during a specific year. Unfortunately, in the world of government accounting, things are often not as they appear.” Cities can do things such as keeping pension and other employment compensation costs out of the budget to give the illusion of a balanced budget. For example, Kansas City has $870 million and St. Louis has $380 million in underfunded pension benefits for city employees, so they each clearly need to be contributing more each year to the city pension funds to achieve true financial stability (as well as moving forward, not backward, with pension reforms).

Times are tough for individuals, businesses, and governments, but we shouldn’t forget the importance of accountability and balancing the budget. Truth in Accounting has released this report in previous years, and St. Louis and Kansas City have continuously ranked in the bottom third of cities. Show-Me Institute researcher Patrick Tuohey wrote this years ago and it still holds true: Instead of chasing shiny new projects and schemes, policymakers “should focus on the less glamorous but more important task of regaining sound fiscal footing.”

The post Kansas City and St. Louis Receive D’s in Fiscal Health appeared first on Show-Me Institute.

If the numerous initiatives introduced in this plan are privately funded, great! Individuals and businesses are free to invest in these initiatives if they deem them worthwhile investments. However, if this plan calls for public dollars, taxpayers should be wary. What is the plan for funding initiatives like the Brickline Greenway or lofty goals like an “entrepreneurial surge?” There is some mention of “public capital” and “sizable investments” in various organizations, but taxpayers ought to have a clearer explanation, especially if their tax dollars will be diverted to these projects.

Spending taxpayer dollars on vague endeavors is not the solution to St. Louis’s woes. The creators of this plan claim it will help St. Louis’s economy, yet there is no mention of things that research shows have positive effects on a city’s economy, like lowering taxes or lessening regulations. Recent population estimates show a decline in both St. Louis City and County, continuing a trend that’s been going on for years. St. Louis needs real policy reforms to pull the city out of its slump and the STL 2030 Jobs Plan simply doesn’t deliver that.

The post The Plan Without a Plan appeared first on Show-Me Institute.

• Policymakers must recognize that this is a one-time injection of money, so they must not create any new programs that require recurrent funding. Economic recovery will take enough time on its own, and higher taxes will only slow it down.
• Further, stimulus money should only be spent on or reimbursed for pandemic-related expenses, whether they be totally new costs or additional costs incurred from programs facing additional strain. This would allow jurisdictions already transferring money from unrelated funds to pay for virus-related expenses to be reimbursed and the transferred-funds replenished. Spending money outside these parameters would likely lead to new programs and higher taxes in the future.
• Transparency is paramount. Taxpayers have a right to know how their money is being spent, especially in a crisis where governmental decrees curtail normal behavior. While it is necessary to move quickly in a crisis, government action should be out in the open in order to strengthen public trust.
• To meet these objectives, Missouri counties and cities should publish their spending—all of it, since money is fungible—as a condition of receiving stimulus dollars. Extending the Treasurer’s Show-Me Checkbook project to receive and include these records would be a logical approach. That way, state policymakers can confirm that local governments have complied with the stimulus transparency requirement, and taxpayers can simultaneously track local spending themselves, now and in the future.

The governor has assembled a task force to determine how Missouri’s money will be spent. Abiding by these principles can help keep government honest and taxpayers informed.

The post Stimulus Spending Checklist appeared first on Show-Me Institute.

Tell that to Platte County.

The Zona Rosa shopping district there cannot meet its bond obligation, and so the County has been considering covering the debt. In a March piece in The Kansas City Star, Platte County Commissioner Dagmar Wood said the effort amounts to “basically bailing out bondholders.”

According to The Bond Buyer magazine, the county board considered not making those payments, and as a result,

[S&P Global Ratings] slashed the rating on the Platte County Industrial Development Authority bonds for Zona Rosa deep into junk Sept. 7, to B-minus from A. The bonds were originally rated AA-minus based on the strength of the county’s guaranty subject to annual appropriation.

Let’s consider that “guaranty subject to annual appropriation.” It does not mean the County is bound to make up the difference; just that it will consider doing so each year as funds are available. The 2007 financial deal itself makes very clear that the county is not on the hook for the bonds (emphasis in the original),

THE BONDS DO NOT CONSTITUTE A GENERAL OBLIGATION OF THE AUTHORITY, THE DISTRICT OF THE COUNTY AND DO NOT CONSTITUTE AN INDEBTEDNESS OF THE AUTHORITY, THE DISTRICTS, THE COUNTY, THE STATE OF MISSOURI (THE “STATE”) OF ANY POLITICAL SUBDIVISION THEREOF WITH THE MEANING OF ANY CONSTITUTIONAL, STATUTORY OR CHARTER PROVISIONS OR LIMITATION.

Despite this, and because the County is considering not making such an appropriation, there may be considerable repercussions not just for the Zona Rosa project, but for Platte County and for the state! The Bond Buyer continues,

“S&P reports that the county is in strong financial and economic condition, but MMA assumes catastrophic downgrades for all Platte County securities should the IDA bonds default,” MMA wrote in its weekly commentary. “Further, MO appropriation bonds generally could see weaker price trends, particularly if market wide yields begin to rise.”

One can easily imagine a situation wherein a weak air travel market generates lower-than-expected revenue at KCI—below that needed to meet debt payments to bondholders. Just as with Zona Rosa, one can see that a rating agency might threaten to lower ratings for Kansas City despite the specific terms of the bond. Would Kansas City leadership then argue that taxpayers need to bail out the airport to avoid a reduction in our city bond rating?

The lesson for Platte County is that no publicly financed development is without risk to taxpayers. As Kansas City’s new terminal project lurches forward from error to error, it is lesson we ought to remember.

The post The Risk of City-issued Bonds appeared first on Show-Me Institute.

It is disconcerting, then, that a minor bevy of similarly complicated prevailing wage “reforms” keep creeping out of the shadows. One would peg wages to county wage averages; another would lightly tinker with wage reporting requirements. Sometimes the prevailing wage would attach. Sometimes it wouldn’t. And so on.

Just stop.

I understand the appeal of keeping the prevailing wage in place to construction interests, since it props up their pay. However, legislators should be supporting the interests of taxpayers and acting to steward taxpayer money, not conjuring new ways to rebrand a Rube Goldberg public construction wage system that frankly shouldn’t exist. To put it plainly, this is a question of taxpayer interests versus special interests. Policymakers shouldn’t complicate an issue that, in the end, is that simple.

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Let’s start with some uncontroversial data.

• The hospitality industry constitutes a small fraction of the Saint Louis economy. Less than 4% of the city’s payroll comes from the hotel and restaurant industry.
• Nearly all convention business in Saint Louis could be accommodated by existing hotel and event space. In 2015, only 9 conventions had more than 10,000 attendees. In 2016 that figure rose, modestly, to 11. For 2017, Saint Louis is currently slated to host only 10 events with 10,000 or more guests.
• The Saint Louis Visitors Commission, which runs the convention center, loses some $16 million a year.

Now let’s review convention center history.

• The Saint Louis convention center opened in 1977, underwent a $150 million expansion in the late 1980s, and was flanked by the $280 million Edward Jones Dome in 1995. The expansion and dome were promised to boost hotel “room nights”—a measure used to assess convention center success—to more than 800,000 annually. But in 1999, convention business generated barely over 200,000 room nights. In 2014, annual room nights were just over 425,000.
• Nationally, nearly every convention center expansion or renovation has dramatically underperformed. Washington D.C.’s convention center saw roughly 36% of the room nights that were projected when renovation was undertaken. Austin’s saw 47%; and Portland’s saw 44%.
• While the America’s Center and dome were supposed to be profitable ventures for the city over the long term, the public still owes some $100 million on them, and won’t pay off that debt for at least 5 or so more years.  

In short, empirical evidence suggests that the financial prospects for a major overhaul of the convention center are bleak. Perhaps that’s why no private developers are interested in funding the project. But if the private market indicates that the investment isn’t worthwhile, should taxpayers be saddled with the risk?

Convention-center boosters will object, insisting that a renovation will help the local economy, especially because a high percentage of convention spending comes from out-of-towners. This objection misses the mark in several ways. For one, demand for convention center space has remained flat over the last few decades. Is investing hundreds of millions of public dollars in a buyer’s market the best way to get windfall returns? Secondly, the tax revenue that would pay for a renovation could be used in myriad other ways that would have a much greater impact on the economy, regardless of whether that revenue came from outsiders. If we’re really interested in economic growth, why not spend the money on meaningful infrastructure or use it to provide tax relief to city residents and businesses?

