ST. LOUIS — State officials say a market shift is behind the recent decline in real estate-related tax credits redeemed by Missouri businesses and individuals.
The state Revenue Department this week reported a $103 million overall annual decline in tax credits cashed in the fiscal year that ended on June 30. That includes a $55 million plunge in the historic preservation tax credit and another $20 million drop in the low-income housing credit.
The St. Louis Post-Dispatch reported Friday that tax credits under Missouri's Quality Jobs tax credit grew by $5 million in that same period and have nearly tripled since 2010. Overall, $512.9 million worth of tax credits were redeemed in the 12 months ending June 30, a drop of more than 25 percent from the previous year's record redemption.
The redemption represent money actually paid out by the state after a firm gets initial tax credit approval and then complies with the legal requirements.
The Missouri Department of Economic Development called the recent changes in tax credit use "a direct reflection of the state's economic activity." The market shifts also jibe with the priorities of Gov. Jay Nixon and some Senate Republicans, who have pushed to tighten the costly historic and low-income housing programs and focus efforts on credits that directly reward job creation.
Missouri has more than 60 tax credits covering programs from wineries to wood fuel pellet production, but the bulk of the half-billion-dollar cost comes from a few programs.
The historic program reimburses one-fourth the cost of renovating old buildings and has been a boon for St. Louis, where the housing market continues to adjust.
"Historics being low represents when the market fell off during the recession," state tax policy analyst Brian Schmidt said. "It takes two to five years for a project to go from (initial) authorization to credits being redeemed, you're seeing the effect of the downturn now."