JEFFERSON CITY—Senator Ryan Silvey, R-Kansas City, filed legislation today that would establish an overall, or global, cap on the amount of tax credits authorized each year. The bill does not deal with any one program in particular; instead, it limits the total amount of tax incentives the state can authorize annually, with that number slowly reduced by approximately 15 percent over the next five years.

Tax credit reform has been an ongoing effort in the General Assembly for a number of years, with several bills filed each session to cap funding for the incentives. Many of those bills, though, dealt with individual tax credit programs. Senator Silvey’s legislation creates a cap that would affect all programs, versus singling any one out specifically for reform.

Senate Bill 507 would create a global cap on the annual authorization of tax credits of $575 million, slightly above the average of the last three years. The measure would then ratchet down the cap by 3 percent over a five year period. Once fully phased in, the cap would be $493 million, reducing tax credit authorizations by around $80 million annually.

“The General Assembly has been fighting to implement sensible tax credit reform for years, and each session, those efforts are blocked, despite broad agreement that it needs to be done,” said Sen. Silvey. “I think a lot of those attempts died because they tried to deal with one or two programs instead of the whole system. My legislation would curb the amount of credits that are authorized each year, slowly reducing what we ultimately spend and reforming what nearly everyone recognizes as an unwieldy and fiscally irresponsible tax credit system.”

Currently, Missouri carries approximately $2.7 billion in tax credit liabilities, due to the way the system is set up. First, an entity applies for the credit. If it is authorized, it can then be issued and redeemed. However, tax credits can be carried over multiple years. While the incentive may have been authorized and issued in a single year, it may be not be redeemed until farther into the future. Right now, Missouri authorizes around $600 million annually in tax credits.

“By limiting the amount we authorize, we can reduce the amount of revenue these programs ultimately cost,” said Sen. Silvey. “My legislation is a modest reduction in what we’re already authorizing each year, so it shouldn’t be a sudden shock to the way the system has operated. Finally, it has the end goal of limiting the exorbitant amount of revenue we forgo in tax credits; money that could then go toward education, transportation or other priorities.”

For more information on Sen. Silvey’s legislative efforts, please visit his official Senate website at www.senate.mo.gov/silvey.