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)Complete Audit Report