At the center of the issue is what’s called the “Thrifty Food Plan,” which is the formula the USDA uses to set SNAP benefits every year. In short, the formula is designed to determine the cost of a basic but nutritious diet, given the USDA’s dietary guidelines. For decades, the Thrifty Food Plan was adjusted yearly to account for the increased costs families saw in their grocery bills. But in 2021, the formula was changed to boost benefits by around 21%, far exceeding inflation.

The precise way the formula was adjusted is complicated and goes beyond the scope of this post, but suffice it to say that both the foods included in the calculation and their cost were changed to increase national SNAP expenditures by roughly $200 billion over ten years, all without an act of Congress. Historically, major changes to the Thrifty Food Plan beyond inflationary cost increases have been the result of legislation. Such a significant change without explicit approval led many to call for its immediate reversal, arguing the move violated federal law and years of precedent.

After several years of higher SNAP spending, the OBBB finally addresses the issue created in 2021. The law now ties Thrifty Food Plan increases to inflation and specifies how often the foods included in the calculation can be re-evaluated. While this may not seem like some groundbreaking change, it’s an important step to protect against future bureaucratic attempts to expand welfare benefits without congressional approval, and could ultimately save Missouri taxpayers money.

As I wrote recently, in an effort to improve SNAP’s program integrity, the OBBB will soon start putting states on the hook for a portion of benefit costs if they can’t get their payment error rates under control. Keep in mind that until the OBBB is fully implemented, the federal government covers 100% of all SNAP benefits. Meanwhile, states have overpaid recipients nearly 10% of the time. By changing the incentives, states now have a reason to lower their error rates, which should reduce wasteful spending. The Thrifty Food Plan change will also help states (maybe including Missouri) that become responsible for a portion of benefit costs (because their payment error rates are too high) from being subject to unanticipated large program cost increases in future years.

The Thrifty Food Plan changes will help rein in the administrative state and encourage states to be better stewards of taxpayer money. Missouri’s policymakers and taxpayers should welcome the return of thrift to SNAP.

The post More SNAP Changes: Restoring Thrift appeared first on Show-Me Institute.

Patrick Tuohey, co-founder and policy director of the Better Cities Project, has been critical of the Sun Fresh project. He says the store looks “great on paper” but does not have demand to support it. Plus, he noted, the neighborhood has other options because of a nearby Aldi store and the independent Happy Foods Center.

Kansas City officials hoped that subsidizing the grocery store would revitalize a long-neglected corridor. Ten years later, with the store on the brink of closure, city leaders are asking what went wrong. But they needn’t look far: the answers were visible from the start—and many of them were detailed in the very Show-Me Institute blog posts I wrote at the time.

Since 2015, I’ve chronicled the Sun Fresh project and argued that its shortcomings were structural, not situational. Here are the key arguments made then, all of which remain relevant now.

• In May 2015, I wrote that “Kansas City government is going into the grocery business,” a move I called “a stunning development.” I noted that the city would lease the property to Sun Fresh for just $1 per year and that the entire project was heavily subsidized—a sign that market demand alone wasn’t enough to support it.
• In the same 2015 post, I argued that grocery demand was already being met in nearby areas: “people who make a living running grocery stores by investing their own money do not think this [Sun Fresh investment] is a good idea.”
• The next week, I conducted some shoe-leather reporting by driving around the supposed food desert. I found several grocery stores with well-stocked produce aisles, and marveled about how, due to the city’s use of various taxing jurisdictions, food in some of the city’s poorer neighborhoods was more expensive than in wealthier areas.
• In May 2016, I updated the story of the subsidized grocery store, noting costs were ballooning, ending with: “In short, it appears that city leaders are planning to lose money investing in an already-failed venture in order to pursue a policy that has no evidence backing its effectiveness.”
• The next month, I wrote that the USDA was becoming skeptical of the “food desert” idea itself. I also noted research showing that the mere availability of healthy food was not sufficient to solve the problem of unhealthy diets.
• In March 2017, I pointed out that project costs continued to rise.
• In December 2017, I summarized new research showing that the “food desert” premise was deeply flawed.
• In October 2018, I highlighted a Kansas City Star piece indicating grocers are in the business of giving people what they want, not what someone else thinks they ought to have. The Sun Fresh store director told the paper, “You can pick apart any store that you want to on what they have or don’t have, but it’s about if people request these things or not . . .  We’re going to give our customers what they want. Not just what looks good.”
• In July 2019, I wrote that there were signs the project was already failing. “Despite city-funded construction and dramatically subsidized rent, the store cannot pay its bills. The question now seems to be whether taxpayers should further fund this failing enterprise.”

