| Missouri Tax Credits | |
|---|---|
| Fiscal Year | Redeemed in millions |
| 1999 | $143 |
| 2000 | $262 |
| 2001 | $298 |
| 2002 | $288 |
| 2003 | $309 |
| 2004 | $370 |
| 2005 | $427 |
| 2006 | $431 |
| 2007 | $500 |
| 2008 | $533 |
| 2009 | $585 |
| 2010 | $521 |
| 2011 | $545 |
Perhaps the winner of this year's special session was Missouri's taxpayers. Even though very little was changed as far as Missouri's laws, a lot of light was shed on dangerous spending trends in our state. What we are wasting takes away from Missouri's true needs in education, infrastructure and helping the state's poor.
The biggest losers would be the donors and politicians who made failed deals to protect programs only benefiting a few.
Tax credits have been used for years to help certain social or economic special interests. In total, Missouri tax credits have increased over the last 13 years by 430.9 percent, equaling $545 million in 2011. For FY 2012, budget experts estimate the number of tax credits will grow to $639 million. That total is 22 times more than the costs of the state's A+ Schools program. The following programs represent a large portion of the spending. While these projects do help worthwhile projects, their allocations and framework need some reform:
The Senior Circuit Breaker Property Tax Relief is designed to help low-income seniors not be overburdened by rising property taxes. Oddly, renters and those living in nursing homes qualify, as well. Removing those folks would save nearly $50 million to keep the program intact for folks that could lose their homes. While I am not necessarily against helping the poor in this way, I believe it is dishonest to give property tax relief to those that do not pay property taxes.
We rank No. 2 in the nation for Low-Income Housing tax credit giveaways. Once a project is improved, the state provides a tax credit to the developer, which can be bought and sold, and redeemed annually for 10 years. This has left our state with a liability of outstanding unfunded Low-Incoming Housing tax credit liability of $1.369 billion. That is roughly half of what spend on K-12 education in one year. Developers have been known to install granite countertops in apartments funded under this program, only to replace them later with lower-costing options. The cost per apartment unit in these developments, as provided by a colleague, may shock you (Imagine if new homes had been built for this amount.):
- Schultz School Senior Housing project in Cape Girardeau used state Low-Income Housing tax credits to rehabilitate 45 housing units. The developer received $372,997 per unit.
- Bethel Ridge Estates in Columbia received $320,476 per unit to rehabilitate 42 units and then was awarded another $339,588 per unit to rehabilitate another 42 units for Bethel Ridge Estates II.
Other programs offered by the state in the form of tax credits and other incentives and reforms can be viewed here.
I believe the governor missed an opportunity to address these tax credit issues during special session. Instead, his call to bring the Legislature back to Jefferson City dealt with a variety of issues that were neither extraordinary nor timely. We will have serious budget shortfalls in the future if we do not get our state's tax credit programs in control.
| 2011 Tax Credit Program | Allocation in millions | Percent of Total |
|---|---|---|
| Senior Circuit Breaker | $119 | 22% |
| Low Income Housing | $107 | 20% |
| Historic Preservation | $10 | 18% |
| Missouri Quality Jobs | $57 | 10% |
| New Markets | $49 | 9% |
| Brownfield Remediation | $22 | 4% |
| Distressed Area Land Assemblage | $20 | 4% |
| Enhanced Enterprise Zone | $17 | 3% |
| New Generation Cooperative | $14 | 3% |
| Neighborhood Assistance | $12 | 2% |
| BUILD | $10 | 2% |
| Neighborhood Preservation | $10 | 2% |
| Other | $8 | 1% |
| Total | $545 |
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