The state-run St. Louis Regional Convention and Sports Complex Authority is set to ask for $50 million in state tax credits for a new St. Louis Rams stadium tomorrow, something that isn’t entirely a surprise, given that this has always been part of Gov. Jay Nixon’s stadium funding plan. Way down at the bottom of the St. Louis Post-Dispatch article, though, there’s a tidbit that’s worth exploring further:
Under one option to be presented to the finance board, the Dome authority would donate $100 million raised for the project to a nonprofit entity, which would then contribute $100 million to the board’s Infrastructure Development Fund.
In return for this contribution, the board would issue $50 million in tax credits to the nonprofit, which in turn would sell the credits and donate the proceeds to the Dome authority. The application says it expects to get about 95 cents on the dollar for those tax credits.
That’s a whole lot of paper-shuffling, but the interesting bit is at the end, where the state would be issuing $50 million in tax credits, but the Dome authority would only be getting $47.5 million in proceeds. That’s not a huge difference, but $2.5 million is $2.5 million, which raises the question: Why not just have the state give $50 million to the project directly, instead of mucking around with funneling money through tax credits and nonprofits?
I’m guessing here (Missouri locals and/or public finance experts, correct me if I’m wrong), but my assumption is that it’s so the headlines read “Dome authority to ask for $50 million in state tax credits” and not “Nixon proposes giving $50 million more to Rams.” It comes to the exact same thing, but for whatever reason some people think of tax expenditures as different from public spending, so apparently it’s worth $2.5 million to keep up this charade.