Will a New St. Louis Stadium Sales Tax Proposal be a Shutout?

December 20, 2016

Even after St. Louis taxpayers were stuck with the bill in 2015 when the NFL’s Rams left for Los Angeles, city officials are now looking to finance a new $200 million stadium in the effort to attract a Major League Soccer team. 

St. Louis Mayor Francis Slay, a supporter of the stadium plans, offered separate tax proposals that he hopes to have taxpayers vote on in April. The first is a half-cent sales tax increase to fund four policy goals: MetroLink transportation expansion, neighborhood development, workforce development, and public safety.

The second proposal is dependent on passage of the first proposal. If the sales tax increases by a half-cent, the city’s use tax, an 8.013 percent tax levied on out-of-state purchases, would rise by an equal amount. The Slay administration estimated that this would generate an extra $4 million in revenue a year. Mayor Slay wants voters to decide whether that $4 million can be used to fund the new stadium. The proposals must be passed by the city’s Board of Aldermen by January 24th to have them appear on the April 4th ballot.

SC STL, the group trying to get the stadium built, is asking for $40 million in tax credits and $80 million from taxpayers. Part of their justification for a subsidy is that the Missouri Economic Research and Information Center estimates that the stadium would, in fact, generate $24.5 million in net state general revenue over 33 years.

Missouri Governor-elect Eric Greitens, however, has different ideas about stadium subsidies, as expressed Monday in a statement from his transition team: “This project is nothing more than welfare for millionaires. Right now, because of reckless spending by career politicians, we can’t even afford the core functions of government, let alone spend millions on soccer stadiums.”

St. Louis already has a relatively high combined state and local sales tax rate at 8.679 percent. In our ranking of 116 major U.S. cites, St. Louis’ rate is the 23rd highest in the country. If the proposals pass and the St. Louis sales tax increases to 9.179 percent, the city would have the 12th highest sales tax rate in the country. Evidence suggests that a higher sales tax might drive consumers to travel to nearby localities to avoid the high rate.

Additionally, prior experiences and research have not proved stadiums to be a wise financial investment for government, and economists almost universally agree that sport stadium subsidies should be eliminated. St. Louis taxpayers, of course, have already been left in debt by one failed NFL sports stadium.

As of today, the Missouri Development Finance Board has postponed a vote on the $40 million in tax credits at the request of SC STL. The group would like to meet personally with Governor-elect Greitens before the board votes, though it remains unclear if he could actually affect the stadium’s progress if the plan is put in motion by Mayor Slay before the January 9th gubernatorial inauguration.

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