A slew of Missouri tax credits will not be issued beginning in July because lawmakers have chosen not to support them.  The credits have to be approved annually by the House Budget and the Senate Appropriations committees to move forward.

House Budget Committee chairman Scott Fitzpatrick speaks on the Missouri House floor in September 2017 (file photo courtesy of Tim Bommel at House Communications)

This year, House Budget Chairman Scott Fitzpatrick led a led a group of fellow Republicans on his panel to put an end to four tax credit programs.

Chief among them was the low-income housing tax credit.  The Missouri Housing Development Commission ended the program in the current fiscal year when it voted 8-2 not to match the $140 million in federal low-income housing credits.

That move was spearheaded by Republican Governor Eric Greitens, who argued that only about half the money realized through the credits actually went to build housing for poor people.

It’s been speculated that opponents of the now impeachment threatened Governor are bankrolled by developers of low-income housing.

Newspaper publisher Scott Faughn testified before a legislative committee Wednesday that he gave $120,000 to a lawyer who represents a client tied to allegations against Greitens that the committee is examining.  One of Faughn’s advertising sponsor’s is Sterling Bank, which specializes in loans using low-income housing tax credits.

Greitens’ formed a panel last year, the Governor’s Committee on Simple, Fair and Low Taxes, which concluded that taxpayers would save up to $250 million over 10 years if the credits were converted to low-interest loans.

Its findings mirrored some of the results in a study issued by Democratic state Auditor Nicole Galloway that was critical of the budget impact of tax credits in general.

In it, Galloway identified the low-income housing credit as the largest programs in the state.  The study said the program also represents a significant liability to the state with approximately $1.3 billion in credits outstanding and obligated.

House Budget Chair Fitzpatrick said his committee’s decision was a follow up to the actions of the Missouri Housing Development Commission (MHDC) with an eye toward the future.

“It really was mainly on the heels of what MHDC did, a show of support for that from the budget committee, in hope that it’ll prompt the reform discussion that needs to take place moving in the next session,” said Fitzpatrick.

The vote in committee on the low-income housing tax credit went largely along party lines.  But Fitzpatrick contends Democrats also see a problem with the program even if they weren’t in favor of ending it.

“The critique of the program is certainly bipartisan,” Fitzpatrick said.  “It’s just that the Democrats didn’t want to zero it out.  And I think they didn’t want to agree with the governor on that.”

Democrat Deb Lavender of Kirkwood sits on the House Budget Committee.  She admits the tax credit may need to be downsized, but thinks the panel acted far too hastily.

“How did you make a decision affecting $140 million that’s invested in this state to create low-income housing on a 15-minute review of that tax credit,” said Lavender.

Back in November, Kansas City Mayor Sly James called together a group of 27 Missouri mayors to rally around key issues, including low-income housing tax credits.  James contended the cuts would hurt Kansas City’s ability to provide workforce housing as well as housing for veterans and people of low means.

“We have finally reached functional zero on veteran’s homelessness in Kansas City,” said James at the time.  “Without low-income housing tax credits that would have been an impossibility.”  He added that the credits are used to build housing in undeveloped areas and on projects that offer a lower return on investment.

Because of decisions made by the House Budget Committee, three other tax credits will be dumped in the upcoming fiscal year starting in July.  They include the wine and grape credit, which assists wine producers and grape growers who purchase new equipment and materials.

Also seeing the chopping block will be the Qualified Beef and Innovation Campus credit programs which Fitzpatrick contends are underutilized.  Further,  the committee downsized the historic tax credit to preserve older buildings from $140 million to $120 million.