An Assessment of the Effectiveness and Fiscal Impacts of the Use of Development Incentives in the St. Louis Region

In response to concerns about the long-term effects on the economic health of the region and the fiscal well-being of local governments, the EWG Board of Directors passed a resolution that requested an inventory of the use of economic development incentives and the resulting economic activities as well as examination of the ability of local governments to finance public services and the contribution that the use of incentives has on economic and racial disparities in the region. The “Interim Report”, describes the difficulty of the research due to the lack of essential data, unreliability of self-reported information and the general lack of transparency and accountability in the use of economic development incentives in the St. Louis region. The “Final Report” is a culmination of three years of research, which found that in the last 20 years local governments in the St. Louis region diverted more than $5.8 billion in public tax dollars to subsidize private development through the use of various financial incentives, including tax increment financing, special taxing districts and tax abatements. These incentives subsidized new developments by taking a portion of what otherwise would have been paid as taxes and instead diverting them to the private developer to finance the development. This research documents that the use of these tax incentives has been ineffective both as a way to increase regional sales tax revenue or to produce a significant increase in quality jobs. It also clearly has not helped municipalities avoid fiscal stress or had a general beneficial economic impact on the region. The data for some of the incentive programs is updated periodically.