The Problem
Excessive use of economic development subsidies enriches developers at the expense of taxpayers, schools, and other public services.
The Solution
Eliminate or substantially reduce the use of economic development subsidies by local governments, including tax-increment financing (TIF), community improvement districts (CIDs), transportation development districts (TDDs), and the use of subsidies for professional sports franchises.
Key Facts
- The border war truce legislation between Missouri and Kansas expired in 2025.
- Five counties in Missouri now use county-level TIF commissions instead of municipal TIF commissions.
An Abysmal Track Record
Subsidies like TIF rarely deliver promised economic benefits. Research shows that 84% of firms would choose the same state no matter what subsidies and incentives were offered by other states. Nationwide studies show that these subsidies typically fail to keep their promises of job creation and economic growth.
The Border War
In 2019, Missouri passed legislation that renewed the agreement with Kansas limiting the use of tax subsidies by both states in the Kansas City metropolitan area. The agreement expired in 2025. The use of tax subsidies to lure businesses across state lines had been shrinking the tax base of the region without leading to any economic growth (as happens with almost all subsidies). The truce, which was first passed in 2014 and renewed in 2019, had been a success. Despite Kansas’s recent, awful decision to use subsidies to lure the Chiefs and Royals across the state line (which was a violation of the spirit, if not the letter, of the agreement), Missouri should still renew the border war truce legislation. (If Kansas chooses not to renew its part of the deal, then Missouri’s renewal does not go into effect anyway, and both sides will lose out.)
It would be appropriate for Missouri to clarify that the Chiefs, Royals, and other professional sports teams are included in the border war truce legislation as part of this renewal.
Change the Decision-Making Process
A major flaw in the TIF process is that in most cases, cities decide on tax subsidies that affect other taxing districts. Cities can approve a TIF project or property tax abatement that may benefit the city but is harmful to other taxing districts, such as schools. School districts should be able to opt out of TIF just as fire and ambulance districts can. One way to address this problem is to move such decisions to county TIF commissions, where the county appoints most of the members. County officials are more likely to weigh the costs and benefits of the proposed subsidy for the entire region. Currently, there are county TIF commissions in five Missouri counties. That number should be much larger.
It is too easy to create a new TDD or CID. Currently, property owners (often just one) can vote by signature to create a district or create one through a simple court filing. The public can be excluded from the entire process by drawing CID or TDD districts that have no residents. With such little oversight and public involvement, malfeasance runs amok with these taxing districts.
Policy Recommendations
- Renew RSMO §135.1670 (the border war truce legislation), which expired in 2025.
- Move TIF decision-making to the county level in many more counties around Missouri and allow school districts to opt out of TIF and other tax-subsidy programs as fire districts are allowed to.
- Require actual public votes by the entire city or county when new TDDs or CIDs are proposed and refrain from using state or local tax dollars for sports stadiums.
