Missouri's State Budget -- Part III: We Must Stop Balancing the Budget on the Backs of our Children through Education Cuts

As part of our look into Missouri's current budget situation, we previously examined where we are, where we are headed and some of the factors that have put us in this situation. In my opinion, the politicians have failed to act and instead pushed Missouri's budget deficit off to the future. Because of the situation Missouri is in, now is the time for leaders to enact real reforms that will make sure the spending of your tax dollars are in line with our values.

One area where Missouri can reform is in the process of awarding a large number of tax credits at the cost of cuts to education. Politicians always say education is their number one priority, yet their actions show a different truth. They continue to show tax credits are their number one priority by continuing to increase the amount of tax credits given out by 407.9% over the last 12 years. A tax credit is a dollar-for-dollar reduction in tax liability that would otherwise be due to the state. This means that every dollar that is given away in a tax credit is a dollar that our state government must replace by increasing taxes or making cuts in current programs; and taking more of your hard earned money is not an option.

The state offers many tax credits for a diverse list of causes, including historic preservation, low-income housing, livestock breeding, and business development. But the popularity of tax credits can often be traced to the pockets of big businesses and special interests. These special interests are well represented by lobbyists in the halls of the Capitol who convince legislators that special interest tax credits create jobs or enhance economic development when all they really do is line the pockets of their beneficiaries.

One of the biggest offenders of using Missouri's scarce resources are the developers receiving the Low Income Housing Tax Credits. This program provides federal and state tax credits to investors where, each year for 10 years, these tax credits can be sold to raise equity to construct or acquire and rehabilitate affordable rental housing. Low Incoming Housing Tax Credits though, are, as a 2008 report by the Missouri Auditor called it, "costly" and "inefficient." The audit showed that only 35 cents for every dollar in tax credits go to development costs while the remaining 65 cents go to investor needs. The same auditor's report also criticized the selection process of not documenting how projects are selected; suggesting that political influence impacts the selection of Low Income Housing Tax Credits.

I believe it is this political influence that made Missouri #2 in the nation in 2009 for Low Income Housing Tax Credits ($106 million) and #1 in the nation for Historic Preservation Tax Credits ($186 million). At the same time, the U.S. Census Bureau reports Missouri is 45th in per capita funding of higher education and 32nd in per capita funding for K-12. I believe this spending is backwards and does not represent our priorities.

In Missouri, the method by which we set Missouri's priorities in spending your tax dollars is in the appropriation process. Through this process, we ask each of the state's expenses to stand in line before your representatives in the General Assembly; requiring them to demonstrate why, with limited resources, they should be funded over others. The problem with Missouri's current tax credit system is the politically connected who receive tax credits, cut to the front of the line, receiving their $521 million in 2010 first, without ever coming before your elected representatives. Then, after waiting in line, when education finally reached the front of the line, the politicians had to tell teachers and students, sorry, we don't have the money to fund our educational needs and underfunded K-12 funding by $23.8 million.

This is why as part of protecting educational opportunities; we must incorporate fundamental reform to Missouri's tax credit system. My plan is to subject tax credits to the appropriations process. This way, instead of playing favorites by being able to cut ahead of the line, tax credits will be made to stand in line like every other state expenditure. In this process, your elected representatives will have the chance to look at all the things we spend your tax dollars on and prioritize accordingly. It also creates a transparent process for developers to be held accountable for a return on investment for receiving your hard earned tax dollars.

I believe we need to reform tax credits, not spend more on them through the creation of new ones. But sadly, House leaders disagree. In next week's column, I will share with you the coming battle to protect our children's future educational opportunities versus giving away your hard earned tax dollars in tax credits to politicians' campaign contributors.

Contact Me

As always, I appreciate hearing your comments, opinions, and concerns. Please feel free to contact me in Jefferson City at (573) 751-2459. You may write to me at Jason Crowell; Missouri Senate; State Capitol; Jefferson City, MO 65101, or e-mail me at: jcrowell@senate.mo.gov or visit me on the web at http://www.senate.mo.gov/crowell.