JOPLIN, Mo. — With Missouri Gov. Jay Nixon continuing a push for tax credit reform, local developers say the proposal would hurt a program that has been central to revitalizing downtown Joplin.

Nixon is seeking a cap on the amount of credits the state can authorize and a reorganization of the various tax credit programs. Over the past week, he has asked for support from education officials by pointing out that a tax credit overhaul would free up money for education as the state continues to face declining revenues.

Locally, education officials say it depends on whether the credits have been used to bring in businesses that would not otherwise have come, and on how the money freed up by reining in the credit program would be distributed.

Downtown investment

In the past four fiscal years, developers have received more than $4.24 million in state historic preservation tax credits for projects in Carthage and Joplin, according to records from the Department of Economic Development. Those credits have been used for work at the Drake Hotel in Carthage, the Zahn and Ridgway apartments in Joplin, the Columbia Traders block in Joplin, and buildings in the 500 and 600 blocks of South Main Street in Joplin.

The total costs of those projects exceed $21.4 million, according to state records.

Toby Teeter, one of the developers of the Gryphon Building near 10th and Main streets in Joplin, said that project is using $2.2 million in state tax credits. The total project cost is close to $11 million.

“It’s not a windfall,” he said of the credits. “It costs additional money to rehabilitate older structures.”

Teeter said that without the credits, the revitalization that has taken place on South Main Street would not have been done.

He also voiced concern about a new cap creating a “political process” in which the state would have to determine which projects receive credits and which ones don’t.

“The biggest issue for downtown Joplin building owners is the proposed law change would make credits a political process due to the discretion given to the director of the Department of Economic Development,” Teeter said. “So instead of focusing on rehabilitation projects that will create jobs and further local economic development interests, the DED will be pitting small projects in Joplin against high profile projects in Kansas City and St. Louis. Joplin loses under that scenario.”

Mark Williams, who co-owns and has renovated several buildings in downtown Joplin, called the proposal “a naive move.”

He pointed to the return the state sees on its tax credit investment, which goes toward projects that hire contractors and workers who in turn spend money locally.

“I understand they have to cut a lot of government programs,” Williams said, but he said the state would be cutting one of the programs that generates money.

Nixon and education

Nixon on Tuesday night convened a conference call with representatives from colleges, universities and local school boards to detail his proposal for reform.

The Democratic governor urged education leaders to lobby lawmakers. He reiterated that Missouri’s incentives have grown too much, and have diverted funding from education and other government functions. Last year, Nixon had backed an expansion of the tax credit program for businesses.

Nixon said about $585 million in tax credits were redeemed last fiscal year in Missouri, which amounts to an increase of 86 percent over the past decade. Redemptions of tax credits have continued to rise over the past two years despite declines in state revenues amid the economic downturn.

Nixon singled out two tax credit programs — one for historic preservation, the other for low-income housing projects — that he said have seen particularly explosive growth.

Nixon said Missouri ranks No. 1 in the country in historic tax credit redemptions. Those redemptions cost the state $186 million last year and $161 million in 2008. The state ranks No. 2 in redemptions of low-income housing tax credits, which cost the state $176 million in 2007.

“The growth of entitlement tax credit programs in Missouri is simply unsustainable,” Nixon said.

By contrast, the state ranks 45th in the nation on per capita spending for higher education and 35th for K-12 spending, he said.

Nixon has proposed capping the state’s annual authorization of tax credits at $314 million and reorganizing the state’s 60 tax credit programs into six general categories. The Department of Economic Development would have greater flexibility in deciding how much should be spent in each area and would have the authority to “choose the right deals” for the state, the governor said.

Nixon said tax credit reform is needed to provide accountability and transparency for how the credits are used.

He also said the cap would save the state between $150 million and $165 million per year, a significant portion of which would go toward education.

Bruce Speck, president of Missouri Southern State University, listened to one of the conference calls Tuesday night. He said he did not have the “kind of background in tax credits” to be able to talk about reform, but he acknowledged that a “good argument” can be made for some kind of reform.

Speck said one of his questions about the proposal is how the money freed up by a cap would be distributed — not just among higher education and K-12 education, but also among other government services.

He said $150 million is “a lot of money” in a statewide context, but “not a lot of money” when it comes down to spreading it throughout all the state’s public schools, colleges and universities individually.

“I think it would be interesting to know how that would work,” Speck said Wednesday in a phone interview.

C.J. Huff, superintendent of the Joplin School District, on Tuesday said he supports tax credits that attract businesses that otherwise would not have come.

A new business, he said, can mean new property tax revenue for a school district. It can mean jobs for parents and, by extension, income tax revenue for the state and sales tax revenue for communities.

But Huff said he would question the efficacy of a tax credit to bring in a business that likely would have located in Missouri regardless of the credit.

State lawmakers

Nixon’s proposal has drawn opposition from a number of state lawmakers who have accused the governor of using education officials as props.

House Speaker Ron Richard, R-Joplin, has said that sharply cutting the credits would mean businesses and developers would face uncertainty over their financing and would be less likely to proceed with projects.

“By providing tax credits to businesses that chose to locate and grow in our state, we are able to create jobs,” Richard wrote in a report last week. “The revival of our economy is always important — but it is vital now more than ever.”

Richard warned in that report that job losses would hurt education because people would not be buying homes and properties that fund education through property taxes and sales taxes.

Richard was in meetings Wednesday and could not be reached for comment. His spokeswoman, Kristen Blanchard, said Richard is “open to meeting with the governor” and would support a comprehensive review of the program at some point, provided it was “objective” and included a cost-benefit analysis of the tax credit programs.

Blanchard pointed to the logistics of pushing for a massive tax credit overhaul now with about two weeks left in the legislative session and the budget still the top priority. She also said Richard feared that Nixon and the state auditor’s office — which this week released an audit of the tax credit program calling for increased oversight and accountability — were “playing a dangerous political game” and creating a “fictitious” conflict between education and jobs.

Nixon has countered that the Legislature should take up the issue now while it still includes many seasoned lawmakers. He also argued that the problem will grow worse next year if it is left unchecked.

He said education is vital to job growth because it provides a conduit for training.

“That link between education and economic growth is fundamental,” Nixon said Tuesday.