Commentary: Fix tax credits, don't abandon them
This article first appeared in the St. Louis Beacon: Missouri boasts a veritable catalogue of unmet needs. These include education at all levels: Teachers' pay is low; the state's support of secondary and elementary education ranks toward the bottom; and college tuition in Missouri is higher than that in any other state in the Big 12 Conference. Health care is similarly starved for resources, and our transportation infrastructure is deteriorating. The state has yet to face the fact that a modern economy demands improvement in these areas, not a slide to the bottom.
Contrary to what tax cutters say, economic growth in Missouri stumbles at the back of the pack of surrounding states, many of which tax their citizens more. There is no free lunch. Investment in education, health care, energy research, mass transit and highway repair cannot be conjured up from thin air, Wall Street money men to the contrary notwithstanding.
Hamstrung by the Hancock Amendment and by public sentiment stoked by unrealistic political rhetoric, governments throughout the state search for resources without tax increases. Tax forgiveness has been the final refuge for satisfying needs that fiscal conservatives fail to recognize.
St. Louis and some areas of St. Louis County provide a case in point. The lack of state resources directed toward urban problems is well known. Missouri barely acknowledges the necessity of public transit for cities and lower-income riders much less invests in modern rail transportation and rapid transit. By focusing solely on highway construction that contributes to further sprawl and suburbanization, the state's transportation policies fail to help cities and actually contribute to deterioration.
While rural counties elect their assessors and largely escape the attention of the State Tax Commission, cities are subjected to the glare of state supervision and increased assessments. The inequality of assessments is made more profound by the fact that farm property is assessed at 9 percent of value, residential at 19 percent and commercial at 32 percent. Since educational need is weighted in relative ratio of assessments between jurisdictions, the result is apportionment of state educational assistance that discriminates against urban areas. Proposals to raise teachers salaries by flat increases would merely reinforce that tendency.
Many problems have been caused by neglecting urban revitalization exacerbated by the Wal-Martization of small towns and suburban outflows of people. Starved of state resources for urban revitalization, city residents and their legislators have turned to tax credits to aid historic neighborhoods and to renew blighted and deteriorated areas as well as to support specific social services.
Efforts to win tax credits have proliferated; one of the latest was a multimillion-dollar effort to lure a Canadian aircraft manufacturer to the Kansas City area. That proposal was recently voted down. But the reaction in the state legislature went beyond the Bombardier bill and developed into an across-the-board attack on tax credits. This is particularly in the state Senate -- regardless of a program's value. The failure to set reasonable priorities for state spending and to address those priorities with specific programs is at the heart of this developing chaos.
A rational observer might wonder when the recognition of reality will occur.
The situation cries out for investment -- especially if the state's ambition includes a modern educational system, humane health care, a modern integrated, multi-modal transportation system and viable cities and towns. Programs must be developed, resources identified and mustered.
What is required is a progressive coalition to address these concerns coupled with a willingness to undertake mutual sacrifice exemplified by reasonable taxation. The solution is to determine categories of credits and the credits themselves with the same care required in legislating appropriations, not by abandoning credits as a useful tool to induce desired activities and projects.
About the author
John Roach, a St. Louis attorney, consults on transportation and real estate matters.