April 30, 2008

Citizens League Opposes Fiscal Disparities Exemption for Mall of America expansion

The Citizens League has urged the Minnesota House and Senate not to use the Fiscal Disparities pool to subsidize the Mall of America Phase II, yet it appears that legislative leadership is committed to a subsidy package that includes fiscal disparities to subsidize a large ramp with "free" parking for $200 million.

Violates the fundamental purpose of the pool

Using fiscal disparities to subsidize Mall of America is a direct violation of the purpose of the pool, which is to share regional tax base. Fiscal disparities is not a subsidy tool; it is the opposite of a subsidy tool. The purpose of fiscal disparities is to share tax base to reduce competition; subsidy tools are used by communities to compete with one another. From a regional perspective, therefore, the policy statement is that MOA Phase II does not benefit from being part of the metro region. If successful, this use of fiscal disparities will quickly lead to more perverse effects when implemented. It will increase property taxes on everyone else in the region without having to go through any process to determine whether the subsidy is needed.

Sets an extremely bad precedent

The use of fiscal disparities to subsidize one development at the expense of everyone else breaks a 35-year regional contract among communities and sets the precedent for widespread misuse of the fiscal disparities pool. Fiscal disparities would become a desired approach for subsidy, since there are no established processes to evaluate who should receive it. On what policy basis could we then deny use of the pool to others who compete with the MOA? Why should other malls and the myriad other businesses that may compete with the MOA first be required to subsidize their competitor and then not be subsidized in the same manner when they build or expand? Why should other projects of regional and statewide importance not seek a subsidy through fiscal disparities?

There is no process to determine need

Fiscal disparities has no evaluative process as a subsidy tool because it is based on a fundamentally different premise and perspective than subsidy tools, namely that each community benefits from being part of the region. In other words, we are all in this together. Without such a process that involves the entire region, the door will be open for state policymakers and developers to raid this pool whenever they want a subsidy to the detriment of the entire region.

We leave it to you as a member or supporter of the Citizens League to determine if you want to weigh in on this with your elected officials, but we want to make sure you understand how this relates to the work and priorities of the Citizens League.

For more information see our letter to member of the Minnesota House of Representatives and our past work on Fiscal Disparities.

Posted by Annie Levenson-Falk at April 30, 2008 1:49 PM