Corporate Welfare - Testimony
Senate Bill 774: Reforming Tax Increment Financing Districts Print E-mail
By David Stokes   
Wednesday, April 23, 2014

Missouri needs TIF reform. Senate Bill 774 is a beneficial compromise on the subject of TIF.

 
The Use Of Tax Increment Financing In Kansas City Print E-mail
By Patrick Tuohey and David Stokes   
Tuesday, April 08, 2014

The Kansas City community is deservedly excited about the expansion of the Burns and McDonnell campus and headquarters within the city. However, neither that excitement nor the undeniable quality of the company necessitates millions of dollars in tax subsidies.

 

 
The Next Step In Flood Plain Protection And Tax Increment Financing Reform Print E-mail
By David Stokes   
Tuesday, March 04, 2014

In 2003, Saint Charles County was given a special exemption that disallowed the use of TIF in the flood plain within that county. House Bill 1709 would expand this taxpayer protection state-wide.

 
Aerotropolis By Any Other Name Print E-mail
By Patrick Ishmael   
Monday, February 17, 2014

When the Missouri Legislature originally considered subsidizing the half-billion dollar “Aerotropolis” project in 2011, the Show-Me Institute had numerous questions. Where, for instance, was the research that substantively showed the plan would work? Why should Missouri subsidize new warehouses around Lambert-St. Louis International Airport when so much warehouse space is already unused? Why were many prominent Aerotropolis supporters claiming that if the incentives were approved, mountains of Missouri beef would be shipped by plane to China – when not only was it illegal to ship American beef to China at the time, it would have been impractical even if it were not illegal? Those questions and others were not adequately answered, and the incentive package, and the special session that was called to consider the proposal, failed as a result.

That brings us to today’s version of the Aerotropolis project, the $60 million “Missouri Export Incentive Act.” While this bill is considerably pared back from the original, the practical and policy problems that beset that first Aerotropolis attempt should not be forgotten.

 
House Bill 1512: Reforming Tax Increment Financing Districts Print E-mail
By David Stokes   
Tuesday, February 11, 2014

Missouri needs TIF reform. House Bill 1512 is a beneficial compromise on the subject of TIF. The combination of a very large number of local governments and the inclusion of sales taxation in Missouri TIF law has been a dangerous mixture. 

 
House Bill 1501: The DALATC Does Not Deserve To Be Renewed Print E-mail
By David Stokes   
Tuesday, February 04, 2014

When the previous DALATC program expired last year, Missouri taxpayers benefitted. According to the Missouri Accountability Portal, the primary beneficiary of that DALATC program has already received approximately $43 million from it in tax credits for a project in North Saint Louis. That money is in addition to a $390 million Tax Increment Financing (TIF) subsidy package that the City of Saint Louis approved for the exact same project. That is a total subsidy approaching a half billion dollars. When, and how much, is enough? The subsidy game is now a part of the mindset of business in Missouri. The legislature did the right thing by refusing to extend this tax credit last year, and that discipline would continue to benefit Missouri taxpayers going forward.

When the state spends millions of dollars on one potential development, it is taking a huge risk with taxpayers’ money. The state is risking that one developer will transform North Saint Louis and remove all of its societal problems. How can we trust that the bet will pay off? Who is on the line if this project fails?

 
The Use Of Tax Increment Financing In The City Of Saint Louis (Downtown) Print E-mail
By David Stokes   
Wednesday, October 30, 2013

St. Louis has a history of tax subsidies, but does Laclede Gas really need an $8 million TIF to move just two blocks?

 
Lee's Summit Should Not Institute an Enterprise Zone Print E-mail
By David Stokes   
Thursday, April 11, 2013

The dirty little secret that nobody seems to want to recognize, or even attempt to uncover, is that EEZ, Tax Increment Financing (TIF), and other subsidies do not work. They do not succeed in growing the local economy. 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, 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.”

