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WHAT OTHERS SAY: The time is now to correct Missouri's out-of-control tax credit scheme

Monday, September 3, 2012 | 3:51 p.m. CDT

There are 629 million reasons why Gov. Jay Nixon's decision to reconvene his tax credit commission is a good idea.

That's the record number of dollars that were siphoned away from the Missouri budget this year as part of Missouri's out-of-control and poorly structured system of using its tax code to try to entice certain behaviors.

Most of the money is dedicated to economic development programs that have proved to be very inefficient investments. Some of the money goes to social programs, such as food banks and property tax relief for senior citizens.

The most expensive programs, the historic redevelopment tax credit and the low-income housing tax credit, return less than 30 cents on every dollar invested. Worse, they have no sunset clauses, which means that the developers who profit from such programs never have to make their case before budget committees like schoolchildren, poor people, blind people and everyone else does.

No, developers get their money off the top. Everybody else fights over the scraps.

In the 2012 legislative session, Nixon and House budget chairman Rep. Ryan Silvey, R-Kansas City, engaged in a highly publicized war of words about spending the last few dollars available in the budget. The choices were higher education or health care for the blind.

In reality, this wasn't about the blind or college students. It was about silly political one-upmanship. But the argument highlights the biggest problem with Missouri's tax credit system: If Missouri's budget is so tight that the blind must fight college students for the final available dollars, why aren't developers part of that debate?

The reason is simple. They designed the system so that they get their money first. That $629 million, a record for tax-credit redemption, reduces the amount of money available for other programs. Legislators have no control over it.

The budget pie for developers grows while everybody else's shrinks.

That is unjust, and Nixon and the Missouri legislature must fix it.

In 2010, Nixon's tax credit commission produced a solid report. It recommended that several tax credit programs be abolished, that economic development tax credits be streamlined and that all tax credits have sunset clauses so lawmakers regain some control over them.

Nixon, though, lost his voice after the report came out. He failed to use his bully pulpit to advocate for the changes.

But a small group of politically powerful developers — including Jeffrey E. Smith of Columbia and Stacy Hastie of St. Louis — convinced then-House Speaker Steve Tilley, R-Perryville, and Rep. John Diehl, R-Town and Country, to block the most important reforms pushed by Senate Republicans. They wanted the two largest programs, historic redevelopment and low-income housing, to come before the legislature to make their case every few years.

No one is arguing that the development programs be abolished. They have done much good, including revitalizing downtown St. Louis. But Nixon's newly reconvened tax credit reform commission should insist on rigorous, cost-benefit analysis. Developers should have to account publicly for how they spent every taxpayer dollar.

A succession of governors and legislators have ceded authority over what is now 7.5 percent of state tax revenue to an unelected, unaccountable group of well-connected business people. Who's running this state, anyway?

The system has been rigged. It lacks fairness. It needs justice.

Copyright St. Louis Post-Dispatch. Reprinted with permission. Questions? Contact Opinion editor Elizabeth Conner.



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