States and IDA Policy: Knowledge- Building, Networking, and Creating New Opportunities Tax Credit Policy and Legislative Issues Gena Gunn Center for Social Development St. Louis, MO

Goals To learn the strategy of states in the creation and passing IDA tax credit legislation. To gain information about bill sponsorship To gain knowledge about IDA tax credit programs To learn marketing and leveraging strategies

Tax Credit Policy and Legislative Issues What are tax credits? Provide an individual or corporation with a credit to use against their tax liability in exchange for contribution to or participation in a designated activity, thereby reducing the state/federal taxes owed by the taxpayer by the amount of the credit.

Tax Credit Policy and Legislative Issues Case Studies –Colorado –Major support for the bill came from a non-profit –First proposed in 1990 –Passed into law 2000 –One amendment for administrative changes –25% tax credit –$5 million per year –Bi-partisan sponsorship –Non-profit organization serves as administrator for the program –Program is not operational due to state shortfalls

Tax Credit Policy and Legislative Issues –Oregon –Proposed and passed in 1999 –Four months from start to finish –Legislative efforts were initiated by a private foundation –Original legislation was a 25% tax credit –One amendment to increase to 75% tax credit –$660,000 tax credits annually –State Department administers the program –Bi-partisan bill sponsorship

Tax Credit Policy and Legislative Issues Indiana Impetus of legislation began with one legislator Received bi-partisan support Passed in % tax credit $500,000 annually Several amendments –Administrative changes –Adding College Savings Plan –Removing College Savings Plan Program in place and managed by a state department At least one agency is selling the tax credits

Tax Credit Policy and Legislative Issues Missouri Impetus of bill came from a social policy group Bi-partisan support Took about 2 years to pass the bill 50% tax credit $4 million per year Managed and administered by a state department through an RFP process Program operational since 2000

Tax Credit Policy and Legislative Issues Barriers to Use –Competition Established tax credits programs Other organizations for allocations –Marketing and Leveraging Inexperienced staff Creating a donor pool –Insufficient Incentives Tax credit amount is too low Corporations without state tax liability

Tax Credit Policy and Legislative Issues Other with IDA Tax Credit Legislation –Arkansas – 50% tax credit –Connecticut – 5% tax credit –Hawaii – 50% tax credit –Maine – 50% tax credit –Pennsylvania – 50% tax credit (Neighborhood Assistance Program-NAP)

Tax Credit Policy and Legislative Issues Tax credits as a viable funding stream for IDAs –High tax credit percentage –Specific staff to sell the tax credits –Program plan for implementation –Marketing strategy