So, what is it going to be, Ellisville? TIF or no TIF?

Tonight is the scheduled final vote on the use of Tax Increment Financing (TIF) for a proposed development at Manchester and Clarkson Roads in Ellisville. We know why Show-Me Institute thinks this is a bad idea for Ellisville. If this TIF can be defeated, as far as I know, it would mark the first rejection of such a proposal by a point-of-sale city. Combined with Florissant’s rejection of a TIF recently, we would be making real progress toward stopping the constant use of subsidies around Saint Louis.

Stay tuned, and follow me on twitter (@DavidCStokes) for results of tonight’s vote.

Officials for the St. Louis Rams football team must submit their counter-proposal for upgrading the Edward Jones Dome to the St. Louis Convention & Visitors Commission (CVC) by tomorrow. It will be interesting to see the Rams’ proposal; however, CVC officials will not release the plan — unless the Rams give them permission (I would not bet on that).

This proposal is integral in determining whether the Rams stay or leave Saint Louis. But what really matters is that the CVC will not let the public review the proposal, which if accepted, could cost the taxpayers millions on top of the $24 million per year that the state, city, and county already pay for the Dome’s construction. The Rams already rejected a proposal from the CVC that would have left the public on the hook for $60 million, so it is reasonable to guess that the public’s portion of the bill in the Rams’ counter-proposal will be much higher.

CVC officials maintain that they are complying with a provision in the lease with the Rams that some information can be kept confidential. However, considering that (a lot) of public money is potentially on the line with this deal, NO decision should be made until the public has a chance to review it.

The Show-Me Institute has a long record of opposing such government “investment.” However, even if the CVC accepts the Rams’ counter-proposal, it should do so only after the people who would actually pay for the project are allowed to see the costs.

The Columbia Missourian has published an overview of the statewide use of Tax Increment Financing (TIF), a development subsidy that is growing in popularity. The article provides a detailed overview, and the Missourian has posted excellent data online. Unfortunately, Columbia City Manager Mike Matthes, in his comments, seems to be fond of revising TIF history.

Matthes cited Independence, a suburb near Kansas City, as an example of a community that has enjoyed success with TIFs. I wonder if he was referring to the Bass Pro TIF in Independence that has failed. The city of Independence has had to kick in more than $4.1 million to cover bond payments associated with the project.

Matthes also said that ”(TIF) does prevent and eliminate blight” and “it does increase property value and tax revenue over time.” Though the Missourian highlighted a TIF in North Kansas City that is characterized as successful, it failed to mention the notorious Citadel TIF in nearby Kansas City.

In late 2011, Kansas City officials voted to pay $15 million to purchase property that had been razed and contaminated with asbestos. The Citadel site now sits vacant, and is an example of a TIF project that made an area much, much worse, instead of eliminating so-called blight.

Moreover, earlier this week, the Wall Street Journal characterized Kansas City’s downtown entertainment TIF development, the Power & Light Development, as a “budget hole.” The Journal reports that the Power & Light Development is generating less than one-third of the tax revenue needed to cover debt costs associated with the project. As a result, Kansas City is setting aside $12.8 million to make up the difference.

On the eastern side of the state, TIF does not look much better. Matthes’ statement that TIF eliminates blight and increases tax revenue over time ignores the findings of a multi-year study of TIF and other development subsidies in the Saint Louis area that those subsidies were frequently concentrated in “higher-income communities.” The same study found that retail jobs associated with TIF projects came at a cost of more than $370,000 in taxpayer dollars.

Those findings are not surprising: Years earlier, the Brookings Institution concluded that TIF in Missouri “. . . is used extensively in high-tax-base Missouri suburban areas with little need for assistance . . .”

Perhaps I am being unfair. When Matthes said that TIF has proven to eliminate blight, he may have been referring to the TIF awarded to a Saint Louis area mall. The mall was deemed “blighted” because it lacked a Nordstrom’s. I suppose, because the West County Mall now has a Nordstrom’s, one could consider the “blight” removed.

