On Tuesday, February 20, Show-Me Institute Director of Municipal Policy Patrick Tuohey delivers testimony to the Missouri House Economic Development Committee on Senate Bill 859 and tax-increment finanicng policy reform. Click on the link below to read the full testimony.
THE PROBLEM: Excessive use of economic development subsidies has diverted much-needed tax revenue to developers and away from schools and other public services. In the past 15 years, Saint Louis City alone has distributed $709 million originally intended for municipal services to developers via tax increment financing (TIF) and tax abatement. Studies from across the country indicate that these subsidies fail to generate promised jobs and growth.
After voters rejected implementing a local use tax in November, the Columbia City Council made it their mission to win back the trust of voters by being wise stewards of taxpayer money. Councilman Matt Pitzer talked about how to go about the task:
We do that by making smart financial and fiscal decisions . . . and being open and transparent in our spending and where the citizens’ tax dollars are going.
Paul F. Byrne, a professor at Washburn University in Topeka, Kansas—who has examined tax increment financing (TIF) use in Missouri for the Show-Me Institute—has a new working paper on TIF job creation in Missouri. In the paper, Byrne examined data from the Missouri Department of Revenue and the U.S.
We’ve written for years about the failure of Missouri municipalities to focus their development efforts on reviving the moribund parts of their inner cities. Across the state, it seems, leaders in Kansas City and Saint Louis are eager to throw taxpayer cash at developers only to have them build in already-viable neighborhoods.
Tax increment financing (TIF) does not drive job creation, neighborhood investment, or economic development. What TIF does do is divert tax dollars from schools and libraries into the pockets of developers. These are the findings from studies conducted by the St.
Despite being used in dozens of development projects in Saint Louis, tax-increment financing (TIF) has failed to produce demonstratable economic benefits for the city. Not only is TIF routinely used in relatively prosperous areas in which development likely would occur without incentives, but there is little if any evidence that TIF has a net positive economic impact regardless of where it is applied.
Tax-increment financing (TIF) is a development subsidy program abused all over Missouri, and especially in Saint Louis. See exhibit A: the Boulevard development in Richmond Heights, just east of the Galleria.
The tornado that devastated Joplin, Missouri in May of 2011 killed 161 people and injured over 1,000. Property damage resulted in insurance claims of over $2 billion and cost residents and businesses about $34 million in assessed property evaluation.
In an effort to facilitate reconstruction, city leaders used a tax-increment financing (TIF) program. The people of Joplin rebuilt their town with remarkable speed, and by 2015, total assessed property value in Joplin exceeded the pre-tornado level. But if anything, they did so in spite of—not because of—the TIF program.