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Incoming House leaders question tax credit numbers

Incoming House leaders question tax credit numbers

December 16th, 2010 in News

Some of the Republicans who expect to lead the state House of Representatives next year have challenged Gov. Jay Nixon's 2011 budget proposal, even before the Democratic governor has made it.

Questioning some of the predictions made recently by Nixon's special Tax Credit Review Commission, incoming House Speaker Steve Tilley, R-Perryville, told reporters Wednesday afternoon: "If you remember last year, the governor submitted a budget with $300 million worth of phantom money from the federal stimulus, that we may or may not get.

"I can already sense that he's going to take this report and come up with incorrect conclusions, and try to potentially submit us a budget that's based off potential savings that we don't believe are there."

Nixon spokesman Scott Holste said Wednesday the governor's office had no response or comment on Tilley's statements.

The 27-member commission issued its recommendations last month, that 28 existing state tax credits should be eliminated and another 31 modified.

"The commission estimates that if all of the recommendations in the commission's report were adopted, the state could realize short- and long-term savings totaling as much as $220 million in tax credit authorizations," the panel wrote on page nine of its 54-page report to Nixon.

But, Tilley told reporters: "Clearly, we don't believe that there's anywhere near $200 million worth of savings and tax credit reforms."

At Tilley's request, state Rep. John Diehl, R-Town and Country, analyzed the commission's report line-by-line.

"There are some things in this report that may be worth talking about," Diehl said. "About $120 million (of the estimated savings) is contingent upon the federal government's passing changes to the federal tax law on the treatment of these tax credits.

"That's something that's clearly outside the purview of the General Assembly."

Diehl questioned the commission's findings of 17-percent average annual growth in tax credits.

Instead, Diehl said, looking only at the last 10 years shows an annual growth rate of "about 2 percent per year, which is about the same as general revenue (average growth)."

He said you can't count on immediate savings from any tax credit changes, because the costs are based on when someone holding the credits actually redeems them.

The state Constitution requires the governor to, within 30 days of the start of a General Assembly session, present lawmakers with "a budget for the ensuing appropriation period, containing the estimated available revenues of the state and ... his recommendations of any laws necessary to provide revenues sufficient to meet the expenditures."

Nevertheless, Tilley said, Nixon should present a "balanced budget ... that's based off a consensus revenue (estimate), which means the House and the Senate and the governor's staff all agree on it, (and) don't build in potential savings that we are telling you up front aren't there, and probably won't make it through the legislative process."

Although the economists have submitted their consensus revenue recommendations to the governor and House and Senate leadership, incoming House Budget Chairman Ryan Silvey, R-Kansas City, said he doesn't know when the leaders will agree on that number and release it to lawmakers and the public.