Gov. Jay Nixon talks tax credits with higher education officials
Nixon supported tax credit reform to help solve Missouri's budget problems.
Published April 28, 2010
Gov. Jay Nixon, Budget Director Linda Luebbering and Economic Development Director David Kerr took part in a telephone conference with Missouri higher education officials to discuss economic policy in relation to higher education Tuesday evening.
Each of the speakers presented their own opinions and data to support tax credit reform. Following their initial statements, phone lines were opened for a question-and-answer session.
In his opening, Nixon said the top priority he’s had since taking office has been to create jobs in an effort to expand economic growth. But one of the keys to achieving his goal is insuring good quality higher education.
“That link between education and economic growth is fundamental,” Nixon said.
Although Missouri’s general revenue has been in a steep decline, Nixon said a partial solution to the problem would be to put a cap on the growth of entitlement tax credit programs.
“The growth of entitlement tax credit programs is unsustainable,” Nixon said.
Nixon said the tax credit program costs $585 million a year to support and has seen 86 percent growth in the past year.
Missouri ranks first in its overall expenditures and second in low income housing credits in the U.S. But when it comes to per-capita spending on K-12 students, the state lands in 45th place.
Luebbering said there has been a steep decline in revenue as well as steep increase in spending, due in part to the money spent on tax credits.
“We are very dependent upon the individual income tax,” Luebbering said. “And when people aren’t working, they aren’t buying, and our second highest revenue is sales tax.”
As Missouri’s revenue stays below expectations, Luebbering said it’s going to be difficult not to see an impact on the money going toward higher education.
“The biggest slice of the general revenue spending is 35 percent on K-12 and 12 percent on higher education,” Luebbering said. “It’s impossible not to have an impact on those programs when you’re declining as much as we have.”
Nixon said without tax credit reform, issues with the budget will magnify. He said it is too easy for people to receive tax credits, and a greater level of control surrounding expenditure is needed.
“Right now if a building is old and someone is involved in its ownership they automatically get the money," Nixon said. “We have to have something other than entitlement.”
Because the issue of tax credit reform has already reached the senate, Nixon said there’s a chance of getting reform passed as early as this year.
“A significant portion of money we save from the reform will go to higher education,” Nixon said.
Kerr said in order for Missouri to remain competitive, it needs a trained and educated workforce.
“By continuing to invest in education and reforming our tax credit program we have a chance of growth,” Kerr said.