The Oklahoma Senate passed legislation Thursday that would fill nearly one-tenth of a projected $1.3 billion budget shortfall in the upcoming fiscal year.
Senate Bill 1577 eliminates a tax credit for economically at-risk oil wells, saving the state over $132 million. Under the bill, no tax credit claims can be made on marginally-producing wells from calendar year 2015 and beyond.
Senate President Pro Tem Brian Bingman, R-Sapulpa, authored the bill and said continuing the tax credit would strain the state at the expense of education.
“You will see some impact on some wells. No doubt about it. This is $132 million that we’re talking about. My point is, is this a position the state should be in again, by helping business when we don’t control the commodity prices,” Bingman said.
State Sens.John Sparks, D-Norman, and Ralph Shortey, R-Oklahoma City, opposed the measure. Sparks argued it would put 80,000 wells at risk, and Shortey withheld his support until the legislature scrutinizes the wind industry’s remaining tax credit.
“The wind credit does not create jobs. Not like the oil and gas industry does. It doesn’t create tax revenues. They don’t pay sales tax. Every oil and gas company, when they go buy equipment, they’re going to pay a sales tax,” Shortey said.
The bill passed 29 to 4. It now goes to the House of Representatives, where Speaker Jeff Hickman, R-Fairview, said the at-risk credit was originally developed to encourage production at a time when more oil was needed in the country’s supply.
“We’re continuing to incentivize oil being produced at a time in our history when too much oil is what’s hurting the Oklahoma economy,” Hickman said. “I think that’s all part of this conversation about this credit.”
As a community-supported news organization, KGOU relies on contributions from readers and listeners to fulfill its mission of public service to Oklahoma and beyond. Donate online, or by contacting our Membership department.