Elias Tsapelas

Why are Missouri lawmakers considering reauthorizing a program they know doesn’t work well? Yesterday, the Missouri House of Representatives approved new measures to reform the state’s low-income housing tax credit (LIHTC) program, but the efforts at reform do not go far enough to justify restarting the program. Jefferson City could better serve the taxpayers by saving them the $168 million cost of the program this coming year, and should instead consider market-based reforms that will more efficiently and effectively serve low-income housing needs.

My colleagues and I have repeatedly outlined problems with the LIHTC program, detailing how bad of a deal it is for Missouri’s taxpayers. Three previous auditor reports have outlined the inefficiencies of the program and offered changes that could increase the return on investment. A little over two months ago I wrote about how the current bill “reforming” the program was insufficient. While the changes approved by the House could improve the program’s transparency and accountability, the fact remains the program is too costly, highly ineffective, and has no real measures to ensure improvement if reinstated.

Proponents of the LIHTC often characterize the decision to restart Missouri’s program as the only way to address the state’s affordable housing needs, but that couldn’t be further from the truth. Missouri already receives over $168 million from the federal government each year for the same low-income housing projects.

Only 14 other states match federal dollars for the LIHTC program, and before Missouri halted its program in 2017 it was one of the most generous. This means that 35 other states are addressing the housing needs of low-income individuals in different ways. Since the issue of affordable housing isn’t limited to Missouri, perhaps lawmakers could look to other states for examples of how to do a better job of providing housing at a better price for taxpayers.

There is now only one week left in this year’s legislative session, and many policy priorities remain. Shouldn’t lawmakers spend their time moving Missouri forward, not restarting a program that has been shown to be a bad investment? Missourians deserve their tax dollars be put to good use, and it’s hard to see how underwriting the interests of real estate developers qualifies as good use.

About the Author

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Elias Tsapelas
Senior Analyst

Elias Tsapelas earned his Master of Arts in Economics from the University of Missouri in 2016. His research interests include economic development, health policy, and budget-related issues.