JEFFERSON CITY – Missouri faces billions of dollars in revenue losses from unredeemed tax credits and the economic benefits of credits have been overstated by state agencies, according to a report released Wednesday by Missouri Auditor Nicole Galloway.
About $3 billion in tax credits authorized by lawmakers have not yet been redeemed, the report found, meaning that the state might lose out on that revenue over the next 15 years.
Galloway, a Democrat, called on lawmakers who craft the state's budget to weigh the cost and benefits of tax credits. Missouri lost out on $5.4 billion in revenue because of tax credits over the past decade, the report says.
"Tax credit programs serve a purpose, but each one must be regularly analyzed for efficiency, effectiveness and to ensure they meet desired purposes," Galloway said in a statement accompanying the report. "Budgets are about priorities and the impact tax credits have on the budget has to be considered."
Galloway's office also said economic benefits of some tax credits have been overstated in reports to lawmakers, and that past audits found that's because of "overly optimistic assumptions" by the state agencies that oversee the credits.
For example, the report says Department of Economic Development officials assumed projects wouldn't occur without the state low-income housing, infrastructure development and historic preservation tax credits. Galloway's report said that is unreasonable because those programs also get federal support. Infrastructure-development projects typically are only partially funded with savings from state tax credits, the report says.
About $418 million in tax credits redeemed in fiscal year 2016 went to programs that returned less to the state than the cost, according to the report. That's about 73 percent of total redemptions.
Republican Gov. Eric Greitens has criticized what he describes as "special-interest tax credits" and, like his Democratic predecessor, created a group to study tax credits.