An analysis by ProPublica found the measure is proving costly for the state.
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 law increased the credit to 70% in 2021, further shifting the cost of those contributions to the state.
Because the centers are nonprofit, donors can deduct the remaining $300 of a $1,000 donation from their federal income taxes. (A deduction is worth less than a credit because it only reduces taxable income. A credit reduces dollar-for-dollar what a person owes in taxes.) Ultimately, a donor can end up recouping close to 80% of their gift in credits and deductions.
Lawmakers also removed the limit to how many pregnancy resource tax credits the state could issue in a given year starting in July 2021. And they removed the program’s previous end date of 2024; the tax credit program will continue unless the law is changed.
The cost analysis of the bill, authored by nonpartisan legislative oversight directors, concluded the changes would carry a nominal cost to taxpayers. 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.
But that was only if donations did not increase.
The authors acknowledged that without a cap, the impact could be greater if the increased tax credit led to more giving. And that’s exactly what happened. In the quarter ending March 31, the state authorized more than $7 million in pregnancy resource tax credits, more than three times higher than in any previous quarter.
Bigger tax incentives for giving to the crisis pregnancy centers brought out more donors than in previous years.
It pretty much didn’t matter what the cost was, they were going to pass the bill.
– Kyle Rieman, who was the oversight director and lead author of the cost analysis of the tax credit expansion
“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 state authorized 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.”
Until recently, Missouri has been the only state to issue tax credits for donations to pregnancy resource centers. In April, Mississippi Gov. Tate Reeves signed into law a program offering a maximum of $3.5 million per year in tax credits. Ohio considered a similar measure, but it did not 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. Those funds go to centers for the social services they provide. Missouri has long been one of the nation’s leading suppliers of tax dollars for pregnancy resource centers. An Associated Press analysis this year estimated the state had issued more than $44 million to centers since 2010, third most of any state behind Texas and Pennsylvania.
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, president and CEO of the Missouri Budget Project, a liberal think tank that studies the state’s spending and public policy decisions.
Legislators and advocates on both sides of the abortion debate said they were surprised by the increase in the tax credits that were issued. 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 Manchester Republican.
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 also can take advantage. The maximum tax credit per taxpayer 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, who was the oversight director and lead author of the cost analysis of the tax credit expansion, said lawmakers gave his staff only an hour to analyze the financial impact 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. But Parson signed the measure before Rieman could publish a more 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. Asked how there could be none, a spokesperson for the agency told ProPublica that the department meant the program did not affect its own budget and the “impact is on the state’s general revenue.”
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.
– Sen. Andrew Koenig, R-Manchester
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 to questions from 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.”
A spokesperson for Parson did not respond to ProPublica’s questions.
Koenig said he did not consider the amount of revenue diverted for the pregnancy resource tax credit to be significantly 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, the executive director of Pro-Choice Missouri, said abortion foes knew exactly what they were doing when they expanded 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.”
sen. Jill Schupp, a Democrat from Creve Coeur 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.”
And even a Republican who voted for the bill said the new numbers are concerning. “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.”