Gov. Jay Nixon Friday signaled that he’s expecting a vigorous debate over tax credits next spring after receiving the report of a state panel that’s been studying Missouri’s 61 tax credit programs.
The Tax Credit Review Commission wrapped up its work Friday, handing the governor updated recommendations from two years ago that call for sharp cuts to two of the most popular — and most expensive — programs: historic and low-income housing tax credits.
“The 2012 Tax Credit Review Commission Report reaffirms the urgent need to reform our system of tax credit expenditures,” Nixon said.
The 24-member panel proposed capping Historic Tax Credits at $90 million a year, down from the current $140 million, and Low-Income Housing Tax Credits at $135 million, down from $195 million this year. They also called for axing 28 mostly-smaller credit programs that fund everything from charcoal production to movie-making, in a bid to streamline the state’s economic development efforts.
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Had the recommendations been in place the last three years, the Commission estimates, they would have cut the amount of money authorized in tax credits by more than half, to $95 million.
Yet the cuts are softer than ones the same panel recommended two years ago, when it proposed a $75 million cap on historic credits, a shorter time frame to claim low-income housing credits and a mandatory “sunset” on all programs, putting them up for a vote in the Legislature. Eight members of this year’s panel signed a “supplemental and minority report” criticizing those changes from the earlier version.
“While recognizing that the Commission’s report reflects more than one point of view,” Nixon said, “I’m greatly encouraged by the clear consensus on the need to rein in these expenditures, which undermine our ability to make vital investments in priorities like education and public safety.”
Nixon convened the panel in September after efforts to reform tax credits — based partly on those 2010 recommendations — stalled for two years in the Legislature, and after news that credits last year cost $629 million to Missouri’s treasury.
Like Nixon, legislative leaders in both houses have said they hope to revisit the issue in 2013, and several lawmakers have already pre-filed bills that would make wholesale changes to Missouri’s tax credit system.
Tim Logan is a business writer at the Post-Dispatch. Follow him on Twitter @tlwriter.