The city’s logic was clear enough: offer fresh food options in a historically underserved area, and hope it drives neighborhood investment. The Star quoted then-Mayor Sly James as saying the Sun Fresh Market would be the “beginning of the revitalization of this entire corridor.” He was wrong. The policy approach ignored fundamental questions of market feasibility and safety. Even when intentions are noble, taxpayer subsidies cannot manufacture demand where it doesn’t exist.

Supporters may argue that this was an experiment worth trying. But experiments should come with contingency planning and humility—not endless subsidies. The city’s willingness to absorb risk that private firms declined should have been a warning, not a point of pride.

The real tragedy is that Kansas City could have directed those resources toward improving public safety, supporting neighborhood-scale entrepreneurship, or partnering with existing grocery providers willing to operate without public subsidy. All of those approaches would have been more fiscally responsible and, most likely, more sustainable than what the city did.

As policymakers consider next steps, they would do well to revisit the early warnings and lessons from Sun Fresh. The problem was never just about food access. It was about how we define, diagnose, and address the challenges facing our neighborhoods.

This was a foreseeable failure. Hopefully, our policymakers learn from it.

The post Sun Fresh’s Struggles Were Predictable—and Predicted appeared first on Show-Me Institute.

State and local government

Missouri has received roughly $2.096 billion for state and local government relief. $521 million of that must be distributed to counties and cities with populations under 500,000 within ten days of Jefferson City receiving the funds. St. Louis County has also received roughly $173.5 million and Jackson County $122 million. The money is to be used for non-budgeted coronavirus-related expenses.

Community health centers

Twenty-nine community health centers have received a total of $29.8 million for testing, treatment, and continuing primary care.

Education

Missouri’s Department of Elementary and Secondary Education has filed the appropriate paperwork to receive $208.4 million from the Elementary and Secondary School Emergency Relief Fund. Further, the governor has announced that $54.6 million from the Governor’s Emergency Education Relief Fund will also arrive to assist with K-12 and higher education, as well as $117 million from the U.S. Department of Agriculture to help provide school lunches. Senator Roy Blunt has announced that Missouri will receive $206 million for colleges and universities, half of which will be immediately available for institutional and student use, as well as $66.5 million through the Child Care and Development Block Grant for early childhood education needs.

Transportation

The Missouri Department of Transportation has received $61.7 million from the CARES Act to be used for operating expenses and capital assistance for 30 rural agencies. Additionally, Missouri has received $152.4 million to be used for revenue assistance at 75 airports across the state.

Housing

$57.7 million in Community Development Block Grants are reported as being available to a combination of 16 Missouri cities, counties, and state government by the federal Department of Housing and Urban Development. This money is supposed to be used as block grants, emergency solution grants, and housing opportunities for persons with AIDS. The Missouri Department of Economic Development has announced that it will receive $13.6 million of that total.

Unemployment

The Missouri Division of Employment Security has used more than $66 million in federal funds to provide additional unemployment compensation, although more compensation will be distributed once the state determines how to process workers in the “gig” economy.

Emergency management

Missouri can apply for roughly $1.86 million to assist with emergency management procedures ranging from data collection and sharing to response plan development. A 50 percent match in state funding for the program is needed to receive funding.

Public safety

The cities of Joplin and St. Joseph have received funds to assist with public safety expenses for a combined total of $170,000. Overall, $5.5 million is available for 28 Missouri county and city agencies and $11.6 million for state agencies, should they choose to apply for these funds.

Small business loans

Over 46,000 Missouri businesses have received loans from the Paycheck Protection Program, totaling slightly more than $7.5 billion.

Summary

Received: $10.201 billion

Expected: $710.2 million

Available through application: $18.79 million

If you add these sums together you get $10.918 billion. This is what we know so far. More dollars may arrive in the future, boosting the totals for many—if not all—categories.

The post Federal Stimulus Money in Missouri: What We Know So Far appeared first on Show-Me Institute.

To review, there were two offerings to get the USDA to relocate to Kansas City, Missouri. The first was a state subsidy that allowed half of the withholdings tax paid to the state to be used to offset the costs of preparing the new site. Under the statutes relevant to the particular incentive package being used, 20 percent, amounting to $6 million, was to be paid to PortKC in administrative fees.