The driving force behind massively expensive convention center renovations—much like sports stadiums, light rail expansions, and other “transformative projects”—appears to be a desire to rebuild the downtown core. But like most transformative projects dangled in front of taxpayers, the prospects for success are low and the costs dispersed; a small and well-connected few are given a sweetheart deal while taxpayers are left on the hook.

For what it’s worth, the economist Heywood Sanders, in his 2014 book, Convention Center Follies, devotes an entire 78-page chapter to the failures of Saint Louis’s convention center. Perhaps that, if anything, is an indication that we should be skeptical of proposals to reinvent the convention center with taxpayer dollars.

The post Convention Center Renovations: Picking Winners and Losers with Taxpayers’ Money appeared first on Show-Me Institute.

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Former Fire Chief Mike Ballmann, who claims that the firefighters union pressured the board to fire him, believes that the union has overstepped its role in the affairs of the fire district. When asked about union involvement in the management of the fire district, Ballmann said that the Fire Protection District Board of Directors was “packed with union people so the shop gets what it wants without any grief.” With the union’s heavy involvement in deciding who will run for the board positions, has the government union overstepped its role?

Since the district is funded by taxpayers, its business should be conducted with the interest of the taxpayer in mind. However, when board meetings are closed, interested taxpayers do not get to see how government unions involve themselves in district affairs. Furthermore, according to Ballmann, there are instances when the union shop steward is invited into the closed board meeting, which not even fire chiefs are allowed to attend. The problem isn’t the existence of a union, but rather their conspicuous control over the fire protection district.

The obvious and sensible solution is for fire districts like O’Fallon to follow in the footsteps of the Monarch Fire Protection District and initiate an open collective bargaining process. This would make sure that any changes made to district operations, union contracts, and decisions to hire or fire employees are free from ambiguity. However, despite efforts to gain the O’Fallon Fire Protection District Board’s insight on this issue, the inner workings of the district seem as ambiguous as ever.

Taxpayers are aware of the great importance firefighters play in protecting their community; their concern, rather, lies in the fact that their fire district is lacking representative leadership and sufficient oversight. Transparency is essential to guarantee that the taxpayer interests are being met. Once open collective bargaining becomes the norm for all government unions, we can ensure that both the worker and the taxpayer are being represented and considered in the political process.

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Building a new terminal would not require general taxpayer funds. Instead, bonds would be paid by airport passengers, airlines and other users of the facility.

Now we learn from the Kansas City Business Journal that general taxpayer funds will be used after all. On Nov. 19, Austin Alonzo reported on the latest airport advisory group meeting:

During the meeting, Fowler announced that the board will “engage” New York-based transportation consultancy firm Frasca & Associates LLC as its independent consultant.

After the meeting, Fowler said Kansas City will handle the consultant’s contract, which could be worth as much as $100,000. More information on that choice and what the firm will do for the KCI Advisory Board will be revealed at the group’s next meeting.

Why are general taxpayer funds being used instead of airport funds? Apparently VanLoh cried poverty, saying the Aviation Department does not have the money. Mind you, the airport had the $117,000 to pay public relations firm Global Prairie to tell us how great an idea the new terminal is. The Aviation Department found the money to conduct the multi-year study that is now being considered. They even had the cash to loan Kansas City $10 million (at a modest rate of interest).

Terminal supporters may argue that the Aviation Department should not have to pay for a consultant to review Aviation Department claims. (After all, we at The Show-Me Institute have been investigating the matter for months at no public expense.) But even if you accept that argument, if the new terminal plan goes forward it, will put the airport into even more debt than the new terminal will generate in revenue. And that debt, we argue, could result in Kansas City making up the difference from the general taxpayer funds, as it has with Power & Light, The Citadel and this current airport consultant. Residents will certainly pay the high costs through airline tickets, parking, or reduced options at MCI.

The people of Kansas City do not want a new terminal. MCI’s biggest tenant, Southwest Airlines, says the proposed plan is too expensive and unnecessary. In most places, that would be enough to settle the issue, but in Kansas City, it just increases the cost (see also: streetcar).

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