 
Tax Increment Financing Reform Print E-mail
By David Stokes   
Tuesday, April 09, 2013

Missouri needs TIF reform. House Bill 914 is an important step in that direction. The combination of a very large number of local governments and the inclusion of sales taxation in Missouri TIF law has been a dangerous mixture. By one measure, Missouri local governments use TIF more than all but two other states.1 Missouri’s many cities have readily engaged TIF in order to increase the sales taxes they collect, while leaving other taxing districts, such as school districts — who depend more on property taxation — holding the empty bag. Originally intended (perhaps farcically) as a treatment for “blight,” TIF has been aggressively used throughout Missouri’s wealthier areas. The constant quest by cities to give away more tax incentives in exchange for new sales tax dollars has had a dramatic impact on Missouri.

 
Private Gain Will Not Solve Social Pain: Let the DALATC Expire Print E-mail
By Kacie Galbraith   
Tuesday, March 26, 2013

The Distressed Area Land Assemblage Tax Credit should expire as planned on August 28, 2013. The only beneficiary of this tax credit has already received a substantial amount in state aid from this tax credit – more than $40 million. He is also likely to receive about $390 million in local incentives. All of this money is a multimillion dollar gamble on a single project that may have no benefit to the state.

When the state spends millions of dollars on one potential development, it is taking a huge risk with taxpayers’ money. The state is risking that one developer will transform North Saint Louis and remove all of its societal problems. This is a gamble on a project that does not even have a concrete plan. How can we trust that the bet will pay off? Who is on the line if this project fails?

 
Quality Jobs Program: A Closer Look Print E-mail
By Patrick Ishmael   
Thursday, February 07, 2013

Many of you know that a tax credit is a direct reduction in a taxpayer’s tax liability that a government grants for the performance of a government-desired activity. Tax credits are often used as a way to promote activities for the expressed or implied purpose of promoting economic development. In contrast to a tax deduction, which decreases a taxpayer’s taxable income, tax credits are applied against a tax liability dollar for dollar, and although not technically considered spending by Missouri courts, public officials often portray tax credits as the state making “investments” in the economy. One need not look far to find a Missouri Department of Economic Development (DED) press conference or press release announcing, with great fanfare, the “new jobs” being brought to a community as the result of a tax credit.

Unfortunately, the jobs that are promised do not always happen, and part of the reason for this is that governments, by and large, are not very good at picking successful “investments” for their constituents.

 
Transit-Oriented Development: The Economic Development Myth Print E-mail
By Kacie Galbraith   
Thursday, January 24, 2013

Government planners are steadily increasing their use of TOD. However, contrary to one of the central tenets of TOD, surveys indicate that most people do not want to be forced into high-rise apartments in a busy urban environment. Four out of five Americans prefer having a home with a yard to living near shops, transit, or jobs. So what is the rationale for using taxpayer money to support retail and other development along public transit lines? Planners may think it is best for us to live in high-rise apartments and take transit everywhere, even though we do not want to; but individuals should be able to freely decide where to live, how to travel, or where to open a business.

 
Testimony Before the St. Louis County TIF Commission on the Proposed Shrewsbury TIF Print E-mail
By David Stokes   
Wednesday, January 09, 2013

In theory, establishing a TIF district involves serious and impartial deliberation and calculus. A city intends to revitalize a part of its community, but first it must go through a complicated process designed to test whether certain tax incentives are allowed. The city contracts with urban planners who independently determine if the proposal could happen “but for” the taxpayer assistance, and also if the area meets the standards for a designation of “blight,” or “conservation” (or another appropriate designation), making it eligible for subsidies. A developer is then brought into the process and, with the assistance of the government and the taxpayers, produces an economic growth engine that provides jobs, a revitalized community, and (eventually) an expanded tax base.

 
Public Money, Private Money Print E-mail
By Patrick Ishmael   
Friday, December 21, 2012

Meet Norwood Hills Country Club. In 2006, the state issued more than $1.1 million in state Historic Preservation Tax Credits (HPTC) to the facility.