For our regular readers, the fact that the Kansas City Power & Light District (P&LD) is hemorrhaging taxpayer money is no surprise. For those just finding out about the problems that have beset P&LD over the last few years, the Wall Street Journal’s report on the city’s budgetary mismanagement is as sobering as it is galling. The headline puts it succinctly: “Urban Center Is Budget Hole.” (Video via Tony’s Kansas City.)

The P&LD was a bet made in the 2000s that will cost the city $10 million-plus per year for years to come. Yet, the city refuses to learn its lesson. Kansas City officials persist in pursuing a massive new publicly-financed hotel project downtown and  an expensive new streetcar system that will burden local businesses with taxes they do not want. We are talking about a city with one of the worst debt loads and tax levels in the region, and the solution — with the benefit of hindsight — is more debt and higher taxes? Pair it with the ongoing border war the city has with its Kansas rivals, and it is clear that the city is not embarking on a credible development strategy, but a road to ruin.

Oscar Wilde wrote in The Picture of Dorian Gray that “there is only one thing in the world worse than being talked about, and that is not being talked about.” Kansas City is getting its press for sure, but as it does its best to keep up appearances with its spend-spend-spend strategy, it ratchets up the risk of debasing its tax resources, wrapped within that thin, debt-laden facade. On the outside, things may look good. On the inside, the city is almost assuredly disfiguring itself, one act at a time.

The St. Louis Post-Dispatch recently published an article lamenting the fact that Missouri has the nation’s lowest taxes on cigarettes. They are not alone; the Kansas City Star editorial that I wrote about on April 3 pushed for the state to raise the cigarette tax. The Post-Dispatch and Star articles differ on the reasons they want the cigarette tax increased;  however, does it occur to people that there might be negative consequences to raising the cigarette tax?

For instance, stores in Missouri that are on the border with other states attract business from people shopping here in order to take advantage of the state’s low excise taxes. Show-Me Institute intern Amy Lutz recently wrote an op-ed that details the impact such a tax hike could have on interstate commerce.

Also, an increased tax on cigarettes would disproportionately harm the poor. The Post-Dispatch article mentions that raising taxes is an effective method for getting people to quit smoking. Do increased cigarette taxes result in significantly fewer smokers? If smoking is bad for us, and it is OK to increase taxes on that, where does it end? What next, enormous taxes on sugar to finance heavy broccoli subsidies? What about an obesity tax? Isn’t there something offensive about government micromanaging our lives?

Apparently, you get a TIF (Tax Increment Financing) anyway. The Ellisville City Council appears to be going forward with a TIF plan despite the overwhelming opposition to it within the city. How can I say “overwhelming opposition”? Well, earlier this month, the two anti-TIF candidates for mayor received more than 70 percent of the total vote. Seems like strong evidence to me that the people of Ellisville do not want this tax giveaway. But city officials nevertheless are going forward with it. Last night, the TIF received preliminary approval, and it is set for final passage in another two weeks. If this passes, it would be one of the most appalling decisions by an elected body I have ever seen. “Let’s enact terrible economic policy AND ignore the will of the voters at the same time!”

The vote last night was 5-2, with the newly victorious anti-TIF mayor and one city councilmember (who also ran for mayor opposing the TIF) voting against it.

I predict the Ellisville charter rules on referendum and recall will quickly become very important in Ellisville if the TIF passes — along with Missouri TIF-related case law involving referendums from this lawsuit.

Tonight is the big night in Ellisville. The just-announced closure of the Best Buy in town should make the choice easier for the city to just join the county sales tax pool, as the difference between what Ellisville would get as an “A” (point-of-sale) city and a “B” (pool) city is now much closer.  It should not be used as an excuse to enter into the proposed Tax Increment Financing (TIF). Cities do not have to play this game. They have a way out – the sales tax pool.

