Retailers sing “Subsidize Me In St. Louis”

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The East-West Gateway Council of Governments has released a damning report on economic development subsidy use in the St. Louis region. The report is the product of three years of comprehensive research. Researchers offer a conservative estimate that more than $5.8 billion in public funds have gone to subsidize private developments in the area over the last 20 years.

More than $2.6 billion of those funds were committed through the use of highly controversial tax-increment financing (TIF). The use of TIF in the St. Louis region has been a sore spot for years, due to its dominant use by retail projects mostly involving outlets of national chains in the wealthier suburbs. This focus on retail expansion is described in the report as a “losing economic development strategy”, in which municipalities end up pirating jobs from their neighbors. The report uses mapping to demonstrate this leakage in economic activity, tracking the movement out of the urban core between 1998 and 2007. Most distressing is a key finding that TIF use exacerbates economic and racial disparities when these retail projects locate in affluent areas with few minorities.

Efforts to estimate the full amount of economic development incentive spending were hampered by inadequate data. Without better and more widely available data, researchers, elected officials and the public cannot know the full impact of any tax incentive strategy.  The report authors call for greater transparency and accountability and the creation of a “complete database of public expenditures and outcomes for all publicly supported development projects”.

For more information on TIF use in the St. Louis region, see Chapter Six of The Great American Jobs Scam by Greg LeRoy.

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