Missouri Set to Load on Subsidies for Cargo Hub

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During a special session this week, the Missouri legislature is expected to approve $360 million in tax credit subsidies for “Aerotropolis,” a project that would create a cargo hub at Lambert–St. Louis International Airport to lure Chinese air carriers. Yet, the project faces some serious questions. In its report Aerotropolis: If You Build It, Will They Come?  the Missouri Budget Project (MBP) makes the case that the legislature should think twice before approving the subsidy.

The report points to some important issues overlooked by the legislature. Based on a review of Airports Council International market data, MBP argues that the U.S. has been experiencing a decrease in air cargo transportation and already has “excessive unused existing capacity for international cargo movement throughout the entire Midwest.” Chicago‘s O’Hare Airport, one of the nation’s biggest cargo hubs, has unused capacity even as it undergoes an expansion.  MBP notes that Lambert, where traffic is down 20 percent since 2000, also has extra capacity.

Another concern, according to MBP, is that the project lacks an enforceable commitment from a major international freight forwarder, a company that manages cargo movement. MBP cites an independent analysis that evaluated a similar project in Hazelton, Pennsylvania. The Hazelton analysis, noting that no cargo airport has ever succeeded in the United States without a major tenant such as FedEx, UPS, or DHL, argued that the project should not proceed without a committed anchor tenant. MBP also notes that Aerotropolis has not been subjected to an independently performed cost-benefit analysis.

While voting on the big Aerotropolis giveaway, the special session will also, ironically, consider proposals to reform the state’s entire system of tax credits. While some of those credits definitely need reform, the plan to eliminate others could have a harmful effect on low-income residents. One of the most controversial proposals is to phase out tax credits for low-income seniors and disabled renters (MBP’s reports on the issue are available on its website).

As MBP argues, it is foolish of the Missouri Legislature to rush through the Aerotropolis subsidy deal with no strings attached. Before committing any public money, the legislature should commission an independent study that would evaluate the costs and benefits of Aerotropolis, and secure an enforceable commitment from a major international freight forwarder.

September 21 update:

As of this week, the Missouri legislature is still debating the Aerotropolis proposal, but with significant changes. In the new version of the bill, the Missouri Senate took out the $300 million tax credit for warehouses at the future hub and created the Compete Missouri program. The new $141 million fund would combine six economic development programs and would give the Governor power to control who gets the subsidies. Warehouses at Aerotropolis would be able to apply for subsidies under the new program. Unhappy with the changes, the House threatened to kill the bill if consensus between both chambers is not reached by Friday.

One Response to “Missouri Set to Load on Subsidies for Cargo Hub”

  1. Brent Pittman Says:

    Both the Republican and Democrat parties are going in the wrong direction. To SAVE the US entrepreneurial ranking, credit rating, stock market, the $, Medicare, Social Security, Medicaid and the police, fire, k-12 public school, library, military, defense and homeland security budgets while CUTTING government spending, debt and present tax rates without causing inflation or high interest rates; both State and Federal parties would be winners if they would compromise with the following strategies:

    Create good paying American jobs with good benefits for American citizens by repealing all sales taxes & replace the lost revenue with an import tax/tariff on imported labor & manufactured goods. Increase the federal income tax deduction from $5700 (2010) to $15000 for American citizens. Increase the IN state income tax exemption for non-dependent adults from $1000 to $5000, up to $15,000; depending on disabilities and age. All standard deductions and exemptions should be adjusted for inflation. Collect an export tax on natural resources/commodities such as coal, oil, natural gas & grains.

    Repeal all wealthy individual, business and new development/construction tax incentives such as tax abatement, tax increment financing, grants, deductions, credits, tax free bonds, earmarks and loopholes that are creating poverty wage American jobs or exporting jobs. OR, require these corporate welfare kings to pay a living wage, minimum wage of $15/hour with good benefits; adjusted for inflation. Collect mandatory impact fees (IN code: 36-7-4-1300, only infrastructure today); but, expand the code to collect impact fees for schools, libraries, parks, police and fire. Search for Brent Pittman at flyergroup.com and google.com for more information and details.

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