The second subsidy (unrelated to the first) redirected local Kansas City taxes to the project. This amount also happened to total to about $6 million. So rather than have local taxpayers give up all that money, the city council simply directed PortKC to forgo some of its administrative fee so that Kansas City taxpayers didn’t have to cough up as much. The amount given to the USDA is the same, but PortKC’s windfall is dramatically reduced.

Monday, Steve Vockrodt reported in The Kansas City Star that PortKC followed suit, albeit begrudgingly:

Last month the Kansas City Council passed an ordinance that reduced by about $4 million what the city would contribute to the USDA incentive package. In turn, the Port Authority felt compelled to cut the $6 million it had counted on from the AIM Zone by $4 million to make up the difference and keep the USDA interested in relocating to Kansas City.

This is a victory for Kansas City taxpayers and a necessary limitation placed on PortKC. Back in August I called for further restrictions to be placed on PortKC’s authority and jurisdiction. This is a good start, but more should be forthcoming.

The post Show-Me Gets Results? PortKC to Refund Taxpayers appeared first on Show-Me Institute.

• The Tax Increment Financing (TIF) Commission diverted from its usual rubber-stamping to say no to an outrageous request to subsidize a luxury hotel downtown.
• A vote to approve a proposal to dump a bunch of public money into an office tower has been repeatedly delayed by the city council. Not only is this a speculative risk for the city, the numbers used by proponents are wrong.
• More recently, and immediately after the Show-Me Institute published a call to do so, the deal to bring the USDA to Kansas City was reworked to cap public investment by reducing the port authority’s windfall.
• More promising for the long term, Mayor Lucas appointed former councilmember Alissia Canady to head the TIF Commission as well as appointing some current council members to the commission. Putting elected officials on the commission should make the commission more responsive to voter concerns, and Canady herself has been consistent in her willingness to oppose some incentive projects.

There is a great deal more to be done to rein in the incentives culture in Kansas City. Among other things, we need a legitimately independent study of incentives and their impact, the recent city effort having been an absolute debacle. But based on the past few weeks, there is reason to be guardedly optimistic.

The post Some Positive Signs on Economic Development Incentives in Kansas City appeared first on Show-Me Institute.

https://www.youtube.com/watch?v=NibOUrzzwho&t=5s

The post Patrick Tuohey Discusses Local Issues on KCPT’s Ruckus appeared first on Show-Me Institute.

The Kansas City region is unlike many in the United States in that the metropolitan area is divided almost exactly in half by the state line. The older and more urban part of region, Kansas City, sits in Missouri. The newer and more suburban post-war developments rest in Kansas. So the traditional urban-suburban economic wars seen across the country have an additional component: state interests. According to the Hall Family Foundation, the two states spent $335 million in the past decade trading employers only to see Kansas win a slight 1,200 net gain of jobs.

While the state action is welcome, the truce deal does not include all the various localities on either side of the state border. Cities may continue to offer incentives or other financial packages to lure existing businesses into their domain. While Kansas City, Missouri has pledged to honor the agreement, smaller suburban communities on the Kansas side have not. As demonstrated by the USDA’s recent announcement that it has chosen a site on the Missouri side to relocate some of its workforce, the two states will continue to fight an expensive war among themselves to bring jobs from afar. The Kansas City Area Development Council—a private non-profit which seeks to attract jobs to the region—still operates as a double-dealing promoter in the regional jobs Fight Club, collecting dues from both sides of state line and then repeatedly pitting them against each other.

Many of the individuals and organizations who profited handsomely from the years of combat have come out in favor of the deal. Sort of. The CEO of the Greater Kansas City Chamber of Commerce—a chamber whose portfolio includes both sides of the state line—recently told a local radio host, “I think it forms a new way to think about how we’re going to grow Kansas City where we really are looking to grow it in a net new way, not just moving companies from one side of the city to the other.” But moving companies and jobs from one side of the city to the other is exactly the economic development policy the Chamber has championed in the past and will likely champion in the future (e.g. a downtown baseball stadium for the Kansas City Royals).

Part of the problem seems to be that the folks who run such economic development programs are able to use questionable data in order to proclaim job growth and presumably justify their own budgets. For example, Waddell & Reed, a financial services firm originally located in Missouri but that crossed state line years ago in exchange for such incentives, started its incentives negotiations to return to Missouri just before the Border War truce was announced. In exchange for $62 million in Missouri incentives, it will move 1,000 jobs from Kansas. A spokeswoman for the Missouri Department of Economic Development heralded the move as good for the region, apparently unaware the jobs were already well within the region. One can be confident they will claim those jobs and new in their reporting documents.

