Mo. tax credit critics balk at Nixon plan

JEFFERSON CITY, Mo. -- A coalition of Republican senators served notice Tuesday that they will not let Gov. Jay Nixon's job-creation plan pass without new limits on state tax credits.

After more than a half-dozen senators took turns laying out a preamble for a filibuster, supporters set aside the legislation for further negotiations. A Senate leader implied it could be weeks, even months, before a bill passes.

The House already has passed a bill expanding tax incentives for businesses that create jobs in Missouri. The Democratic governor wants the Republican-led Legislature to deliver the bill to his desk by its mid-March break.

But tax-credit critics attacked the very premise of the legislation Tuesday.

Sponsoring Sen. David Pearce, R-Warrensburg, estimated the $100 million package of tax incentives could help create 30,000 jobs.

"I will bet my house against your house that this does not create 30,000 jobs," retorted Sen. Jason Crowell, R-Cape Girardeau, the first to rise in opposition to the bill.

"This is a large corporate tax credit giveaway," said Crowell, who indicated his resolve by distributing two dozen proposed amendments stripping virtually every provision of the legislation.

Other senators rose with equally harsh assessments of Missouri's penchant for tax credits in the name of economic development.

"We have become drunk on tax credits," declared Sen. Matt Bartle, R-Lee's Summit.

"For years and years we've almost operated as if tax credits were money from God that were created in heaven and were bestowed and didn't come out of anybody else's pockets," Bartle added.

Supporters claim targeted tax credits can help create new tax revenue by allowing businesses to employ more people, who in turn pay income and sales taxes. But the tax credits themselves reduce the amount of money the state has available for other services, such as public schools and government-subsidized health care for low-income Missourians, critics said.

Missouri forwent nearly $505 million of revenue during the 2008 fiscal year because of tax credits -- a more than 40 percent increase from five years ago. The largest item on last year's tab was $140 million in tax credits for the renovation of historic buildings -- a program that critics particularly want to curtail.

In addition to limiting how many tax credits can be awarded each year, some senators also want to make them subject to legislative appropriation -- diminishing the authority of some boards and commissions that currently award them.

"Without meaningful tax credit reform in this bill, you will not get a jobs bill," Sen. Brad Lager, R-Savannah, told Pearce during Tuesday's debate. "This is going to be a methodical process, we are not going to rush it."

Pearce said in an interview later that he agrees with a need for some tax credit reform but disagrees with assertions that tax credits are benefiting primarily big businesses and rich people.

"Our economy needs a jump start, we need to put people back to work, and why wait?" Pearce said.

Asked Tuesday about including tax credit reform in his jobs bill, Nixon replied: "Clearly we want to make sure we have transparency in the use of our economic development tools." But he neither endorsed nor ruled out any specific tax credit restrictions.

"I would fully expect that they will have a full-throated discussion about what sort of oversight would be helpful," Nixon said.

Senate Majority Leader Kevin Engler, R-Farmington, said senators will work privately for a compromise but he cast doubt on meeting Nixon's goal of passing a bill by their March 12 break.

"I would like the economy to be great by spring break, that doesn't mean it's going to happen," Engler said. "We're not going to, in the spirit of haste, do something that's not right ... and you're not going to break a filibuster with seven or eight senators, that's the reality."

------

Tax break bills are SB45 and HB191.

On the Net:

Legislature: http://www.moga.mo.gov