Missouri taxpayers are now back on the hook for one of the least effective and most expensive tax credit programs in the country. The state’s Low-Income Housing Tax Credit (LIHTC) program had been dormant for three years, but the Missouri Housing Development Commission (MHDC) recently voted unanimously to revive it. The move breaks one of the first promises made by Governor Parson (the governor sits on the MHDC), who vowed to keep the program shuttered until the legislature reformed it. Never mind the legislature’s failed efforts over the past few years to improve LIHTC. If the program was going to resume without the requisite reforms, why do it now?
Of course, our state is in the middle of an unprecedented pandemic, which has been especially hard on low-income Missourians. But the LIHTC program does nothing to make housing more affordable for those who need a place to live right now. Assuming the MHDC starts awarding tax credits this year, the subsidized housing will still need to be built before it can provide any additional relief for Missourians.
Research has shown that, even in normal economic times, LIHTC is not effective at making housing more affordable. Not only does less than fifty cents of each dollar in tax credits go toward the construction of affordable housing, Missouri’s program also doesn’t increase the supply of affordable housing. For years, Missouri had one of the most generous state LIHTC programs in the country, matching each federal dollar on a one-to-one basis. Yet, in the years after the state match was halted, the number of affordable housing projects across the state remained largely unchanged.
Missouri’s state government is also struggling to deal with the pandemic and facing a serious budget crunch. To keep the budget balanced, the governor has already restricted more than $400 million in state spending. This means that there will be hundreds of millions less in funding this year for things such as education and public safety. And the outlook for next year’s budget isn’t any better.
There’s no doubt that many Missourians are facing housing issues during this unprecedented time. But if our elected officials’ goal is to address this problem, shouldn’t they be searching for a solution that is going to help people now instead of reviving a costly and ineffective program?
