Legislative Update: TIF Reform

Researchers and activists across Missouri have long decried the way in which city governments too easily give away taxpayer money. One particularly odious handout is tax-increment-financing (TIF), which allows city leaders to give away money that belongs to other taxing jurisdictions such as schools and libraries.

Happily, legislators are considering a reform proposal that would make three important changes to how TIF projects are awarded.

What I Saw at the TIF Hearing

Anyone who has been paying attention to the Show-Me Institute over the past few years knows that our analysts are not impressed with a number of economic development subsidy programs in Missouri. While we write often about tax-increment financing (TIF), there are many other programs ripe for reform. But as my time spent in one legislative hearing shows, those with a vested interest in the programs are going to put up a fight.

2018 Blueprint: Economic Development Subsidies

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.

Is This How Trust Is Regained?

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.

Fixing a Blight on Missouri Statutes

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 in Saint Louis

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 in Post-tornado Joplin

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.