March 13, 2013

TIF Reform Stalled In State Legislature

There are definitely some good things happening in the Missouri Legislature. There are, as always, plenty of bad ideas, too. Unfortunately, this session appears to be missing an opportunity (again) to reform the rampant abuse of Tax Increment Financing (TIF) in Missouri. There are several very good bills in the Missouri House that appear to be stalled. I would love to be wrong. I would be delighted to eat crow on this, but everything I see and hear tells me TIF reform is not getting out of the House of Representatives despite substantial support for reform from the rank-and-file of both parties.

TIF reform can be accomplished if voting from all taxing districts that the TIF affects is required, as the above linked bills propose, or if the ability for cities to override a county TIF commission is eliminated. Both would be excellent. Neither plan would eliminate TIF in Missouri, though both would heavily reduce its use, in my opinion. The overuse of TIF is empowering local governments to plan our economy, pitting city against city (willingly, too often) in a property tax base race to the bottom, increasing the use of eminent domain, and is violating tax fairness because it allows cities to decide on tax exemptions that affect all levels of government.

Of course, there are many good aspects of TIF, but our word count limit will not allow me to go into them. That is a joke. There is absolutely nothing worthwhile about how we administer TIF in Missouri. (Other states use it more wisely, mostly because they focus TIF only on property taxes and do not include sales or income/earnings taxes.)

The focus for TIF reform is on the House because it pretty clearly will pass the Senate. (Last year, a major reform bill passed 34-0 in the Senate.) I think the governor would sign a good reform bill if it makes it to his desk. I am fairly certain that a substantial majority of House members would vote in favor of reform if it makes it to the floor. I think it is imperative that key House leaders allow TIF reform to get on that floor for a vote. Otherwise, this would be a tremendous lost opportunity for important changes in Missouri.

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