Perhaps most notable of all is that the truce lacks precise language to describe exactly what it is prohibiting. Kansas Governor Laura Kelly’s executive order seems to restrict incentives to projects that create “net new” jobs. But that term is not defined. Could a growing Missouri firm already planning to make a few new hires take that plan to Kansas and seek incentives — using those “net new jobs” as leverage? How will Kansas assess whether those “net new jobs” were due to the incentives themselves?

Knowing the degree to which job creation or private investment is due to incentives has been a point of contention all along. Policymakers and developers point to all the new property development as proof of efficacy, but the vast majority of the economic research literature indicates that such development likely would have happened anyway, and that the return on investment of public dollars is small if anything at all. Private companies have learned how to game the system through a combination of over-promising, threats of relation, and fanciful accounting.

It is heartening to learn that other regions may be examining the Missouri/Kansas deal to see if it might work for them; the goals are laudable. But if policymakers are serious about ending these types of economic development incentive wars, all levels of government in the region need to be a party to it and the terms must be precisely defined. The allure of ribbon cuttings and claiming to be job creators is too great to leave to vague promises.

The post Skepticism Is Warranted on Missouri/Kansas Border War Truce appeared first on Show-Me Institute.

The USDA office is moving into 805 Pennsylvania, a piece of land designated an Advanced Industrial Manufacturing (AIM) Zone by Port KC. According to state statute, this designation allows 50 percent of the state withholding tax collected from the new jobs to be redirected to the USDA, totaling just over $26 million dollars, per The Kansas City Star. To offset the cost of developing the site for a new employer, Port KC is allowed to charge an administrative fee of 20%, which comes to $6 million dollars in this case.

But wait, there is another subsidy for the project, this time coming from Kansas City taxpayers. From the Star:

On top of that, Kansas City could offer up to $6 million through the redirection of 75% of city taxes, according to a document outlining the local and Port KC incentives obtained by The Star. The Kansas City Council would have to vote to approve the redirection of local taxes for the USDA relocation; an ordinance is expected within weeks.

“City taxes” and “local taxes” are euphemisms for the earnings tax, as there will be precious little other tax generated at the USDA site. Kansas City leaders, who argue breathlessly that the earnings tax is such a vital source of income for things like public safety, are willing to forgo $6 million of earnings tax revenue for the USDA.

There is a better way. If city leadership wanted to protect Kansas City taxpayers from losing vital tax dollars, council members would demand—and Port KC would agree—to waive its administrative fee, which is coincidentally the same amount that city taxpayers are being asked to give up. Without such a demand by the city council, however, this deal includes a transfer of millions of dollars from Kansas City taxpayers into Port KC’s pocket.

The post USDA Deal Is Great for Port KC, Less Great for KC Taxpayers appeared first on Show-Me Institute.

The Port Authority, or Port KC, ultimately could issue up to $25 billion in bonds over 35 years for the Google data center project, a figure that represents the company’s maximum investment in Kansas City. Think of the $25 billion as a credit limit on a personal credit card. It’s not necessarily an indication of how much Google will invest.

The benefit to Google is that the Port KC can issue Chapter 68 bonds that give Google a property tax exemption for 25 years. Vockrodt goes one step further and makes clear in the story that such subsidies for data centers don’t offer a great return, if any, for taxpayers:

Good Jobs First, a research group often skeptical of corporate incentives, in a 2016 report identified a Google data center project in Oregon from 2006 that received $360 million in subsidies in return for 175 jobs, or $2 million per job. Good Jobs First advised cities and states to treat data center subsidies with caution.

“Internet-based companies have to grow the cloud and they will choose stable areas with cheap electricity,” the report said. “They will barely benefit your local economies because they create so few jobs and often import top-wage labor.”

Once again, Kansas City through its port authority is playing handmaiden to large corporations even when there is so little to gain. (Rest assured, this same story will unfold if/when the USDA considers locations in Missouri.) How is Kansas City supposed to fund infrastructure, education, public safety and all the other basic needs on which we depend if we continually offer exemptions from the taxes needed to provide them?

If taxes are too high for Kansas City to be a competitive place to attract business, then that needs to be addressed fairly for everyone. Offering sweetheart deals to a few while the rest of us pull their weight is no way to operate a city.

