Economic incentives are set to be the main focus of the upcoming special session after tax credit reform failed to pass earlier this year. But even before lawmakers return to Jefferson City, tax credit redemptions are decreasing.
Tax credit redemptions fell 10.6 percent to $522 million in fiscal 2010, ending June 30, compared to $584 million during fiscal 2009, according to the Missouri Department of Economic Development.
Before last fiscal year, tax credits were on the rise.
Tax credit redemptions from fiscal 2001 to 2009 grew at a rate of 57 percent, from $372 million to more than $584 million, according to an audit report released last year in April. General revenue in Missouri, meanwhile, increased 15.7 percent from $6.44 billion to $7.45 billion during the same period.
Proponents of tax credits claim many economic development projects across the state would not happen without the incentives, while opponents say tax credits are a way for the government to pick winners and losers, interfering with the free market.
Missouri Gov. Jay Nixon formed a commission to reform the state’s 61 tax credit programs last September.
The Missouri Tax Credit Review Commission then returned a 54-page report in November, concluding the state could save more than $220 million a year by cutting, combining or not reauthorizing 28 of the tax credit programs.
Tax credit reform, however, did not pass before the end of the legislative session in May.
The Republican leadership of the Missouri General Assembly flew around the state to announce their compromise plan regarding economic incentives in July, claiming their plan has more than $1.5 billion in savings over 15 years. The day after, Nixon, a Democrat, crisscrossed the state to tout economic development.
Last week, the governor made it official, calling on lawmakers to return to the Capitol for a special session to discuss numerous economic development incentives, along with several other issues, starting on Sept 6.