While many tax experts and state officials acknowledge Oklahoma’s tax breaks and incentives need reform, the state legislature has taken little action to do so. A group of state officials and policy experts discussed why they believe action is necessary during a “Tax Credit Reform – From Talk To Action?” panel - part of the Oklahoma Policy Institute’s 2nd Annual State Budget Summit
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OPI Executive Director David Blatt introduced the topic and panelists, following a related presentation by two members of the Pew Charitable Trusts.
Representative David Dank, chair of the House Revenue and Tax Subcommittee, said the current tax credit system is full of abuses and loopholes that will eventually bankrupt the stat.
“A great Oklahoma philosopher once said politics is the art of extracting money from the rich and votes from the poor under the pretext of protecting each from the other,” Dank said. “That was back in the 1930s and believe me, nothing has changed since.”
State Auditor Gary Jones elaborated on Rep. Dank’s point, saying the system needs to be simplified and cleaned up.
“It’s almost like we’re on a merry-go-round,” Jones said. “We go through the same things over and over again. We have a system of government that’s a system of sub-committees within sub-committees, and we wonder why we don’t get anything done.”
Oklahoma House Minority Leader Scott Inman, outlined his and his fellow House Democrats’ position on tax credits.
“I generally adhere to the Tom Coburn principle of tax incentives. I would much rather live in a society where the free market works itself out. That’s what my general philosophy is,” Inman said.
“However, unlike Senator Coburn at times, we have to govern in reality. We can’t govern in theory and ideology. Tax credits have an important role in the economic engine that is the state of Oklahoma,” Inman added.
Deidre Myers, Deputy Secretary of Workforce Development for the Oklahoma Department of Commerce, said the strength of Oklahoma’s economy is largely thanks to tax cuts.
“Oklahoma’s economy, regardless of what the news has been saying about energy in the past month, is larger, it’s more complex, it’s more diverse, and it’s more globally integrated and more regionally specific than it’s ever been,” Myers said.
Myers emphasized the credits in place are mostly effective because they “are based on economic activity that has already happened.”
John Estus, from the Office of Management Enterprise Services, talked about his office’s work with Pew to gather more information about Oklahoma’s incentives so state legislators can make more informed policy decisions.
“We feel bad for them that they even have to vote on a lot of these things, because we know many times they don’t have the full story,” Estus said.
Mark VanLandingham, Vice President for Government Relations at the Greater Oklahoma City Chamber, asked for caution when it came to tax credit reform. He said the state’s incentives have helped it develop one of the best business climates in the country.
“Our biggest concern is that some babies will get thrown out with the bathwater before accurate data is available, so we ask the legislature and the governor to guard against that,” VanLandingham said.
When asked about the need for government consolidation, Rep. Dank pointed to what he called an excessive number of county commissioner and school districts.
“I’m not talking about getting rid of small schools,” Dank said. “I’m not talking about getting rid of small towns. I’m talking about being efficient.”
The discussion then turned towards funding for education. Jones said the state claims education as its number one priority, but fails to treat it that way.
“If you would tie the beginning pay of a teacher to the pay of a legislator, you’d probably get teacher’s pay brought up real quickly,” Jones said.
Jones added that officials must think long-term to solve the state’s budget problem.
“We look at everything based on a year-to-year and how can we get through this year and we don’t look at the long-term plan of what we’re going to do in the future. And until we do that we’re not going to make any progress,” Jones said.
Rep. Inman suggested that much of the state’s budget problem stems from Republican politicans’ attempts to de-fund federal and state government. The success of these attempts, he said, has put more of a burden on the local level.
“Because we have fundamentally changed the way we fund government, local county folks in Mays County will pay more when they go to the grocery store just to have a county jail open, and that is a travesty,” Inman said.
Meyers pointed out that there are two sides to this debate and they must listen to each other to find a solution.
“I would ask that everybody have a conversation and understand that there are other sides to this conversation, there is data we need to look at then let’s strike a balance among all Oklahomans,” Meyers said.
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