Taxpayers Off the Hook for $360 Million
Good news: The $360 million in subsidies as part of the so-called “China Hub” or “Aerotropolis” bill did not pass the Missouri Legislature. At the Show-Me Institute, we have worked diligently to point out to lawmakers the folly of awarding hundred of millions of dollars in tax credits to subsidize warehouse construction near the Lambert–St. Louis International Airport.
The idea, legislators said, was to encourage international trade. In reality, though, the proposed legislation would have created $300 million in tax credits to subsidize warehouse construction and $60 million to encourage freight companies to send flights to Saint Louis.
Tax credits are not free money. When the state awards tax credits, it forgoes future revenue. And, unfortunately, legislators are rarely fiscally responsible enough to make corresponding budget cuts when awarding tax credits. Bottom line: Tax credits mean either budget shortages later, or — more likely — increased taxes.
Legislators and subsidy proponents did not bother to explain publicly why the 18 million square feet in existing vacant warehouse space wasn’t enough to satisfy market needs, didn’t produce a feasibility study, and couldn’t show that any international firm was waiting to send flights to Saint Louis until the subsidies were written into law. They just asked Missourians to dream big and ignore the possibility of failure.
It’s good news for Missouri taxpayers that the Aerotropolis subsidies failed to get off the ground, but they are by no means abandoned. Legislators and proponents have said publicly that they want to continue to push for the subsidy package.
I, and my colleagues at the Show-Me Institute, will continue to watch the proposed warehouse subsidies closely. We will continue to ask to see concrete numbers, firm commitments, and an explanation as to why so much new warehouse construction is needed.