A new Walmart is opening in Jefferson County. Yes, it got a TIF. The property taxes will now be frozen for all the other taxing districts. So, someone please explain to me how the school district is going to pay for educating the kids in the 180 new homes that are part of the project, when those homes will not be paying the necessary marginal taxes for the schools. Oh yeah, the school district will seek to raise taxes on everyone else . . .

Meanwhile, in more positive news, Florissant officials are set to vote next week on approving a development for a Walmart that is being built without a TIF. The Florissant City Council rejected a TIF last year, but the project is going forward because this particular plan makes economic sense. I commend Florissant officials for their discipline, and hope this serves as an example to cities throughout Missouri. This is a good opportunity to remind people that I have nothing against Walmart – just the subsidies that usually accompany it.

Finally, here is the Show-Me Institute’s latest study on the basic structure of TIF.

I do not smoke. But I am curious about radio ads that are advocating for stronger anti-smoking laws in Saint Louis County. The ads, which come from a group called Let’s Face It, are creative – and alarming. Consider this line from one of the ads:

There are still workplaces in St. Louis County that legally allow smoking. . . . let’s truly eliminate second-hand smoke in the workplace. It’s better for all of us.

Saint Louis County recently passed an expansive anti-smoking ordinance; the law includes exemptions for bars and casinos. The owners of those establishments felt that if smoking was not permitted, they would go out of business. I attended one of the hearings when the Saint Louis County Council was considering the partial ban. Several bar and restaurant owners told officials they feared their businesses would close or they would have to lay off employees if customers were not allowed to smoke.

Well, it turns out that more than $7.5 million in federal stimulus money is funding those radio ads and advocacy efforts to eliminate exemptions. According to the Recovery.gov website, federal stimulus money has gone to Let’s Face It’s anti-exemption campaign. In its report to the federal government, Let’s Face It noted that it hopes to “place amendment on council agenda,” “remove exemptions from current ordinance,” and  ”increase the number of County municipalities that enact smokefree [sic] policies that exceed the comprehensive County-wide policy. . .”

The group has also partnered with the St. Louis Rams, and ran anti-smoking advertisements during the Rams’ Dec. 18, 2011, home game. In its report to the federal government, Let’s Face It claims to have created 38.16 jobs associated with this campaign. Some of those jobs are associated with $2 million that went to Fleishman-Hillard (four jobs) and $175,000 that went to the St. Louis Cardinals (actually, no jobs are claimed to be created with the money directed to the Cardinals).

The Show-Me Institute has made the case that customers (and employees) have the freedom to choose what bars and restaurants they frequent. The argument that customers or employees are somehow trapped at a venue that allows smoking is a smokescreen, at best.

But federal funding of advocacy efforts goes even further. If the anti-second-hand smoking argument is a good one, then why aren’t private associations and nonprofits stepping up to make the case? Why does the federal government have to fund an advocacy campaign?

What is next, Fannie Mae funding an organization that advocates for land banking legislation? Or federal stimulus money being used to fund similar advocacy campaigns throughout the United States against soda?

Ellisville officials made the right decision last night. They decided to delay a vote on the much-discussed Tax Increment Financing (TIF) proposal involving a proposed new WalMart at the corner of Manchester and Clarkson Roads. We have already discussed why we think the TIF would be bad policy.

It would have compounded the mistake if the Ellisville City Council had voted for it one day after a new mayor and city council were elected.  Mayor-elect Adam Paul and the new city council will be sworn in April 18.  Properly, the ball is now in their court.

The current Ellisville City Council is scheduled to vote on the Tax Increment Financing (TIF) proposal tonight. Last night’s election results – where a solidly anti-TIF candidate won the mayor’s race – will not go into effect for another couple of weeks. So, the question is, should the current city council, which appears to be pro-TIF (I would love to be wrong on that), make decisions during this brief “lame-duck” session that go against the pretty clear opinions of the voters? Obviously, I hope they listen to the voters and allow the new mayor and city council to make the decision.

