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Senate committee begins deep dive into Missouri’s tax credits

  

JEFFERSON CITY, Mo. — Members of an interim Senate committee tasked with examining the state’s tax credits met for the first time Tuesday afternoon, largely to lay out the group’s objectives. 

Sen. Cindy O’Laughlin, the chairwoman of the Interim Committee on Tax Credit Efficiency and Reform, specifically pointed to what she sees as a need for more transparency, accurate and quicker data, and efficiency when it comes to how Missouri divvies out tax credits. 

“We as a state, I believe, need an overall plan which creates an environment where our businesses and individuals can thrive without being subsidized by the Missouri taxpayer,” O’Laughlin, a Republican, said. 

Committee goals 

O’Laughlin said the committee will look at the social and cost analysis benefits of Missouri’s tax credit programs, its return on investments, economic development incentives, and other goals for tax credits. She said the state needs to do a better job of looking at the results of the awarded incentives.

State Sen. Cindy O’Laughlin

Additionally, the committee will establish metrics for tax credits to decide whether to continue, expand, or eliminate certain programs.

As of June 2016, Missouri had about $3 billion in outstanding or unredeemed credits, according to O’Laughlin, who called on the committee to probe that figure. 

“I respect and support the businesses that relocate here and become responsible partners with our other Missouri residents,” she said. “I’d like us to remain competitive for good businesses, and I believe we do that not through tax subsidy in most cases, but by creating a workforce that is capable — one thing that we are rather short on at times — and reducing regulation and taxes.”

Sens. John Rizzo and Brian Williams are the sole Democrats on the eight-member committee. Williams said it’s been a priority of his to ensure his constituents are informed about tax credits in the St. Louis district he represents. 

“Clearly I’m a supporter of tax credits. I think they can be used as a tool to really revitalize a lot of areas throughout the entire state,” Williams told The Missouri Times. He noted St. Louis and Kansas City, in particular, are unique with how the cities utilize tax credits, especially when it comes to low-income housing. 

“I’m hoping just to bring that perspective [to the committee], and I’m grateful for the opportunity to serve along with my colleagues,” Williams said. 

Dominant tax credit programs 

O’Laughlin placed an emphasis on the committee focusing on “dominant” tax credit programs. She established those — based on Fiscal Year 2018 — as low-income housing, senior citizen circuit breaker, Missouri Quality Jobs, historic preservation, and Missouri Works. 

She noted offsets to the general revenue have exceeded $500 million per year since 2009 — about 5 or 6 percent of the general revenue. 

“I have the feeling that sometimes when we’re talking about tax credits, we hear that they’re going to be a great thing for Missouri, we’re going to do this and that, but how is that reflected in our overall budget, and are we really thinking about that when we’re trying to allocate scarce general revenue dollars to things we’ve already committed to,” O’Laughlin said.

DED credits

Missouri has more than 60 tax credit programs administered by seven state agencies and two commissions, the Senate Appropriations Committee found earlier this year. Of those, the Department of Economic Development (DED) handles the most — about half, in fact. 

The DED issued nearly $274 million in 2018, according to its 2019 Tax Credit Accountability Report. The DED did not include low-income housing tax credits in the report. 

The industries raking in the most incentives are manufacturing, real estate, professional and technical services, and public administration, according to the report. 

Coming up for the committee 

The initial meeting, held in the state Capitol, was standing room only. The committee is tasked with holding four meetings in total, with the next one scheduled for September 10 in Jefferson City. 

Aside from O’Laughlin, Sens. Mike Cierpiot, Bill Eigel, Dan Hegeman, Denny Hoskins, and Andrew Koenig make up the Republican contingent of the committee. 

O’Laughlin also wants the committee to review how data is reported and shared through government. 

“From a business owner’s perspective, we do have a weakness in our government that I think is a very large weakness. That is: Data, when it is available, is rather suspect,” she said. 

More information can be found on the committee’s website