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Senators discuss uncertain future for tax credit reform

JEFFERSON CITY, Mo. — Senators from both sides of the aisle are indicating there will be no significant reform of the state’s $600 million dollar tax credit programs — which the Republican legislature and Democratic Gov. Jay Nixon both have said are in dire need of reforms — before the end of the 2014 legislative session.

“I’ll work to get an economic development package and a tax credit reform package across the finish line in 2014,” Sen. Scott Sifton, D-St. Louis, told The Missouri Times. “But the fact that it didn’t happen again this year suggests it maybe will take some fresh perspectives in 2015.”

Sen. Scott Sifton, D-St. Louis
Sen. Scott Sifton, D-St. Louis

Sifton said while the House and Senate could pass legislation dealing with different credits, the two bodies could not reconcile their positions, which ultimately kills any chance of reform.

“In the Senate, you certainly have a place where one senator can stand and talk for a while and slow things down,” Sifton said. “But you also have people in the House in certain leadership roles that can play just as significant a role in slowing down legislation or deciding what moves or doesn’t move.”

Sen. Brad Lager, R-Savannah, a leading voice in tax credit reform during the past few years, condemned the House for inaction on the issue during this past session and beyond that.

Lager said donors involved with both parties who work in industries on the receiving end of the credits prevent the lower chamber from making any significant reforms.

“The House doesn’t want to own the reforms,” Lager told The Missouri Times. “The House members do largely what donors ask them to do, they’re very beholden to them because of the way the process works.”

Lager said, while engaged in negotiating possible changes to some tax credit programs, he was forced to negotiate not with his colleagues in the House but with the recipients of the tax credits directly.

“This is the only issue, and I mean the only one, where I’ve sat down and negotiated directly with the special interests who have a stake in this and nobody else, no representation of the people from the House,” Lager said.

Sen. Brad Lager, R-Savannah
Sen. Brad Lager, R-Savannah

Sifton and Lager both said the fate of the now-defunct New Markets tax credit, which was set to sunset this year and was not renewed, shows just how far apart the two chambers are on reaching an agreement.

“Here’s a program with a clear benefit and a clearly positive economic impact that was simply set up for a sunset during this time of us discussing significant reforms, and two bodies that simply couldn’t get together on how to preserve it,” Sifton said. “I’d say, given that outcome, that any credit that is approaching a sunset in the next few years should be on the endangered list.”

Lager, however, blamed the influence donors have on House members for the defeat of New Markets.

“That had a clear path,” Lager said. “The House simply wouldn’t take it, and that was a direct result of a turf battle between two donors, and the donor that gave the most money won. I know for a fact that is what happened.”

Lager said because House leadership often looks to run for higher office and the chamber’s shorter election cycles, donors are more likely to have an immediate impact on the way House members vote on an issue.

“I’m not saying it’s bribery or pay-to-play, but when you’ve got someone who donates, lets say, $50,000 to your campaign over one or two cycles and they or their businesses is a beneficiary of one of our tax credit programs, they are certainly going to tell you what they think about this legislation killing that program or reducing that program, and whether you agree with them could make a difference in who they are going to continue to support,” he said.

Lager said the House was so beholden to the wishes of their biggest donors that many in the industries receiving the most credits refuse to negotiate with the Senate at all because they know any significant reduction of their credits will die in the House, making the Senate efforts irrelevant.

“The industry came to us and said ‘we don’t negotiate with you because the House said we didn’t have to,’” Lager said. “They don’t have to work with the Senate because the House will do whatever they ask them to do.”

Both senators said they would continue working toward tax credit reform, however, according to Senate leadership, sweeping efforts are unlikely. Earlier during the interim, Senate President Pro Tem Tom Dempsey, R-St. Charles, told The Missouri Times that while an economic development reform package was a priority during 2013, he’s already moving past it looking toward priorities for next session.