YELLOW SHEET Office of the State Auditor of Missouri |
February 23, 2001
Report No. 2001-13
Insufficient data and no set goals for state tax credit programs make a
cost-benefit analysis nearly impossible, despite the demand for such a review.
Our
audit set out to conduct an impact analysis of the 33 state tax credit programs
so policymakers can evaluate each program�s effectiveness.� But we found a thorough �review difficult due to the lack of data and
clearly defined goals of each credit.� This
audit makes nine recommendations that need to be addressed before an adequate
review is possible. (See page 11)
�In addition, we gathered the necessary data
to perform limited impact analyses on four small tax credits.
More
data needed
No data is maintained on 16 of the 33 tax credit
programs.� The limited data maintained
on the remaining 17 credits often does not include key information such as the
number of jobs created per project, average wages, total investment, affected
industry sectors, or even project street addresses. (See page 7)
Data is not reconciled
Major discrepancies exist on the tax credit data
maintained by both the Economic Development and Revenue departments, an issue
noted in previous reviews.� These two
departments showed a $19.4 million difference in what each considered as the
total redeemed tax credits for fiscal year 1999.� As a result, the simple task of reporting dollar amounts for
approved, claimed and outstanding tax credits is not verifiable. �(See page 9 and Appendix VIII, page 49)
Consensus necessary on program benchmarks
Although Missouri is already cited as an innovative
leader in using tax credits, the state lacks clear goals to measure a program�s
effectiveness.� Our report notes Ohio�s
performance-measurement system that could work in Missouri.� The model guide manages, evaluates and
monitors tax credit programs on an ongoing basis.� (See page 5)
Inaccurate tax credit marketing
Our review showed several instances in which information
on brochures marketing the tax credits did not match the state statute authorizing
the program.� For example, the summary
for the Neighborhood Assistance Program states an annual cap different than the
state statue.� The summary for the
Brownfield �Job/Investment� tax credit sets a maximum refund, but the statute
mentions no such limit.� (See page 10)
Small tax credit programs analyzed
Despite the lack of data and defined goals, our audit
conducted an impact analysis of four small tax credits: film production, wine
and grape growers, rebuilding communities and small business incubator.� Because of the previously noted insufficient
data, we surveyed these programs to gather the necessary information.� (See survey and results on page 48)� We explain the methodology used and the
economic assumptions made.� Each review
includes the tax credit�s purpose, impact on state taxes, direct economic
impact, total economic impact and data issues that hindered the analysis. (See
page 15 and Appendix X, page 55)