Missouri senators passed legislation Thursday limiting tax breaks for future developments in flood plains and giving school districts new powers to prevent their tax revenues from being diverted to developers.
The legislation revamping the state’s “tax increment financing” laws cleared the Senate without any dissent and now heads to the House, where a similar proposal stalled in the final days of last year’s legislative session.
The issue has drawn increased attention after the state experienced severe, long-lasting flooding in 2019 along the Missouri and Mississippi rivers. Some levees that were damaged aren’t expected to be repaired before rivers rise again this spring, creating a renewed risk of flooding.
A tax increment financing district, known as a TIF, allows a portion of the increased sales and property tax revenues resulting from a development to be used to pay for some of the development costs instead of going to schools, fire districts and other local governmental entities.
The Senate bill would allow local school boards, by a two-thirds vote, to prevent their tax revenues from being diverted to TIF projects.
The local tax breaks are a common economic development incentive across Missouri. For 2018, the state Department of Revenue received reports from 449 TIF projects in 109 municipalities with anticipated project costs of over $39 billion, of which more than $15 billion was expected to be eligible for reimbursement through the tax breaks. The 2019 figures aren’t yet available.
After devastating flooding in 1993, some communities fortified levees to better protect developments in flood plains. But those developments have remained controversial, because high levees along rivers can funnel water to other communities downstream, which may then experience more extensive flooding.
A 2002 state law sought to prohibit new TIF projects in flood plains in St. Charles County, which had seen extensive development along the Missouri River. This year’s Senate bill would extend that ban to other parts of the state, beginning on June 30, 2021, with exemptions for the Kansas City area counties of Jackson, Clay and Platte and the cities of St. Joseph and Springfield.