A successful private club in north Saint Louis, it hosted the PGA Championship in 1948. In 2005, the club sought and received designation as an historic landmark, and as an historic landmark, it was eligible for HPTCs from the state.

 
The Use Of Tax Increment Financing In The City Of Saint Louis (Central West End) Print E-mail
By David Stokes   
Monday, October 29, 2012

A major new project proposed for the Central West End will include many new residential options and a new grocery store. According to the St. Louis Post-Dispatch, the developer is asking for $10 million in public assistance. Saint Louis crossed the rubicon of authorizing TIF far too frequently many years ago. (There are currently 124 TIFs within the city.) But this is an excellent opportunity to reconsider that approach. There is nothing about this project that should involve public assistance. The project is proposed for an enviable location in a wealthy part of an economically vibrant area. The idea that a new development at the corner of Euclid and West Pine needs public subsidy is preposterous. Redevelopment can go forward in this area without subsidies. The fact that many new developments have a subsidy is a testament to the ease of getting them, not the necessity of them.

 
Measurements of Enterprise Zones: Comparative Economic Growth in Missouri Counties Print E-mail
By David Stokes   
Monday, June 18, 2012

The dirty little secret that nobody seems to want to recognize, or even attempt to uncover, is that EEZ, Tax Increment Financing (TIF), Community Improvement Districts (CID), and other subsidies do not work. They do not succeed in growing the local economy. 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, 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."

 
Testimony Before the St. Louis County TIF Commission on the Proposed Ellisville TIF Print E-mail
By David Stokes   
Tuesday, March 06, 2012

In theory, establishing a TIF district involves serious and impartial deliberation and calculus. A city intends to revitalize a part of its community, but first it must go through a complicated process designed to test whether certain tax incentives are allowed. The city contracts with urban planners who independently determine if the proposal could happen “but for” the taxpayer assistance, and also if the area meets the standards for a designation of “blight,” or “conservation” (or another appropriate designation), making it eligible for subsidies. A developer is then brought into the process and, with the assistance of the government and the taxpayers, produces an economic growth engine that provides jobs, a revitalized community, and (eventually) an expanded tax base.

 
Missouri’s Tax Credit Crisis Print E-mail
By Patrick Ishmael   
Tuesday, February 21, 2012

Since the late 1990s, Missouri’s tax credit system has grown into one of the biggest burdens on the state’s annual budgets, expending billions of dollars over the last decade and setting the stage for significant budgetary crises in the near future. In fiscal year 2013, Missouri expects tax credit redemptions to cost the state as much as the state is spending on its correctional and public safety systems — roughly $700 million. Put in another context, the entirety of 2013’s projected deficit is less than the state’s expected tax credit payout by about $200 million. Suffice to say, this is real money that legislators will have to understand and grapple with, given the squeeze tax credits have put on the FY2013 budget and will put on state budgets in future years.

 
'Aerotropolis' Tax Credit Bill Lacks Empirical Support, Fraught With Hidden Costs Print E-mail
By Audrey Spalding, Christine Harbin   
Wednesday, April 20, 2011

Our testimony today is intended to provide an explanation of House Bill 840, the Aerotropolis Trade Incentive and Tax Credit Act, and the probable damaging effect that it would have on the Missouri economy. This legislation is fraught with hidden costs, no study has been published that quantifies its supposed benefits, and tax credits in general have been a poor strategy for economic growth in Missouri.

 
Testimony Before the Missouri Senate Agriculture Committee on Ethanol Print E-mail
By David Stokes   
Monday, February 09, 2009

Senate Bill 11 proposes rescinding Missouri's ethanol mandate. This entire subject is a perfect example of Thomas Sowell’s famed statement about public policy, “There are no solutions, only trade-offs.” Corn farmers gain from ethanol production, as do investors in ethanol plants. Missouri has a large number of corn farmers, as you well know. The argument has been made that ethanol has resulted in lower visible gas prices at the pump. In immediate terms, that seems to benefit Missouri drivers.

 


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