Leap year looks like another controversial session for the state legislature
"This has been a boondoggle for many, many years," said state Sen. Randy Brogdon, R-Owasso, about what he described as the "risky business" of "special corporate welfare."
"It is immoral for the state government to use taxpayers' dollars to handpick which businesses are going to prosper," he also said.
Because of his vehement opposition to such "corporate welfare," Brogdon is just about giddy over a bill proposed this session by Sen. Mike Mazzei, R-Bixby.
He and some other lawmakers expect that it will be the demise of many of the state "handouts" enjoyed by big businesses in Oklahoma in the form of tax credits. Or, at least, it will eliminate the risk they associate with them.
Senate Bill 2024 would put a sunset and review process in place for the currently uncounted number of tax credits granted by the State of Oklahoma, to see which are helpful and which are harmful, and to winnow them accordingly.
Which, of course, might sound pretty boring to the casual reader, right?
What isn't boring, though, is the enormous chunk of revenue lost to the State of Oklahoma through such incentives.
"It's well over a billion dollars each year," Mazzei told UTW.
If the concept of a billion dollars a year in tax giveaways isn't staggering enough on its own, to put it in it's proper perspective, the entire state budget for last year was about $7 billion.
Mazzei, who works as a certified financial planner when he isn't legislating and co-chairing the Senate Finance Committee, said that billion dollars is comprised of a combination of tax credits for businesses and tax exemptions for individuals, such as seniors, veterans and disabled.
His bill will not address most of the individual exemptions, he said, since the vast majority of those billion dollars is from the tax credits to businesses.
Mazzei told UTW that he hasn't yet counted all the various tax incentives on the books, but the voluminous text of SB 2024 is a pretty good indication of how many there are: it's 233 pages long, the first ten of which are just the title.The lawmaker declined to comment on what incentive programs might be getting the ax first because, he said, he's only in the "analysis and data-gathering stage," but said the plan is to eventually eliminate any tax incentives that don't have a demonstrable net benefit to the state.
"By placing sunset dates for special tax breaks, it will require the Legislature to conduct regular reviews to ensure these have worked as advertised," said Mazzei.
"Reviewing them will be an ongoing process. If we can find tax breaks that don't benefit the state or that have become out-dated, we can use that money instead to help grow the economy by reducing taxes on income and investments," the financial guru explained.
"There are obviously some incentive programs that work, but there are others that really raise questions," he said.
One program that works, he said, is an incentive for manufacturers: they're exempted from paying sales tax on materials they purchase to manufacture their products.
"All 50 states have this," he said, so if Oklahoma discontinued it, we'd be at a disadvantage to other states, he said.
But, the state's economic climate indicates that many others haven't had their desired effect of creating jobs and raising income in the state during the past few decades since many of them began, he said.
"We went from being 29th in the nation for average income per worker in the 1970s to being 45th in 2005," Mazzei said.
Closing the Loop
Two of the programs in particular that have "raised questions" were the cause of some considerable embarrassment to some lawmakers in recent years.
Investors managed to discover some loopholes in two tax credit programs, enabling them to fleece the state of Oklahoma for as much as $66 million in 2005, according to estimates by the Oklahoma Tax Commission.
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