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Oklahoma corporate tax credits again fall under scrutiny

A special legislative committee meets to review corporate tax credits and incentives. Proposals intended to put more controls on the credits failed to pass the Oklahoma Legislature earlier this year.
BY MICHAEL MCNUTT Published: September 13, 2012

A legislator continued his scrutiny Wednesday of corporate tax credits after lawmakers earlier this year rejected measures intended to put more controls on the economic incentives.

“Tax credits are some of the biggest sacred cows in Oklahoma as we learned last spring,” Rep. David Dank told members of a special House committee formed to review corporate tax credits and incentives. “And it is time for this committee to begin slaying some sacred cows.

“I know the lobbyists are already circling,” he said. “You are going to come under a lot of pressure to just leave things as they are.”

Dank, R-Oklahoma City, last year headed up an interim House of Representatives task force that met for five months and developed proposals outlawing transferable tax credits and developing criteria for tax credits to meet. All failed to advance during this year's session.

“Our task force said Oklahoma has handed out hundreds of millions of dollars every year to businesses and industries that didn't deserve them, did little to justify them and often manipulated them by such practices as selling the ones they didn't need,” Dank said. “We've got tax credits on coal in the east, wind power in the west and old buildings in between. We found industries gaming the system. Our task force found that the real losers were the taxpayers who had to make up the difference.”

Credit changes failed

Dank said various pieces of legislation to change the way tax credits are issued were killed in committees on bipartisan votes. For example, legislation to end the transferability of tax credits failed by a 6-3 vote in the House budget subcommittee on revenue and taxation. Five Republicans and one Democrat voted against it. Another bill in a House budget committee that would have extended the existing moratorium on tax credits failed. Seven Republicans agreed, but five Republicans and four Democrats voted no.

“The lobbyists swarmed, and many of them were former legislators from both parties,” Dank said. “Sometimes bad policy is bipartisan.”

Dank said having a legislative panel instead of a task force, which is made up of several members in addition to lawmakers, gives him optimism that recommendations will have better luck next year.

“We're going to have more legislators involved,” he said. “The task force was fine but so many people on the task force didn't have a vote in the Legislature.”

Dank's committee plans to meet three more times to review economic tax credits and incentives claimed by business entities. It will not review personal tax credits or incentives that are claimed by individuals.

Dank next year is losing a key backer of his efforts with the departure of House Speaker Kris Steele, who cannot seek re-election because of the 12-year legislative term limit. Steele supported the laws proposed by Dank's task force.

“As legislators our main charge is to responsibly manage the tax dollars that have been entrusted to our responsibility,” Steele, R-Shawnee, told members of the House Tax Credit and Economic Incentive Oversight Committee. “And sadly with regard to corporate tax credits we often come up short. And in so doing I believe that we're shortchanging the entire state. Every dollar that's lost to an ineffective tax credit is a dollar that's not eligible to go to a core function of government services.”

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