Since 1990, the St. Louis region’s crazy quilt of taxing authorities has dedicated more than $2 billion in public money to subsidize private “economic development” projects. And there’s almost nothing to show for it.

At best, the subsidies have created a handful of jobs, few of them long-term or high-paying. The subsidies have created no increase in retail sales nor have they sparked any other economic activity.

The primary beneficiaries of the public investment have been national retail chains, real estate developers, lobbyists and public finance lawyers.

These are some of the findings of the first comprehensive study on the impact of local development incentives in the St. Louis region, completed last week by the East-West Gateway Council of Governments.

(Download a copy of the report here)

The findings will be presented to the agency’s board this week. The report covers more than $2 billion in public incentives consisting mainly of tax increment financing deals and special taxing districts. It does not include the value of state tax incentives and many kinds of local tax abatements. These will be covered in later reports, the agency says. State and local subsidies for the new Busch stadium also are not part of this report.

In the programs that were studied, public information about revenues and expenditures was found to be “remarkably weak.” Few records are kept to reflect how much an incentive costs. No one keeps track of what benefit the public has received in return — including whether the developer has lived up to his promises. In many cases, there is no reporting requirement — either by law or as a condition of the subsidy.

“If this was a county or city budget with so little transparency, people would be going to jail,” Les Sterman, executive director of East-West Gateway, told Post-Dispatch editors and reporters last week.
In the absence of specific data, researchers focused on broad measures of regional economic performance.

About 80 percent of the subsidies went to retail developments — shopping centers, big-box stores, fast-food restaurants — but did nothing to stimulate retail sales in the region, which have been flat or worse over the 18-year study period.

Developers sometimes boast about how projects will create jobs. The data say otherwise. The region added just 5,400 jobs to the retail sector between 1990 and 2007.

“This translates to the staggering sum of $370,370 per retail job created. Considering that retail jobs pay, on average, an annual wage of $18,000, this is not a good investment by any measure,” the report concludes.

Meanwhile, said St. Charles County Executive Steve Ehlmann, programs that offer better prospects for job creation have been underfunded. Among them: biosciences.

Donn Rubin, executive director of the Coalition for Plant and Life Sciences, says he gets “decimal point envy” when he learns about the support that life sciences ventures receive from public agencies in states such as Ohio and Pennsylvania.

The report suggests that subsidized “economic development” programs are less about creating jobs than propping up local governments. Municipal governments depend on sales taxes to fund local services, which means they compete with one another to lure high-volume retailers to their jurisdictions — or prevent a neighboring community from stealing one way.

Overall, the pie doesn’t grow and ultimately, Mr. Ehlmann said, the money leaves the area. Benefits go to national chains at the expense of schools, public transit, sewer districts and local businesses that never have asked for a handout.

East-West Gateway’s staff recommends that developers be required to disclose the costs and performance of publicly subsidized projects. That’s a worthy first step, but it would require a change in state law. Previous efforts to reform the state’s tax-increment financing laws have met with mixed success.

Local leaders should urge the Legislature to try again. If accountability and the wise use of tax dollars aren’t bipartisan issues, nothing is.