The six transferable tax credits selected for elimination this year were those for coal, wind power, manufacturing small wind turbines, restoring historical buildings, constructing energy efficient homes and railroads.
All were suspended for two years in 2010 as lawmakers struggled with revenue shortfalls. The moratorium expires Dec. 31.
When companies receive more credits than they owe in state taxes, they use the transferability feature, which allows them to sell their surplus credits to other corporations or individuals, usually for about 80 cents on the dollar. The buyers use the credits to reduce their own tax bills.
More help needed
Deputy state Auditor Steve Tinsley told committee members the auditor's office would need more auditors to review tax credits. He estimated it would cost $159,000 a year in the next fiscal year to provide a two-person audit team and $222,000 to fund a three-person team.
He also provided information from the Georgia Department of Audits and Accounts, which reviewed tax credits six years ago. The report called for improved controls in the administration of corporate tax credits and that data for evaluating their cost and benefit to Georgia should be compiled.
Tax credits cost Georgia about $284 million in a five-year period, the report states, “with little indication of any economic development benefits resulting from these tax expenditures.”
Dank complained that the home office tax credits have no caps and no end date. In the previous fiscal year, 17 insurance companies claimed nearly $17 million in home office tax credits; one company is claiming $6 million. The credit is available for insurance companies that employ at least 200 people at a headquarters or regional office.
Deputy Insurance Commissioner Frank Stone said six other states offer home office credits and only one, North Dakota, has a limit. Oklahoma started the home office credit for insurance companies in 1987.
“The jobs are here,” he said.
State Farm Insurance created more than 1,500 jobs when it moved a regional office to Oklahoma and Farmers Insurance Co. Inc., employs about 1,300 at its regional office. Farmers Insurance last year opened a new customer service and data center in Oklahoma City after leasing space for several years. Rep. Earl Sears, R-Bartlesville, chairman of the House Appropriations and Budget Committee, asked Kim Decker, manager of government and industry affairs for Farmers Insurance, what would happen if the state discontinued the home office credit.“It changes promises made to companies who brought brick and mortar and jobs to the state,” she said. “You're also taking away an incentive for other companies to come to Oklahoma.”
It is time for us to stop listening to the lobbyists and start listening to the people.”
Rep. David Dank