The post Port KC Versus Taxpayers appeared first on Show-Me Institute.

The USDA’s cost-benefit analysis found that shifting these two agencies to Kansas City would reduce costs by 11.3 percent, saving taxpayers roughly $300 million (in nominal terms) over the next 15 years. These savings stem primarily from the fact that Kansas City has dramatically cheaper real estate than D.C., as well as marginally lower cost of living. The USDA’s report noted that the median sale price of a home (a major factor in determining cost of living for employees) in Kansas City is $205,400, compared to $420,000 in D.C.

This isn’t a surprise to me; I moved to Kansas City from Washington, D.C. in 2005. Nor should it surprise anyone who read our paper on the competitive advantages of the Kansas City region, as the paper mentions low cost of living as a major advantage for Kansas City.

While we don’t know exactly were in the region the USDA will locate, it was disheartening to read in The Kansas City Star that $26 million in “unspecified” incentives were part of the deal. The authors reported:

Greg LeRoy, executive director of the watchdog group Good Jobs First, accused the USDA of engaging in an Amazon-style selection process that made states compete for the jobs with incentives.

“It’s outrageous that the USDA would run an auction. This is the extreme version of privatized behavior by the federal government. Uncle Sam has no business running auctions, dangling jobs on state and local taxpayers,” he said.

LeRoy said the final competition the USDA is setting up between Kansas and Missouri is reminiscent of how corporations set municipalities against each other after a region has been selected.

“This is classic site location consultant chicanery…This is an ugly, extreme version of Uncle Sam imitating Jeff Bezos. Yuck. If I were a Missouri or Kansas taxpayer, I would never stand for this. And as a federal taxpayer I’m cross-eyed.”

It’s a shame that the USDA encourages such behavior. It’s a shame that the Kansas City region plays ball, and it’s a shame that we’ll now fight among ourselves for the specific USDA location.

I discussed this topic with Pete Mundo this morning on KCMO Talk Radio. Click here to listen to the segment.

The post USDA Moves to Kansas City, Gets Incentives appeared first on Show-Me Institute.

The story also makes clear that it’s not that stores east of Troost Avenue “lack healthy food,” as the headline suggests. It’s that nutritious food isn’t presented immediately as one enters the store. We’re told, “Customers must walk back 100 feet before they encounter the produce section.” 100 feet.

There’s no bad guy in the story, either. Grocers admit to stocking what people want.

“You can pick apart any store that you want to on what they have or don’t have, but it’s about if people request these things or not,” [Sun Fresh store director Kim] Nagel says. “We’re going to give our customers what they want. Not just what looks good.”

Grocers aren’t fools. They’ll quickly learn what the community wants and work hard to provide it. All the fresh and brightly colored produce goes to waste if no one buys it, which is exactly the problem. Kansas City seems to think that building a new supermarket will address the problem. It won’t, as was addressed directly in recent USDA research. In fact, the Star’s own reporting echoes the research findings on food deserts: People do not necessarily drive to their closest grocery store. If they want something that isn’t available, they travel to where it is available.

I can’t get ground veal at the two grocery stores nearest me. I must travel to a third, more distant store. Am I the victim of a veal desert? Of course not.

The challenge of poor nutrition is very real, and addressing it will require a lot of work. That work should be focused on increasing demand rather than on counting kale and measuring miles. As the Star editorialized a few years ago about the announcement of the taxpayer subsidized Sun Fresh on Prospect:

[Kansas City Mayor Sly] James said building the Sun Fresh Market would be the “beginning of the revitalization of this entire corridor.” In truth, that’s been said before. For example, the current forlorn Linwood Shopping Center opened to rave reviews almost 30 years ago on the site of the demolished St. Joseph Hospital.

Yet the old grocery store there closed almost a decade ago. The center today is a reminder that investing in the East Side must overcome hurdles that don’t exist in other parts of the area. History shows that a lone project can’t really lift up an entire community. It takes a much bigger effort to do that.

The current “rave reviews” over some offerings at the new location will likely end if the demand does not keep up. And there are hurdles specific to the East Side when it comes to nutrition. Pretending otherwise is not just bad public policy; it is a disservice to residents.

The post Food Deserts and Demand appeared first on Show-Me Institute.

First, food deserts themselves turn out to be a figment of the imagination. The USDA has published research indicating that people do not rely on the closest store to them. The Star makes this point by interviewing a woman who currently travels well past the closest market for her groceries. She may patronize the new grocery store when it opens, but she has other choices.

