In the final days of Missouri’s legislative session in May 2019, lawmakers turned their focus to a bill that would outlaw abortion in the state if the U.S. Supreme Court were to overturn Roe v. Wade.
The legislature passed and Governor signed the abortion ban. Mike Parson is still in limbo, at the very least for now. A leaked draft opinionThe Supreme Court is likely to reverse the 1973 landmark ruling. This would result in bans in Missouri and a dozen other states.
A second piece of the Missouri bill has taken effect, though it has been much less well-known. It has funneled millions of tax dollars to fight abortion, and it may well move tens of millions of dollars more to that battle — a drain on state revenues that legislative oversight officials failed to forecast.
This provision increased tax credits for Missouri taxpayers who donate to crisis pregnancy centers or pregnancy resource centers. While abortion foes love the non-profit centers for supporting women, and offering alternatives to ending pregnancies to them, abortion supporters say they mislead women by presenting clinical services and ununbiased advice.
An analysis by ProPublicaThe state is finding the measure costly. Until an expansion took effect last year, Missouri residents who donated to the centers were able to claim a credit of 50% for their donations, meaning for every $1,000 in donations, a taxpayer’s bill dropped by $500. The credit was increased by 70% to 70% in 2021 to offset the state’s increase in costs.
Because the centers operate as nonprofits, donors can deduct $300 of a $1,000 donation from federal income taxes. A deduction is less valuable than credit, as it only reduces income taxable. A credit reduces dollar for dollar what a person owes tax. Donors can recover close to 80% of their gift through credits and deductions.
The limit on the number of pregnancy resource tax credits that the state can issue in any given year, which began in July 2021, was also lifted by lawmakers. And they removed the program’s previous end date of 2024; the tax credit program will continue unless the law is changed.
Nonpartisan legislative oversight director authored the cost analysis and determined that the changes would only have a minor impact on the tax payers. Increasing the tax credit to 70% from 50% meant the same donations that resulted in $3.5 million in tax credits a year — the maximum for the program before the increase took effect — would now result in $4.9 million, a jump of $1.4 million a year. However, that was only if donations did increase.
The authors acknowledged that, without a cap on the tax credit, the impact could have a greater effect if more people give. And that’s exactly what happened. The state authorized more that $7 million in pregnant resource tax credits during the quarter ended March 31, more than three times the amount in any prior quarter.
More donors came forward than ever before because of the larger tax incentives offered by the government for donating to crisis pregnancy centers.
“We definitely did see an increase in big donations,” said Deb Beussink, assistant director of Birthright of Cape Girardeau, one of the 76 pregnancy resource centers across the stateAuthorized to participate in the program.
“And these were from donors who had already been donating well to us,” she added. “But they wanted to take advantage of that tax credit, so they enlarged their donation.”
Missouri was the only state that has issued tax credits for donations made to pregnancy resource centres, and this is now. Mississippi Governor. Tate Reeves signed a program that allowed a maximum of $3.5 million per year in tax credits. Ohio considered a similar proposal, but it failed to advance.
Missouri’s tax credits for pregnancy resource centers come on top of the record $8 million in funding for the centers that lawmakers allocated for the fiscal year starting July 1. These funds are used to provide social services. Missouri has long been one of the nation’s leading suppliers of tax dollars for pregnancy resource centers. An Associated Press analysisThe state was third in the list of states that have issued more than $44 millions to centers since 2010, a record which was set by Pennsylvania and Texas.
The tax credit’s impact on state revenues, and the potential for that impact to deepen, has one Missouri budget analyst concerned.
“It does make me nervous,” said Amy Blouin, the president and CEO of the Missouri Budget Project, a nonpartisan, nonprofit group that studies the state’s spending and public policy decisions.
Advocates and legislators on both sides of the abortion debate expressed surprise at the increase in tax credits. Even the bill’s sponsor in the state Senate said he was unaware of the $7 million in tax credits for one quarter. “I would have expected that for an annual number,” said Sen. Andrew Koenig, a Republican from St. Louis’ western suburbs.
Taxpayers can only redeem tax credits up to the amount of their tax bill, but what’s left over can be used the next year. Businesses can also take advantage. The maximum tax credit per person per year is $50,000
The recipients of Missouri’s pregnancy resource tax credits are confidential — unlike other types of state tax credits that are reported on the Missouri Accountability Portal.
Kyle Rieman was the oversight director and chief author of the cost analyses of the tax credit extension. He said that his staff was given only one hour by lawmakers to evaluate the financial impact of the tax credit expansion before they voted. And he said state agencies provided him with little data to help make an estimate of more than the program’s minimum cost.
“It pretty much didn’t matter what the cost was,” he said in a text, “they were going to pass the bill.”
But Koenig said he provided Rieman’s office with the tax credit proposal weeks before the vote and asked for — and received — a confidential financial analysis. He said that if the research had pointed to major costs ahead, “it could give pause.”
Rieman said such requests are common but “not official or required, so they are not a priority.”
The analysis sent to legislators before the vote said Rieman’s staff wanted more information to update their analysis. Parson signed the measure before Rieman could publish a complete review.
The final analysis, published nearly a month after the governor’s signature, still did not fully explore the potential cost. It said the Department of Social Services, which issues the tax credit, indicated there would be “no fiscal impact” on the agency. A spokesperson for Social Services explained how it could be that there would not be any. ProPublica that the department meant the program did not affect its own budget and the “impact is on the state’s general revenue.”
Rieman said the Office of Administration, which coordinates management of the state, did not provide information about how much the program’s cost could exceed the minimum estimate or consider the costs of removing the program’s end date. The office did not respond when Rieman asked. ProPublica.
Rieman said the experience was “a clear example of a policy that was passed by the General Assembly and Governor without any real public process or consideration of what the fiscal impact would be to the state.”
Parson spokesperson did not respond. ProPublica’s questions.
Koenig said he did not consider the amount of revenue diverted for the pregnancy resource tax credit to be significant next to the state’s $48 billion budget.
“If we’re going to put this ban on abortions in place, I wanted to make sure we support women who are going to be having these babies, and the way to do that was increasing the pregnancy resource tax credit,” Koenig said.
Mallory Schwarz, executive director of Pro-Choice Missouri said that abortion foes knew exactly how they were doing it when they increased the tax credit.
“Crisis pregnancy centers or pregnancy resource centers are unregulated, unlicensed fronts designed to look like legitimate medical clinics, run by people who are anti-abortion, and intentionally mislead and coerce pregnant people to try to scare them out of having abortions or delay their care to the point where they can no longer have an abortion,” she said. “But at the same time, we’re lining the pockets of these pregnancy centers and incentivizing (people) to give against their own self-interest and their own well-being.”
Jill Schupp, a Democratic senator from St. Louis County who voted against the bill, said she was “shocked” by the amount of tax credits being issued: “These numbers are huge.” While the budget is flush with federal stimulus, she said, the cost “might not look like it’s hurting other programs. But that will change.”
Even a Republican who voted to pass the bill said the new numbers were alarming. “I wasn’t aware it was that much money. You just brought it to my attention,” said Rep. John Wiemann, a St. Charles County Republican. “If it’s outside what the fiscal note said, someone needs to explain why it’s that high.”