Nixon: Tax credit changes to be a priority in 2013

JEFFERSON CITY, Mo. -- Gov. Jay Nixon pledged Wednesday to make "tax credit reform" a priority in the 2013 legislative session, but the House leader expressed skepticism about the governor's revival of a special commission to recommend changes.

Nixon encouraged the Tax Credit Review Commission to take another look at Missouri's 61 tax credit programs because the amount of tax revenue waived annually has risen by 20 percent over the past two years to $629 million.

"Tax credits come at a price. Every dollar we spend on tax credits is a dollar we don't have to spend on other critical priorities such as public schools or public safety," Nixon said as the commission met for the first time Wednesday at the state Capitol.

He urged the commission to take testimony from lawmakers, financial experts, community officials and education and labor leaders and produce an updated report by Dec. 5 with recommendations for eliminating, keeping or revamping particular programs. In November 2010, the commission concluded that Missouri could eventually save as much as $220 million annually by reducing, revamping or ending dozens of tax credit programs that have outlived their usefulness or aren't producing much of a benefit.

Among other things, the commission suggested two years ago that Missouri should exclude residents who rent their homes from a longtime income tax credit intended to offset the property tax payments of low-income elderly and disabled residents. The panel concluded that rent payments weren't significantly affected by the property taxes paid by the landlord. The panel also recommended reducing the amount of annual tax credits provided under the state's two most expensive programs -- one for developers of low-income housing, the other for the renovation of historic buildings.

None of those recommendations made it into law because legislators in the House and Senate have been at loggerheads over which programs to curtail, how greatly to do so, and whether to authorize new tax credits for targeted industries, such as international cargo shippers at the St. Louis airport. The most notable failure occurred in fall 2011, when a special session called by Nixon ended without passage of the marquee bill revamping the state's tax credits.

House Speaker Tim Jones criticized Nixon for renewing the commission without adding any current lawmakers to its membership.

"The governor seems to be running a political year sideshow with this tax commission that I don't understand what their purpose or goal is really supposed to be, other than to come up with the same proposal that the governor backed away from last year," said Jones, R-Eureka.

Jones said lawmakers have been discussing tax credit proposals that could be considered during the 2013 session, including limits on the value of tax credits authorized for particular programs and whether some programs no longer are needed.

Former Republican state senator Chuck Gross, who serves as co-chairman for the commission, said the goal is to give lawmakers the most up-to-date facts about tax credits with some recommendations for improving or ending them. But he said the commission is unlikely to mount an aggressive campaign to get its recommendations implemented through the legislature.

"I'm not going to get involved in the political side of it," said Gross, of St. Charles. "We're going to throw out the recommendations and then let the interest groups that are out there kind of stress which ones they agree with, which ones they disagree with, how our analysis pans out for them."

Those competing interests could be intense. At the commission's first meeting Wednesday, a former senator who now lobbies for the wood-waste industry pleaded with the panel to reconsider its 2010 recommendation to end the industry's tax breaks. His testimony was followed by lobbyists higher education and K-12 education groups who thanked the commission for looking at ways to scale back tax credits.