Second, the store that was in this location closed ten years ago. If there wasn’t enough private interest to keep it open at the time, or to renovate it while it sat empty for a decade, why does anyone think it will work now? (Besides the fact that taxpayers are subsidizing the rent to the tune of thousands of dollars a year.)

Third, the project keeps getting more expensive. It was estimated at $11 million in 2015. $15 million in 2016, and the latest estimate is $17 million.

In a city that struggles to offer basic services, this is one expensive misadventure that could have been avoided. 

The post Kansas City’s Food Desert Insanity appeared first on Show-Me Institute.

Earlier this month the Saint Louis Board of Aldermen’s Housing, Urban Development and Zoning Committee voted 4-3 to approve the release of a $2.8M TIF note and to establish a community improvement district (CID).  This decision would impose an additional 1% sales tax in the area to assist with the development of a $20M grocery store and gas station that Paul McKee announced back in March.

Both residents and city officials pushed back on this decision in part due to their frustrations with NorthSide’s history, and in part because the CID would increase the burden on residents in the area who may not be able to afford it.  The proposed CID would bring the area’s sales tax up to 9.679% (Missouri’s average is 7.86%).

When we consider how heavily subsidized the development already is, the argument for a CID becomes less convincing.   The development’s costs are estimated at $20M.  Considering that $10M of funding is coming from a U.S. Department of Agriculture grant, $5M from New Market Tax Credits and $2.8M from TIF, the project is almost entirely being taken on with funds from taxpayer pockets. Is such heavy incentive use appropriate for a venture that includes a dime-a-dozen gas station? 

The Northside Regeneration fiasco has received a staggering amount of incentives and has little to show for it.  The bills in question now move on to the Saint Louis Board of Aldermen to determine whether this development needs yet another subsidy. 

The post The North Side’s Unlearned Lesson appeared first on Show-Me Institute.

The US Department of Agriculture just released an article based on research that concluded that while earlier studies suggested that grocery store location mattered,

More recent studies—using new data with rich detail about food shopping behavior or better methods for understanding the underlying relationships between store access and diet—show that the effect of food store access on dietary quality may be limited.

The study found that regardless of income, people don’t necessarily shop for groceries at the stores closest to them. The study also indicated that food prices affect choices, which shouldn’t be surprising. The part that matters most for Kansas City is the section titled “Building New Supermarkets Is Not Enough.” In one study, researchers compared eating habits before and after a new supermarket opened; concluding,

residents who regularly used the new store had similar diets as residents who did not. The study also found that fruit and vegetable consumption decreased slightly in both neighborhoods.

A similar study of two neighborhoods in Philadelphia—one where a new supermarket opened in 2009 and a similar neighborhood without a new store—was published in 2014 by researchers at the London School of Hygiene and Tropical Medicine and Penn State University. Residents’ perceptions of food accessibility in the neighborhood with the new store improved relative to the control neighborhood, but consumption of fruits and vegetables did not improve.

The article concludes that “improving access to healthy foods” won’t have much impact. It suggests that more important factors might be product cost and available income for food. In those regards Kansas City is not doing well—we are a high tax city overall; often charging a higher tax rate in poorer neighborhoods. Kansas City’s profligate spending—despite the best intentions—is hurting its most vulnerable residents.

The post Is Kansas City’s “Food Desert” a Mirage? appeared first on Show-Me Institute.

A new study from the Cato Institute shows that average federal compensation is nearly double average private sector compensation. Do you think AFGE took this study in stride?

“Bogus!” cries AFGE in a recent release. Rather than acknowledging the fact that, yes, federal employees are very well compensated and enjoy generous health and pension benefits, AFGE resorts to name-calling,  describing the study as “a shameful piece of propaganda.” Ouch.

AFGE argues that it can be misleading to compare the entire private sector to federal employees because there’s so much diversity across job classifications. True, you need to be careful about the conclusions you draw from an average that lumps physicians in with custodians. Especially if the private sector employs many more unskilled workers than the federal government.

AFGE makes this argument, but you have to get through a lot of angry rhetoric and name calling to get to it. And the Cato authors deal with this objection in the study:

Some people argue that the government has a unique high-end workforce that deserves to be paid handsomely. But you can flip through the federal budget and find mundane bureaus where workers are paid highly for normal bureaucratic jobs. For example, average compensation in the Department of Commerce's Economic Development Administration—an agency that hands out business subsidies—is about $140,000. And average compensation in the Department of Agriculture's Office of Chief Economist is about $174,000. So it is not just rocket scientists that earn high wages and benefits, it is also federal workers in regular white-collar jobs.