They might not, though. In which case, Ellisville’s city charter thankfully allows for a referendum on ordinances. Here is the link (section 9 on page 24). Ellisville has about 6,700 registered voters, so if the city council passes the TIF ordinance tonight, opponents would have to file a petition within 10 days. After that filing, opponents would have a month to gather about 670 signatures to force a referendum. That referendum would allow the ordinance to either go to a vote of the people or require another vote of the city council, which would be the new city council that was elected yesterday. Because just about that number of people (667) voted for the anti-TIF, victorious mayoral candidate, I would think getting the signatures is certainly doable.

There are several other key questions here, but it could be a very interesting couple of weeks in Ellisville.

Missouri’s major dailies have had quite a run over the past few days. Last week, the Kansas City Star told readers that the state’s governor needed “to promote reasonable revenue-enhancing measures” — taxes — and put more money toward state programs. The notion of “government investment” features prominently in the piece, as increasingly has become the case when “revenue-enhancing measures” are suggested, post-Stimulus. What the editorial board does not say is that the city’s own local taxes are already among the highest in the region.

Stratospheric municipal taxes overlaid with an even higher state tax burden? This will not turn out well.

But yesterday, the St. Louis Post-Dispatch, the Star’s cross-state peer, spectacularly one-upped the Kansas City paper. The law constrains Missouri legislators on how much they can tax and spend each year, and Missouri is billions of dollars below the limit. How much of that difference would the Post-Dispatch like to spend?

All $4 billion of it.

A lot of folks purchased Mega Millions lottery tickets last week dreaming about what they could do with $640 million. Imagine what $4 billion would do for Missouri.

Let’s be clear: That is a radical tax hike proposal, tucked into what is otherwise an uninspired editorial about state and local governing responsibilities. Combined state and local tax rates have stayed roughly the same for decades in Missouri, but the Post-Dispatch would have those rates hurdle skyward to provide more public services and somehow, some way, improve the economy above the status quo.

Even the suggestion that raising taxes and then spending more would help the state makes no sense by the newspaper’s own standards. State and local tax rates have actually increased slightly since 1980, the apparent “good ole days” implied in the editorial, from 8.6 percent then to 9 percent today. The newspaper cannot even claim that plummeting tax burdens are the reason Missouri is suffering economically, because, by its own metric, taxes have actually increased over the last 30 years.

The proposal is mostly academic here in Missouri, as taxpayers and policymakers would blanch at the thought of such a hike, but the suggestion is still troubling. If implemented, the plan would have awful real-world implications — giving families less to spend and taking capital out of the market for use in less productive government programs. It is a roadmap to ruin, and yet the Post-Dispatch apparently does not see it.

“Imagine what $4 billion would do for Missouri”? No, imagine if lawmakers took their cues from Missouri’s newspapers. What a nightmare that would be.

The Kansas City Star wrote an op-ed urging Missouri Gov. Jay Nixon (D) to expend some of his political capital in order to bring in more revenue to fund state programs. The Star states that lawmakers in Jefferson City should stop bickering about which programs to cut (they specifically mention the current fight about cutting funds from higher education or funding for a medical program for the blind) and focus on finding new sources of revenue. They specifically mention reigning in tax credits and raising the tax on cigarettes.

Why are tax hikes even on the table? Legislators have not even cut all waste and low-priority programs from the state budget, never mind bigger ticket items such as higher education and medical programs for the blind. Considering that the Missouri House passed an appropriations bill that includes funding for the Missouri Wine & Grape Board along with ethanol subsidies (and that is only for the Department of Agriculture), the state has plenty of places to cut.

The Star editorial is not all bad. It does call for reigning in tax credits, which the Show-Me Institute has pushed for repeatedly. However, it also calls on raising the cigarette tax. The Show-Me Institute has written on this issue and the situation is the same now as it was then; raising taxes on cigarettes is not the cure for what ails Missouri.

Missouri needs a healthy environment so its economy can thrive. That does not just mean low taxes; it also means lowering regulatory burdens. Doing so will ensure that the state receives enough revenue so that all PROPER functions of government have enough funding to work effectively.