Missouri Senate, House ready to try again on tax credit reform

For the fifth time in four years, the Missouri Senate and House will square off over whether to cut historic preservation and housing development subsidies.

The outcome could determine whether Missouri shifts some money to new incentive programs, such as tax credits to encourage international air cargo shipments at Lambert International Airport.

Also tied to the bill is the possible extension of a tax credit used by O-Fallon-based developer Paul McKee. He hopes to tap about $50 million in Distressed Area Land Assemblage credits — on top of the $41 million he has already received — for his NorthSide Regeneration project in St. Louis.

The Senate passed its version of the tax credit bill today. The next step will be for both chambers to send the bill to a conference committee, which would try to forge a deal before the legislative session ends May 17.

“I think there’s broad agreement that we need to have some tax credit reforms, particularly on two programs that kind of dominate what we do,” said Sen. Eric Schmitt, R-Glendale and the bill’s handler.

In the past, talks broke down when House leaders balked at paring back the two largest programs, which go toward restoring historic buildings and building low-income housing. Together, those two programs consumed nearly $300 million last year, which critics say is more than any other state spends on such projects.

Tax credit supporters contend that the low-income housing subsidy provides apartments that keep some seniors out of more expensive nursing homes.

Historic preservation supporters say that credit has led to an economic renaissance in urban areas. Restored lofts and restaurants on Washington Avenue in St. Louis are one oft-cited example.

“It’s much easier to take a cornfield in St. Charles County and slap out a (street) grid,” said Senate President Pro Tem Tom Dempsey, R-St. Charles.

Even so, senators say the program’s growth must be reined in. On Dempsey’s motion, the Senate voted today to cap historic credits at $60 million a year, with an additional $10 million available for smaller projects. That was an increase compared to an earlier Senate vote, which capped the program at $50 million overall.

The House wants to preserve the historic preservation program nearly as it is – by setting a $135 million annual cap, plus allowing up to $10 million for smaller projects. Currently, the program is capped at $140 million a year, with no cap on smaller projects.

Similar splits ended in bitter deadlocks during legislative sessions in 2010, 2011 and 2012, as well as during a special session in the fall of 2011.

But many legislators hope they can put the issue to rest this year.

Sen. Maria Chappelle-Nadal, D-University City, said the historic credit has done a lot of good, “but what was good 10, 15 years ago is not necessarily what is needed now. As our economy is evolving, we, too, need to evolve.”

The Senate passed the bill on a vote of 22-11. The “no” votes came from both ends of the political spectrum — from conservative Republicans such as John Lamping of Ladue, who opposes the new tax credits established by the bill, and from urban Democrats such as Jamilah Nasheed of St. Louis, who opposes cutting the development programs.

Estimates prepared by appropriations staffers show the Senate bill could save the state more than $1 billion over 15 years. The House version of the bill provides no savings. In fact, it would increase the state’s costs by about $197 million by the 15th year, according to projections.

(The bill is HB698.)