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Nixon got Boeing through Senate by promising tax credit reform

Nixon got Boeing through Senate by promising tax credit reform


JEFFERSON CITY • After years of avoiding the Legislature, Missouri Gov. Jay Nixon has been in the thick of the action this week as he maneuvers to pass a huge package of tax breaks for a new Boeing plant.

The biggest potential roadblock was a handful of Senate budget hawks, who had threatened to filibuster the bill unless it included offsetting reductions in other tax credit programs.

So Nixon quietly negotiated with five Senate Republicans. Those secret talks culminated in a deal, struck at 10:30 a.m. Wednesday as the Senate was taking a recess from debating the Boeing bill.

Two senators involved in the talks said the governor promised he would use his leverage next year to persuade the House to pass a tax credit reform bill that has died the last four years.

Sen. Brad Lager, R-Savannah, said the first sign of the governor’s commitment could become clear today, when a Nixon-dominated commission could hold up the issuance of new low-income housing tax credits.

“The group that has outright stopped tax credit reform has been low-income housing” developers, Lager said. “Without putting words in the governor’s mouth, I think that dynamic will change” today.

Nixon’s office declined to say whether he had agreed to press harder for tax credit reform and whether the housing tax credits were in play.

“Gov. Nixon will continue to work with legislators in a bipartisan way to ensure that state government operates in a fiscally responsible manner, and that programs provide a strong return on investment for taxpayers,” his office said in a statement.

The other Republican senators involved in the negotiations were John Lamping of Ladue, Rob Schaaf of St. Joseph, Ed Emery of Lamar and Dan Brown of Rolla.

Lamping said the group secured from Nixon “a really strong commitment to not just mention reform in a speech but to do what he did this time (with Boeing), which is to work on legislation, put forward legislation as an implicit co-sponsor and use the tools of his office to get it passed.”

Nixon has typically had a hands-off approach toward legislation. But he has been pulling out all the stops to pass the Boeing tax break bill.

The governor wants the company to build its 777X commercial plane in north St. Louis County. The project could bring as many as 8,000 jobs to the state, as well as spinoff benefits for suppliers and the construction industry.

Under Nixon’s plan, the state could offer the company at least $1.7 billion in incentives over 23 years.

The bill cleared the Senate on Wednesday, only two days after it was introduced. The House will convene at 9 a.m. today to take up the bill.

A House committee gave it the green light on Thursday, endorsing it 24-0.

“It’s my general feeling that everybody wants to make this happen,” committee Chairwoman Anne Zerr, R-St. Charles, told reporters afterward.

More drama may surround the proceedings at the Missouri Housing Development Commission, which gives out the low-income housing tax credits. The commission is scheduled to meet at 1 p.m. in Columbia.

Missouri has about 60 tax credit programs which, taken together, cost the state treasury $513 million last year.

Senators have been trying to rein in the programs for more than four years. Nixon, who formed a Tax Credit Review Commission in 2010, has also pushed for reforms.

But the bill has died chiefly because of differences between the Senate and the House over where to cap the two largest development programs. The House has generally aligned with developers trying to ward off big cuts.

The low-income housing credit program is in the Senate’s crosshairs because it is the most expensive program, costing about $144 million a year.

While supporters point to the thousands of units of affordable housing underwritten with the money, critics note that because of the structure of the tax credit, most of the state’s money doesn’t go into housing construction — it goes to middlemen.

Developers sell their credits to syndicators, who buy them at a discount. They resell them to investors such as insurance companies, which claim the tax break.

In an audit in 2008, then-Auditor Susan Montee found that only 35 cents of each dollar actually went into construction of apartments and single-family homes.

The housing development commission includes the governor, the lieutenant governor, the state treasurer and the attorney general.

Six people appointed by the governor are supposed to round out the panel but Nixon has appointed only four; there are two vacancies.

Today’s meeting agenda includes the staff’s recommendation to award a new batch of housing credits. There were 92 applications. The staff recommends 30 of them receive $13.7 million in credits.

Actually, that amount of credits could be claimed each year for 10 years by the investors, so state taxpayers would spend $137 million over a decade on the 30 projects. The federal government would match the state credits.

The recommended projects include eight in the St. Louis area. For example, developer Mark Gardner of Gardner Development LLC in Springfield would receive $834,000 in state and federal credits for a proposed 48-unit complex in Dardenne Prairie.

Gardner, who served on the governor’s tax credit review commission, said Thursday that he had heard talk that the commission might delay approving new credits as part of the Boeing deal.

“I don’t think that puts any pressure on anybody,” Gardner said. “I’ve heard that argument advanced, and I think it’s just ridiculous.”

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Virginia Young is the Jefferson City bureau chief for the St. Louis Post-Dispatch.

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