After he called for a bond issuance to fund education Monday in his State of the State Address, Gov. Jay Nixon said that to guarantee payment for those bonds, Missouri has to get its tax credit system under control.
“Saying ‘We’ll figure it our later’ won’t work,” Nixon said. “That’s not how we became a Triple-A state.”
The governor said the redemption of tax credits in 2012 created a dent of $629 million, or one-twelfth of the state’s general revenue budget. Nixon called the situation “staggering” and fiscally irresponsible.
Two years ago, the governor handpicked a group of business leaders, educators and government officials for a bipartisan tax credit commission. Last December, the commission released a report that reviewed the 10 largest of the state’s 61 tax credit programs in the fiscal year of 2012.
The commission recommended reforming the tax credit system on an individual program basis. The commission said the biggest cuts should be made to the Historic Preservation Program, proposing a reduction of the program’s annual cap from $140 million to $90 million.
On Monday, economist Howard Wall called the Missouri Quality Jobs program into question during a session with the House Government Oversight and Accountability Committee. According to an Associated Press report, Wall, a professor at Lindenwood University and former regional economics adviser at the Federal Reserve Bank in St. Louis, said the program might be a waste of money since the job gains at one company often come at the expense another business in the state.
Still, an ongoing battle between Missouri and Kansas to lure businesses from the other side of the state line has put tax cuts in the crosshairs in Jefferson City.
In Kansas, tax cuts, exemptions and reductions are contributing to a projected $267 million budget shortfall for the current fiscal year, Bloomberg reports. In response to those cuts, Missouri’s Republican lawmakers are planning possible ways to cut corporate income taxes and lower individual income tax rates.