The bottom line here is that we’ve got to bust this myth of the underpaid government worker. Yes, we want government employees to be well paid, but compensation should be reasonable. The government does not need to be the highest paid industry in our economy.

The post Cato Study Shows that Federal Employees Make More than Private Sector; Government Unions Furious appeared first on Show-Me Institute.

Our state needs to confront the issue of underassessment in rural Missouri. Throughout Missouri, some of America’s best farmland is assessed and taxed at an incredibly low rate. The United States Department of Agriculture calculates all the agricultural property in Missouri at a market value of $74 billion. According to the Missouri State Tax Commission (STC), however, that same land has a taxable value of just $1.7 billion. That means we are setting taxes based on 2 percent of market value. The STC has attempted to partly address this by increasing set assessments for farmland, but the legislature has prevented such action.

Unlike residential, commercial, or even unused agricultural property, Missouri law does not base farm appraisals on market prices. Actively farmed land is appraised and taxed based on a state grading system, not assessment practices. Not surprisingly, that grading system sets assessments that are extremely low. For example, Missouri’s farmland has an average market value of $3,340 an acre. But the best farmland in the state can be valued — at most — at $985 an acre for purposes of taxation. For pastureland, the average value in Missouri is $1,820, but the most it can be valued for taxes is just $195. If your home or business is worth $100,000, it is supposed to be appraised at $100,000. Only farmland gets automatically set at a discount.

Then it gets even more extreme. An assessment ratio is then applied to the value of all property. That ratio is 32 percent for commercial property, 19 percent for residential property, and 12 percent for agricultural property. Your $100,000 home appraisal pays taxes based on an assessment of $19,000. But your $5,000 acre of prime farmland is valued at only $985, and then pays taxes on 12 percent of that, a value of just $118. That is how you get 56 acres of land paying only $87 in taxes.

Why does this matter to the average taxpayer? My purpose here is not to complain about low taxes. In fact, I like low taxes and I do not think farmers should pay high taxes. But if local government in Missouri is going to be primarily based on property taxation, then the system needs to be consistent and fair to all.

Low farmland assessments lead to low property tax bases for rural school districts. That would be fine if it simply meant that rural schools received less and spent less, and it only affected rural residents and children, in accordance with their wishes as voters and taxpayers. However, our statewide school funding formula attempts to equalize school funding. Low rural tax bases mean that income and sales taxes that people pay elsewhere in Missouri, and especially in the heavily populated, high-income portions of Saint Louis and Jackson counties, have more of their taxes transferred to rural schools. What we essentially have is an established system where rural areas pay low taxes yet the suburban taxpayers of Saint Louis and Kansas City subsidize their schools. Ensuring that rural schools have access to adequate education funding is necessary, but the people with high assessments and high taxes should not be subsidizing a system designed around low assessments in the first place.

Missouri needs greater consistency in appraisals and assessments. Market prices should be given a greater role in farm appraisals and assessments, like other types of real property. At a minimum, the new grading system with higher assessment amounts that the STC set should be adopted. If we are going to rely on a system of property taxes, we need to make it a more accurate system.

David Stokes is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Missouri Assessments Need Greater Consistency appeared first on Show-Me Institute.

In response to this emergency, Missouri Gov. Jay Nixon issued Executive Order 12-08, which will:

” . . . authorize the State Soil and Water Districts Commission to implement an emergency cost share program for water source development and/or water distribution practices to assist landowners engaged in livestock or crop production adversely impacted by the current drought.”

I am no fan of government handouts to agriculture. While this particular program does not strike me as an egregious waste of public money, I am still inclined to think that it is a bad idea. Droughts harm farmers by reducing their income, and harm consumers by reducing the available food, which increases prices. Farmers’ crops should be — and are — insured, however, with federally subsidized crop insurance (which has its own issues). Thus, losses suffered due to this drought can be mitigated. International free trade would allow providers worldwide to supply demanded goods to consumers at the lowest possible price. Government barriers need to be removed. Impediments to more effective water pricing should also be changed.

Water sources need to be developed and the governor’s order is an attempt to do so, but I have yet to see a reason why these sources cannot be developed privately. If there is a law preventing private water development, get rid of the law. If the private sector cannot do it economically, then why should non-farmer taxpayers subsidize a government project that cannot be justified economically?

