Missouri Tax Credit News
The Sausage Making Begins - September 06, 2011
Today, September 6th, 2011, the Missouri Legislature begins its special session. The primary goal of the session is to overhaul the state's tax credit programs. If passed, the bill will curtail many current tax credit programs, including the Missouri historic tax credit, tax breaks for low income seniors and the Missouri low income tax credit. The big addition will be the Aerotropolis program that provides $360 million in new incentives for international cargo shippers at Lambert-St. Louis International Airport.
We believe that the Aerotropolis bill is very well intentioned and does a good job protecting the taxpayers from granting credits that don't create the desired activity. However, the developers building the facilities are absorbing all of the risk of building these facilities. No financial institution is going to provide a bridge loan for these tax credits since their issuance is so heavily dependent upon business activities that may or may not occur after the facilities are already built. Absent the international cargo business these facilities will not receive Aerotropolis tax credits and will not otherwise be economically viable. Politicians never appreciate the business considerations of undertaking such projects. Even if passed, we are not sure that any facilities will get built. This will keep bankers from financing these facilities. It wouldn't surprise us if developers don't find a way to use other incentives such as the New Market Tax Credits to subsidize the financing these facilities. The City of St. Louis has an allocation of these credits and many other attractive financing vehicles at its disposal. The taxpayers will still be at risk if these alternative financing methods are utilized.
A lot of people assume the passage of the bill is a "slam dunk" based on its bi-partisan support. Don't count out the Show-me Institute. They make substantial contributions to those that support their mission - fiscal responsibility, and they are strongly opposed to this bill. Also, Senator Crowell has referred to this bill as "a cancer." He may be able to disrupt passage of this bill. Ironically, in the short run he would be helping preserve existing tax credit programs at their current levels, while historically he has been one of the biggest opponents.
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