There have been numerous suggestions on how to cure Missouri's budget deficit this year. Last month, the St. Louis Post-Dispatch's editorial board suggested that one of the best ways to close the gap is for the state to decline to redeem — that is, decline to apply against a taxpayer's tax burden — tax credits presented to the state. Holders of tax credits would have to wait until the next year, or possibly beyond, to use their certificates. At the time, I was skeptical of the move, mostly because it was not clear that such a decision is, in fact, legal.

But now former Missouri Supreme Court Justice Mike Wolff is lending some credence to the idea, writing in the Post-Dispatch that not only would the move be legal, it would be preferable to cutting other state programs:

If the governor or the Legislature declared a holiday on accepting tax-credit coupons in payment of taxes, the state would not be reneging on its promise to accept tax credit coupons to pay taxes. The state simply would be saying, "wait until next year."

Should the state pay interest on tax credits that are on holiday for a year (or more, perhaps)? For example, when a taxpayer eventually is allowed to use its $10 million in tax-credit coupons, which the taxpayer bought for the discounted amount of about $9 million, perhaps the state should pay interest because the tax-credit owner has had to wait. Because these tax credit certificates are bought and sold through banks, perhaps the passbook savings account rate should apply. At the current generous rates, that might cost the state 1 percent or less per year.

But what if the taxpayer does not want to spend cash to pay its taxes because it needs the $10 million to rebuild its jet plane's engines or to refurbish the yacht? Not a big problem, actually, because remember, the tax credits can be sold. But can these $10 million in tax credits be sold for the taxpayer's original price of $9 million? Well, probably not, there could be a further discount; markets work, even markets for tax credits.

If Justice Wolff's idea was implemented, it might help Missouri's budget problem for a year, but it would not solve the underlying problem: tax credit issuances run amok. In fact, declining to redeem tax credits could actually compound budget problems in future years if other reforms are not implemented to reduce the state's forthcoming and outstanding tax credit liabilities; tax credits that have been authorized or issued but not yet redeemed constitute a multi-billion dollar (that's "billion" with a "b") liability that the state will have to pay in coming years. Preventing budget cuts to favored programs — for Justice Wolff, education — does not seem to be a compelling reason to embark solely on his plan. It is almost like trying to get a hamburger today for $1 tomorrow . . . at some point, you have to pay for the hamburger. Tax credits are a recurring problem, the reduction of which could cure other recurring parts of the budget (for example, reducing taxes on all corporations with the savings, rather than picking and choosing winners and losers.)

Keeping all of that in mind, if done in concert with a moratorium on tax credit issuances (ideally including caps, sunsets, and other permanent changes), Justice Wolff's idea might be workable as part of a larger reform program; over the long haul, such a multi-pronged approach may actually make a real dent in the state's looming tax credit liabilities, and ultimately save the state money.

Missouri officials cannot just treat the symptoms of the state's tax credit excesses and defer cuts for later; it must also treat the underlying disease. Trimming tax credits and reducing taxes is a better, forward-thinking solution, and would provide the foundation for a healthier economy and a more stable budget.