Failure of Fragmentation: The Who, What and Why of the Failed Fight Against Ellisville Walmart TIF

Retail is not economic development; it is the result of it. However, time and time again it is billed as economic development in the St Louis region. Mayors, council members, aldermen and others use it as evidence they're serving their constituents. Several factors contribute to the misuse of TIF for retail - the lure of new stores, the illusion of growth from abandoning the old big box for the new one, powerful developers, construction labor interests, and how we fund our municipalities in our fragmented region through sales taxes.

In St Louis County some cities are in whole or in part point-of–sale cities where some of the 1% sales tax levied goes to the municipality where the sale occurred and the rest goes into the pool. The rest are pool cities where the sales taxes generated are put into a pool and given back to cities and the county (for the unincorporated areas) on a per-capita basis. The pool takes into account the reality that many who shop in a particular town are not residents there (however sales taxes from sales by residents of other counties stay in the county). Dozens of the tiny cities in St Louis County have no or very little retail sales and thus little sales tax revenue to fund operations. This creates a vexing regime where point-of-sale towns grasp for sale tax revenues, and the pool props up tiny often dysfunctional municipalities.

Ellisville is a point-of-sale city so it is incentivized to chase after sales tax revenues. Page 90 of the 2012 budget says it all: