OUR VIEWS Tax credits, incentives a hot topic

The Oklahoman Editorial The Oklahoman   

Published: February 21, 2010

MAKE no mistake: The buzz swirling at the state Capitol over tax credits and incentives is an attempt to squeeze more blood from a tight revenue turnip.

Were it solely about accountability, cost-effectiveness, etc., this discussion would have been just as noisy three years ago as it is today. The buzz started a year ago and is now in full beehive mode. It's not that tax credits and incentives were never talked about (except when passing more of them!) before. They were. Now, though, the conversation is louder.

Gov. Brad henry included tax credit eliminations in his budget. Lawmakers are poring through the list of incentives. State Sen. Tom Adelson, D-Tulsa, has put a bull's-eye on sales tax exemptions.

The Oklahoma Policy Institute's David Blatt offers talking points on making Oklahoma's tax preferences more "transparent and accountable," but he opens the discussion not with an esoteric reach for efficiency but with the state's "deep and prolonged budget crisis" that he says "is creating an urgent need" to review tax and incentive policy.

So this truly is about rooting out money where money is thought to be hiding.

Equally engaged are business groups such as The State Chamber, which has among its 2010 legislative goals the opposition to "attempts to reduce or repeal necessary economic development incentives for existing and new businesses." Among them is a five-year ad valorem tax exemption for manufacturers.

Business groups aren't opposed to the review of incentives but are alarmed by specific targets. We concur with Blatt and some lawmakers that the state would be remiss in not scrutinizing incentives to determine their effectiveness in meeting stated goals. We also concur with The State Chamber that as long as other states are offering incentives, Oklahoma must do the same in order to remain competitive.

A list of economic development incentives runs to several pages and includes a number of items that appear to have cost the state nothing in fiscal 2008. On the other hand, the Quality Jobs Program cost the treasury more than $59 million that year. Combined, the various incentive programs ran up a tab of more than $134 million.

Blatt puts the number of "tax expenditures" (exemptions, deductions, incentives and credits that allow taxes not to be paid) at more than 450 with a fiscal impact of "at least $5.6 billion." If you're keeping score, that's about the size of the state budget in Oklahoma's reduced circumstances.

So real money is at issue, not the usual academic talk about efficiency and transparency. The Legislature has an obligation - and not just when money is tight - to review policy that reduces tax revenue. It has an equal obligation to review its spending, which tends to grow dramatically when the good times roll.

Read more: http://newsok.com/legislature-obliged-to-give-revenue-debate-full-review/article/3440873?custom_click=headlines_widget#ixzz0gBd5nZav