The post Let’s Not Throw Taxpayer Money Down The Well appeared first on Show-Me Institute.

In this video, Show-Me Institute policy analyst Patrick Ishmael explains how, despite the claims of Aerotropolis proponents, Missouri beef can not be exported to China because of current Department of Agriculture regulations.

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The post What’s Wrong with Aerotropolis: Grounded Beef appeared first on Show-Me Institute.

“If we want to sell more beef to Asia, we need more refrigerated warehouses. If we want to sell more pharmaceuticals and aerospace equipment, we need safe and secure transport facilities,” he said. “I am a strong supporter of this initiative.”

Missouri Speaker of the House Steven Tilley did it (emphasis mine):

Tilley said while the cargo hub would bring in planes filled with imports, the returning flights will open new markets for Missouri agricultural exports, specifically beef.

And former U.S. Senator Kit Bond did it, too. (Audio: Fast-forward to 14:45.)

Yet no matter which way you cut it, beef is — according to the Department of Agriculture — ineligible for export to China. If you loaded American beef onto an airplane tomorrow, it seems pretty clear that it could not go to China under these regulations. So every time a politician touts this beef angle, taxpayers should keep this important fact in mind.

We noted the beef prohibition in our Aerotropolis case study, specifically citing internal emails from Jason Van Eaton, the current China Hub executive director and a former high-level staffer to Sen. Bond. The relevant part (emphasis mine):

Bottom line, pork is officially open between the US and China. Beef is not but the word is that it will open soon … but that’s been the word for months. Many other trade issues keeping this tied up right now.

“Beef is not.”

Kudos to Sen. Jason Crowell, then, for telling his constituents in southeast Missouri how the beef export aspect really plays out (emphasis mine.):

“It will help the job market in St. Louis and our neck of the woods as well,” [Speaker] Tilley said, noting that many people in Perryville, Farmington and Cape Girardeau County drive to work in the St. Louis area. The increased tax revenue from about 20,000 jobs created by the Aerotropolis project would also provide more money for schools and transportation statewide, he said.

“Things that make St. Louis thrive spill over to help the rest of Missouri,” Brandom said.

But Crowell called Aerotropolis a “boondoggle for St. Louis” and said it will not help Southeast Missouri cattle producers because China has a ban on imported beef.

“We’re not stupid down here,” Crowell said. “We can see when politicians who want to take St. Louis money speak down to their constituents.”

As the old Wendy’s ad asks, “Where’s the Beef?”

Much more soon.

The post ‘Where’s the Beef?’ A Reminder That American Beef Products Are Ineligible for Export to China appeared first on Show-Me Institute.

Newly tabulated information from the Environmental Working Group, which is critical of U.S. farm policy, shows that absentee landowners and investors receive subsidies that, in the public’s mind, go to struggling family farms. The U.S. Department of Agriculture last year sent nearly $100 million to cities with more than 500,000 residents.

Not very farmy communities in this area got in on the action. In Kansas City, Missouri, 1,611 recipients collected nearly $5 million in 2010. The city’s boundaries reach into four counties, so it stands to reason that the receivers include people who drive actual tractors and combines for a living. But zip code searches indicate that the subsidies are also being mailed to downtown addresses and people who live around the Plaza.

A little back of the envelope math tells us that each Kansas City recipient received just more than $3,100 on average. As The Pitch notes, many checks are probably supporting genuine family farmers, given the expansiveness of KC’s municipal boundaries. But on the Plaza? Not likely. Pick the right high-rise apartment and telescope, and maybe urban farmers can see their fields being tilled from afar. Is that the kind of situation legislators contemplated when they crafted the law that created the subsidies?

Naturally, agricultural tax breaks aren’t the only ones subject to the ingenuity of recipients, and the malleability of tax credit language can often make for easy (and profitable) contortions of a law’s intended purpose. Case in point: Saint Louis’ blighting of Del Taco. Fellow policy analyst Audrey Spalding has an indispensable post about how cities “blight” property to award tax subsidies. A sampling (emphasis added):

Colin Gordon, author of Mapping Decline: St. Louis and the Fate of the American City highlights one of my favorite examples of a contorted blight finding: Officials blighted a thriving shopping mall because it didn’t have a Nordstrom’s.

Because every mall needs an eBar.

And, just because I can:

The post Green Acres, We Are (Not) There! appeared first on Show-Me Institute.