Historic tax credit provides slight benefit, analysis says
Wednesday, April 17, 2002
JEFFERSON CITY, Mo. -- Missouri's historic preservation tax credit, by far the most costly credit the state awards, returns only a slight benefit to the state, according to an economic analysis.
The cost-benefit estimates reviewed Tuesday by the House Budget Committee showed net positives for all two dozen of the tax credits for which the Department of Economic Development said it could calculate benefits.
But the historic preservation credit had one of the lowest cost-to-benefit ratios, returning about $1.10 in tax revenue for every $1 of tax credits issued, according to the analysis.
Next fiscal year, the department projects the historic tax credit to cost the state at least $94 million -- nearly four times more than any other tax credit the department administers.
According to the ratio, next year's tax credits could be expected to generate at least $103 million in taxes through construction and operation of the renovated historic buildings.
The analysis looked only at state tax revenues, it did not include benefits to local governments or to such things as the quality of life.
The real benefit is accruing not to the state, but to the developers who undertake the projects, said Rep. Dan Hegeman, who is sponsoring legislation that would limit the amount of historic tax credits issued annually.