Since 1990, the St. Louis region's crazy quilt of taxing authorities has dedicated more than $2 billion in public money to subsidize private "economic development" projects. And there's almost nothing to show for it.The report is titled "An Assessment of the Effectiveness and Fiscal Impacts of the Use of Local Development Incentives in the St. Louis Region"
At best, the subsidies have created a handful of jobs, few of them long-term or high-paying. The subsidies have created no increase in retail sales nor have they sparked any other economic activity.
The primary beneficiaries of the public investment have been national retail chains, real estate developers, lobbyists and public finance lawyers.
These are some of the findings of the first comprehensive study on the impact of local development incentives in the St. Louis region . . .
From the Executive Summary:
Local governments in the St. Louis region have made extensive use of public financial incentives to compete for tax-generating businesses. In some areas, most new development is, in effect, publicly subsidized through foregone taxes in the form of abatements, tax increment financing, and related mechanisms. . . . While the short-term effects of these incentives are usually positive for the local government or private sponsor, the overall impact on regional growth and the financial viability of local governments is less clear.Sounds like the New Hartford Business Park, no?
Among the conclusions:
Broad measures of regional economic outcomes strongly suggest that massive taxThat, my friends, is exactly what is happening here . . . the rich communities benefit themselves, neighboring areas become destabilized, and the whole region suffers.
expenditures to promote development have not resulted in real growth. While there are certainly short-term localized benefits in the use of incentives, regional effects are more elusive. Development incentives have primarily acted to redistribute spending and taxes. While distribution effects might yield broader economic benefits when used to redevelop economically distressed communities, when incentives are used in healthy and prosperous communities the regional effect may be to destabilize the fiscal health of neighboring areas.
The key to making sense of all this is found in the first story's phrase: the "region's crazy quilt of taxing authorities . . . "
It is the "crazy quilt of taxing authorities" that makes it possible for one community to negatively impact its neighbor fiscally. If the communities were part of the same tax jurisdiction, governed by a common body of elected representatives, one community could not take advantage of another, and solutions benefiting the region would emerge.
The implications of this should be obvious. . . .