ST. LOUIS COUNTY — If the state is considering eliminating career ladder raises for teachers, shouldn’t tax credits for developers be on the chopping block, too?
That was the bottom line today as Sen. Jason Crowell made a pitch to the Legislature’s Joint Committee on Tax Policy, which is meeting at the Meramec campus of St. Louis Community College.
Crowell, R-Cape Girardeau, wants to make most state tax credit programs subject to the Legislature’s annual budget process. That way, historic buildings and other business incentives would have to compete for funding with basic services such as education and health care.
Under the current process, tax credits are authorized by law for various purposes, ranging from cleaning up contaminated sites to encouraging high-tech businesses. The Missouri Department of Economic Development and other agencies issue the credits.
A tax credit provides a direct dollar-for-dollar reduction in income taxes and other business taxes owed.
Heavy opposition from business groups and other tax credit recipients killed Crowell’s proposal during the last legislative session. Historic preservationists and others said they needed to be able to count on the credits for the programs to work.
Scores of downtown St. Louis redevelopment projects “wouldn’t have been possible,” without historic preservation credits, St. Louis developer Tim Boyle said today.
But Crowell ’s arguments appeared to be picking up some steam thanks to the state’s looming fiscal crisis.
General revenue fell 10 percent during the first quarter of the fiscal year. Even if the drop is only 5 to 8 percent for the year, the state will have to chop at least $300 million to $500 million from the budget, Crowell predicted.
“You will gut higher and elementary education unless you find the savings somewhere else,” he said. He said it was time to end the “entitlement” aspect of tax credits and give legislators more options as they look for budget cuts.
Rep. Don Calloway, D-St. Louis, said he was openminded about Crowell’s idea.
“I’m concerned about how we allocate a limited amount of resources,” Calloway said. “While everybody in here wants to support urban redevelopment, shall we do that at the expense of basic social services?”
Mr. Crowell needs to get behind proposals to take education, healthcare and economic development funding out of politics. If these essential services are funded in the long term by bonds issued by the State of Missouri, after the voters allow such by constitutional amendment, we will see these better suited to serve all the people of Missouri.
http://dangerousintersection.org/2009/02/02/states-don%e2%80%99t-have-to-wait-for-stimulus-payments/
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These folks in Jeff City will never get it. They need to review tax credit programs individually and realize the economic development that selected credits bring to the state and the resulting boost to state coffers before they gut all the programs at once.
In study after study the Historic Tax Credit returns more money to the state economy than flows out in credits. And, much of the benefit of the credit (income and sales taxes, financial costs and fees) is realized before the credits are released because the physical development work must be completed before the credits are released.
If the Historic Tax Credit (and any other credits that are a net gain for the state) is curtailed, the state will see a decrease in economic activity and revenues will decline even more. There is no more effective economic development tool in Missouri.
And don’t believe that “entitlement” word thrown around by these rural budget hawks. They use it because it has a negative connotation. The credit is guaranteed if someone wishes to rehab a building on the historic register and has a work plan approved by the state and the private financing (at least 75% of the total cost, typically much more) in place. Because the credit is “guaranteed,” the developer can use the guarantee of the credits to help with the private, market-driven financing.
If you remove the guarantee, remove the ability for developers and their financers to depend upon availability of the credit, two very negative consequences follow:
- Instead of the market (75%+ private financing contingent upon the credits) and historic redevelopment guidelines (a rules and fact-driven process) determining who gets credits, credits will be awarded at the discretion of the legislature or executive branches introducing cronyism and anti-market forces as potential developers will need to curry favor with whatever entity will control the credits
- There will be a massive dampening of the renovation market. With reliable, market-driven credit-based financing replaced by uncertainty and a politically-motivated process, far fewer jobs will be planned and far fewer private institutions will risk lending the money. Hundreds of jobs will be lost and neighborhoods will continue to lie fallow, with the resulting loss to the state of tax revenue and beneficial economic activity.
So, hundreds of jobs will be lost, vital historic properties will continue to decay, and the state will lose tens or hundreds of millions in badly-needed tax revenue, all to provide some legislators with budgetary “certainty” and to convert an apolitical, market-driven program into yet another political plum.
So, I guess I’m saying we should oppose Crowell’s bill, or, at the least, exampt the Historic Tax Credit and other revenue-positive credits from his sweeping bill.
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Nixon’s going to have a full plate next year. This issue and he promised during the campaign to restore ALL of Blunt’s Medicaid cuts. He promised. Said it would be easy.
It’s hard to have faith in the old boy when he whines to Messenger “This job is busy.”
I’ll give him the benefit of the doubt though and assume Jack Cardetti told him everything would be okay. That’ll teach to listen to fibbers!
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