JEFFERSON CITY — The state auditor called Monday for more controls on tax credits with just three weeks left in the legislative session for lawmakers to take action.
An audit released by Auditor Susan Montee's office cited inaccurate fiscal projections and a lack of government controls as the sources of grave inefficiencies within the state's tax credit program. The audit came just days after House Speaker Ron Richard said he would reject the governor's call to reform tax credits this year and to reduce future funding by half to around $314 million.
According to the audit, state spending on tax credits exceeded official government estimates by $1.1 billion over the last five years. Montee said the gap resulted from incorrect "fiscal notes," or official cost estimates overseen by the state Oversight Division.
Montee said the inaccurate cost projections were acting as a hindrance to productive legislative action on the part of lawmakers.
"Even if the legislature is getting this information, the data is faulty," Montee said. "The information is just not there."
According to Montee, approximately 3,000 fiscal notes are produced during a typical legislative session. In addition to those fiscal notes that are calculated incorrectly, Montee said, the fiscal impact of a measure is often listed as unknown if it is too difficult to predict. Tax credits that did not have fiscal impacts listed amounted to more than $3 million out of more than $2 billion in credits issued.
Montee also blamed a lack of government regulation on state overfunding of tax credits. She said only a handful of tax credits had clear limits on funding; for all others, there is no cap on the amount of money the state can commit.
This deficit of government control has resulted in gross overspending, she said. Last year, the state paid $584 million to tax credits, an increase of 57 percent since 2001. In the same time period, the state's general revenues grew at only one fourth of that rate, or 15.7 percent.
Montee said those numbers indicated a need for further government regulation of tax credits, specifically by putting cost controls in place for spending on individual tax credits.
"If we're going to have (tax credits), which we do, and if they're going to be off on their projections, which they are, then we need to have some things in place that could reign them in without a heated political debate over each individual one," Montee said.
Even so, Montee said the legislature likely will not have enough time to address the problems in full. With only three weeks remaining in this year's legislative session, Montee said lawmakers should view tax credit reform with a wider lens.
"Any action that anyone takes on this is a long-term project," she said. "It can't affect something tomorrow."