A state audit claims only one third of the housing tax credits issued by the state actually goes toward building homes for the poor. The other two thirds go to costs other than housing, according to the audit. State Auditor Susan Montee compared Missouri’s Low Income Housing Tax Credit Program (LIHTC) to similar programs in other states, and concluded that Missouri’s was the least efficient. Montee believes the program has problems across the board.
"Our concern over this is, certainly, it’s too big," said Montee, "It’s too much money being spent by the state without adequate controls over it, and without planning, and without the correct model."
Not only does the audit show the tax credit money is being used inefficiently, but the state isn’t using all the tax credits available. Through fiscal year 2007, the audit shows that $1.6 billion in state low income housing tax credits have been authorized, but only $329 million have been redeemed, leaving $1.27 billion in credits outstanding. Montee believes these outstanding tax credits won’t be fully redeemed for another ten years, and that the number of outstanding tax credits is growing.
"By 2020 we will be sitting on $2.3 billion in outstanding credits," said Montee, "and this year, in 2008, is the first year we exceed $100 million a year, and we project that every single year beyond this one, it will be above the $100 million mark."
Another problem Montee claims is the lack of a "sunset provision," meaning the program will continue until pulled back by the legislature. Montee doesn’t claim to lobby for any particular legislative change, but does believe the program needs changing.
"When we’re going in and we’re talking about budget crunch here, and needing money here," said Montee, "and we can identify something that is so clearly overspending our dollars on a current basis, then I definitely think it’s something that should be looked at."