Gov. Jay Nixon praised legislation passed Thursday by the Senate for making "long-overdue reforms" to Missouri's costly tax credit programs. Yet the bill may be in line for its own reformation from House leaders who don't like its limit on development incentives.
The Senate's 27-7 vote sends the tax credit legislation to the House, where it already faces opposition. The main point of contention - as it has been for years - centers on the extent to which the state should scale back its two most costly tax credit programs that help finance the construction of low-income housing and the renovation of historic buildings.
During the 2012 fiscal year, Missouri waived $629 million in revenues through tax credits, including $164 million for low-income housing development and $134 million through the historic preservation program. Missouri has consistently ranked among the top states in the amount of tax breaks for both programs. The governor and some lawmakers contend that money could be better spent on new business incentives, education or other services.
"This bill contains long-overdue reforms to our state's largest tax credit expenditures, which would yield significant savings for taxpayers in years to come," Nixon said in a written statement after the Senate's vote. "The overwhelming bipartisan support shown today for reining in these tax credits represents an important step toward getting fiscally responsible tax credit reform to my desk this year."
Sen. Rob Schaaf, a Republican physician from St. Joseph, compared the development tax credits to a "huge wound that's just gushing blood" from Missouri's budget. He declared the Senate legislation a successful operation.
"My fear is we're going to send it over to the House to another doctor for the follow-up care, and bad things are going to happen over there," Schaaf said.
House Speaker Tim Jones had a different diagnosis for the bill. He said previously that senators had "overreached" by limiting the historic preservation program to $50 million of tax credits annually - down from a $140 million cap - and the low-income housing program to $55 million annually, a cut from a current cap of around $190 million. Jones, R-Eureka, has suggested limits about twice as high as contained in the Senate bill.
He defended the development programs Thursday against criticism from Senate colleagues.
"I don't understand the argument as Republicans as to why giving someone a tax credit and lowering their tax burden is bad," Jones said. "As Republicans, we're always looking to cut taxes, lower tax burdens - that's exactly what tax credits do, with the added bonus of incentivizing jobs."
In addition to curtailing some existing tax credits, the Senate legislation would create several new incentive programs. It would authorize up to $60 million in tax credits over eight years for air cargo exports intended primarily to benefit Lambert-St. Louis International Airport and allow $36 million of tax credits over six years for so-called angel investors in startup technology businesses. It also would create new state and local tax breaks for computer data centers.