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Our Opinion: ‘Irrational exuberance’ resurfaces in Missouri

Alan Greenspan’s caution against “irrational exuberance” remains relevant long after the former Federal Reserve Board chairman coined the phrase in 1996.

We have been reminded of it on multiple occasions this month as government officials and advocacy groups seek to capitalize on the state’s anticipated economic uptick.

Proposed wish lists in January include:

• Medicaid expansion to be funded largely by $5.7 million federal dollars available for three years through the Affordable Care Act.

• A 10-year, 1-cent statewide sales tax projected to generate $7.9 billion for transportation construction and maintenance.

• A $900 million-plus statewide bond issue proposed by Gov. Jay Nixon in Monday’s State of the State address. The revenue would finance: elementary and secondary education; higher education; state parks; and a new Fulton State Mental Hospital.

In Monday’s address he also proposed a payment plan when he said: “The way to pay for the bond issuance is to finally get our tax credit system under control.”

He pointed out that redemptions claimed last year through the state’s 61 tax credit programs grew to a “staggering” $629 million.

Comprehensive tax credit reform is a laudable goal, but one that has eluded legislative action.

Nixon reinvigorated the reform effort in earnest in 2010 when he created the 25-member Tax Credit Review Commission, which issued a 54-page report. The panel concluded the state could save $220 million in five years by eliminating 28 tax-credit programs and improving the operation of 30 others.

Our concerns are twofold.

First, the suggested $220 million savings falls far short of the $900 million-plus spending plan.

Second, the commission’s recommendation has languished for three legislative sessions: the regular sessions of 2011-12 and the 2011 special session.

Although the membership of the Legislature has changed significantly this year, a victory celebration for tax credit reform is not only premature, it would be an exercise in irrational exuberance.

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