By changing two words and adding two sentences to an existing Missouri law, the state's budget crisis could be solved.
It's really that simple.
Last week, Sen. Jason Crowell, R-Cape Girardeau, filed a bill (SB 790) that would create a one-year moratorium on redemptions of tax credits from the state's two largest tax credit programs. The programs, which fund historic redevelopment and low-income housing projects, are estimated to cost about $250 million in the 2013 budget year.
Those tax credit programs are entitlements. They are paid each year, and they grow most years with no legislative oversight. The corporations and developers who own most of the credits — which reduce the amount of tax revenue the state otherwise would collect — receive the tax benefit upon redemption, no matter the state's economic situation.
In tough times, the legislature and the governor make cuts in education, Medicaid and health care for the blind, for example, to balance the budget. Schoolchildren have no guarantees. But holders of tax credit certificates? They are sacred in Missouri law.
Crowell's legislation would change that simply by turning a "shall" to a "may," creating legislative discretion that should have been there in the first place. Then he would stop payment on those tax credits for one year.
By the time most tax credits are redeemed, they have been sold at a discount in a closely controlled market, and the proceeds have been used to fund construction costs of various projects. Limiting one year of redemptions would not slow down any current building projects.
The tax credits still would be due, but they'd be put on hold during a tight budget year instead of making public schools, unemployment benefits or any number of other areas subject to cuts.
We disagree with Crowell on many public policy matters, but we find common ground in the conservative senator's crusade against the unfettered expansion of tax credit programs. We borrowed from his ideas for an editorial we wrote last month before Gov. Jay Nixon's State of the State address. That editorial suggested that the Democratic governor should declare a "tax credit holiday," allowing him to balance the budget by refusing to allow tax credit redemptions for one year.
Former Missouri Supreme Court Justice Mike Wolff endorsed the concept in a guest commentary, arguing: "If the governor or the legislature declared a holiday on accepting tax credit coupons in payment of taxes, the state would not be reneging on its promise to accept tax credit coupons to pay taxes. The state simply would be saying, 'wait until next year.'"
When a smart conservative like Crowell and a smart liberal like Wolff reach the same conclusion for the same reasons, there might be a good idea in there somewhere.
There is no good reason why Missouri should be No. 1 and No. 2 in national spending on those two tax credit programs while its funding for K-12 education ranks in the low 30s and funding for higher education is among the lowest in the nation. Our priorities are upside down.
Powerful lobbies have stymied reasonable tax credit reform proposals each of the last several years.
There is only one way to get the tax-credit purveyors to the bargaining table, and that is to tell them — loudly, just once, just this year — that they're not getting their money.
Copyright St. Louis Post-Dispatch. Reprinted with permission.