Missouri closes in on half-hearted TIF reform bill
Missouri legislators are considering a bill designed to limit a form of corporate welfare, tax increment financing, which allows developers to use the future property taxes, sales taxes and other taxes that their projects will generate. But critics of the bill say it doesn’t go far enough.
Since the law was passed in 1982, cities across the state have set up hundreds of TIF districts that have diverted hundreds of millions of dollars to developers. County governments, school districts, library boards and ambulance districts are among the entities that forgo revenue.After hours of debate over several days, the Senate decided to leave intact the vague definition of “blight” that has allowed the program to spread. Areas can be declared blighted based on factors such as defective street layout and obsolete platting.
But under the bill, vacant fields or farmland in the St. Louis region would no longer qualify. The region is defined as the city of St. Louis and St. Louis, St. Charles, Jefferson and Franklin counties.
Statewide, undeveloped or vacant land would be ineligible if the project consisted solely of homes or apartments. The idea is, schools can’t afford to lose property taxes from new subdivisions full of children who need educating.
TIF and its necessary partner, eminent domain, have created huge problems in St. Louis County. Local municipalities have created hundreds of TIF districts, exempting the regions from taxation. Meanwhile, a fragmented sales tax system has left many municipalities dependent upon economic development projects to fund local government, so the municipalities heavily recruit developers, which requires even more TIF districts and eminent domain abuse. It’s a vicious cycle that will only be circumvented if the government limits (or, better yet, eliminates) TIF.
This bill certainly doesn’t go far enough. Developers, as always, have the upper hand, claiming that the projects will go to Illinois or Kansas instead. But does anyone really believe that Home Depot would shun Missouri if TIF was not available? Should taxpayers really be subsidizing this development? No and no.
