This article first appeared in the St. Louis Beacon: St. Louis Mayor Francis Slay, a huge booster of Missouri’s historic tax credit program, isn’t happy with the bill approved Thursday by the Missouri Senate that slashes the program’s annual allocation ceiling by almost two-thirds.
But Slay's chief of staff Jeff Rainford said the mayor is confident that the state House will mandate a higher ceiling and “not anything close to this draconian” limit.
The Senate’s economic development bill would restrict historic-preservation tax credits to $50 million a year; it would also place a $55 million cap on low-income housing tax credits. The current caps now are $140 million for historic tax credits and $190 million for the low-income credits.
Former state Sen. Jeff Smith, D-St. Louis, is now executive director of the Missouri Workforce Housing Association, which is made up of 135 groups that seek affordable housing.
Smith said Friday the association is “not pleased with the Senate bill,” and believes that the measure is based on faulty assumptions.
“People forget that the low-income housing tax credit was cut $124 million from its peak back in 2009,” he said. “Most states have other housing programs that spend tens or hundreds of millions” on low-income housing, while Missouri does not.
In addition, Smith said lawmakers need to recognize that cutting low-income housing shifts the state’s costs elsewhere – while also harming the low-income people who need the housing assistance.
“Seniors who go to nursing homes cost the state 4 times as much (via Medicaid) as they do living in a typical LIHTC project,” he said. “A homeless child is far more likely to require special needs education (more expensive), more likely to do poorly in school, and far more likely to drop out of school, leading to large costs to the state, since dropouts are much more likely both to be on public assistance.”
Contrary to what some legislators believe, Smith added, the fees that developers collect for doing low-income housing projects amounts to less than 10 percent of the cost of the project.
State House Speaker Tim Jones already has told the Associated Press that he will support limits in the $100 million-$150 million range for each program. A special panel set up by the governor is promising limits in the $90 million range.
Rainford emphasized that the historic-preservation credits, in Slay’s opinion, have been “the single most important tool in the revitalization of St. Louis.”
Rainford added that he understood that the Senate acted simply to move the bill forward and that leaders expect changes in the House.
Rainford did praise other provisions in the Senate's bill, notably $60 million in credits over the next eight years for "freight-forwarders," businesspeople who direct cargo to various airports. The long-sought provision is aimed at encouraging cargo shipments to be directed to the underused Lambert-St. Louis International Airport.
Slay has been at odds, somewhat, with a fellow Democrat, Gov. Jay Nixon, who has advocated lower tax-credit limits, particularly for the program for historic preservation.
Nixon has noted that all the state tax credits redeemed in 2012 totaled $629 million. And Missouri's historic-preservation tax credit is among the most generous in the nation.
On Friday, state Auditor Tom Schweich announced he is launching a routine audit of the historic-preservation tax credit program.
Said the governor after Thursday’s Senate vote: “This bill contains long-overdue reforms to our state’s largest tax credit expenditures, which would yield significant savings for taxpayers in years to come. The overwhelming bipartisan support shown today for reining in these tax credits represents an important step toward getting fiscally responsible tax credit reform to my desk this year.”