Oklahoma House panel votes down measure to review tax credits

Oklahoma Rep. David Dank, R-Oklahoma City, has spent the past seven years looking into business tax credits. He said House Bill 1371's defeat likely ends his battle to have Oklahoma cut back on business tax credits.
BY MICHAEL MCNUTT mmcnutt@opubco.com Published: February 12, 2013
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Rep. Gus Blackwell, R-Laverne, said the proper way to proceed would be to identify business tax credits that aren't working and eliminate them. He also didn't like imposing a moratorium on the 32 credits mentioned in HB 1371 and prohibiting the credits from being used after June 30, 2014, unless the Legislature passes a measure to reauthorize the credit.

“Once the word goes out that here's a moratorium … capital begins to flee the state of Oklahoma,” he said. “Let's find out the ones that aren't working and eliminate those.”

Oklahoma is facing stiff competition from Kansas and Texas in attracting the wind industry, Blackwell said. Both states offer as good or better incentives than Oklahoma.

“We have opened up the first two wind farms in the Panhandle … that are producing jobs, producing energy and, most important, are producing ad valorem dollars for our local schools,” he said.

Future tax credits

The subcommittee voted 9-4 to pass HB 1369, which would put in place a set of criteria that would govern existing or future tax credits. Criteria include stringent auditing; rigorous cost-benefit analysis; cost and time caps; and a requirement that any tax credit would create or sustain quality, permanent jobs.

It now goes to the full House, but Dank said without its companion measure, HB 1371, it lacks any teeth. HB 1371 would have sunset all existing tax credits as of July 1, 2014. Dank said that date would have given lawmakers time to examine each tax credit, change it to meet the new criteria or let it expire on the sunset date.

“All the king's horses and all the king's men are out here fighting against this,” Dank said. “It's just almost impossible. There's too much lobbying influence to do anything at this stage of the game.”

Dank said he may file a lawsuit challenging the constitutionality of some business tax credits.

An opinion issued in 2010 by the state attorney general's office stated some state tax credits were not constitutional. To be legal, tax-credit programs had to serve a public purpose, provide more benefit than cost and include adequate controls and safeguards, according to the opinion.

“I don't think this Legislature has the will to tackle something that is opposed by so many special interests,” Dank said. “These are the people who get them elected — this is where the campaign contributions come from.”

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