At last week’s meeting of the Oklahoma Task Force on Tax Credits and Economic Incentives, two Oklahoma City legislators with generally conflicting views found themselves agreeing, at least about the usefulness of the hearings and the approach state Rep. David Dank took in guiding the hearings. The pair parted company, unsurprisingly, on whether or not the programs should be maintained.
Neither state Sen. Andrew Rice, a Democrat, nor state Rep. Mike Reynolds, a Republican, played a leading role in driving formation of, or the likely results from, this task force. However, each attended the meetings and participated in the deliberations (Reynolds was at nearly every session).
Each man was complimentary of the process that Chairman David Dank has guided since last summer, studying the effectiveness of pro-business incentives, while also scrutinizing whether or not practices in the programs can be reconciled with principles outlined in an influential 2010 formal opinion by then-Attorney General Drew Edmondson.
Senator Rice is resigning from the Senate on January 15. He gave a positive assessment of the process and Chairman Dank’s focus. Rice marveled at occasional agreement among legislators as diverse as Tulsa Democratic Sen. Tom Adelson and the conservative Rep. Reynolds, each of whom was critical of policies and practices in certain incentive plans.
While not opposed to reforms, Rice laid out cautions about the increased use of the auditor’s office. He said, “Absolutely some of these need to be eliminated, but let’s tread carefully.”
Rice said it was clear some legislators, perhaps a majority, want to use any shift away from tax credits and incentives to leverage a phased-in reduction of the state income tax. He questioned this, pointing to programs that might be cash-starved, including Insure Oklahoma, the state’s health insurance program for the working poor and lower middle class.
Rep. Dank engaged in back-and-forth with Sen. Rice over the auditing procedures, while praising him for “effective and principled” service to the state and the community. Rice’s last day in office will be January 15.
The two men share some Mid-city constituents, including in the Crown Heights-Edgemere Heights area.
Rep. Reynolds, long an ardent critic of most tax incentives programs, is not a member of the task force, but has attended most of its deliberations. Chairman Dank has allowed legislators not on the panel, including Adelson, a Tulsa Democrat often pegged as “progressive,” to ask their own questions of witnesses and to present their own reform ideas.
In comments last Wednesday (November 9), Rep. Reynolds said, “I didn’t run for the office, I didn’t take an oath of office to become CEO of a company. If other people did, I think they ran for the wrong reasons. I took an oath to defend the constitution of the state of Oklahoma. The state constitution had a clause that forbids gifts from government to business. Unfortunately, way too many legislators, for far too long, have ignored that clause in the constitution.”
Reynolds said he would advocate placing witnesses who testify on tax credit and incentives under oath. He also said, “We need to quit studying the issue and take action. Hundreds of millions [of dollars] are leaving the state treasury, to benefit a few.”
At least indirectly, Reynolds aligned himself with most of the Republicans serving on the panel, who are pressing to grant new authority to Auditor & Inspector Gary Jones to improve accountability in any programs that are preserved. He chided members of the task force, including Treasurer Ken Miller, who expressed concern about the proposed audit authorities for businesses participating in incentive programs.
Reynolds reflected, “It’s amazing to me that some say the Legislature can’t understand an audit, and yet they had enough sense to pass the tax credit in the first place.”
Rep. Reynolds was critical of claims made by a representative of the Capital Investment Board (CIB), whose claims of job creation as a result of venture capital tax credits he found “ridiculous.” Reynolds pointed to initial claims of 10,000 jobs created, which he says were adjusted downward to a bit more than 500 jobs.
Then, after Reynolds pressed for information on companies that had participated in the CIB programs, “we were actually able to identify 28 jobs. So we got 28 jobs for a hundred million dollar program.” Reynolds remains a firm opponent of most of the incentives programs. Concerning the capital investment provisions, “I believe those board members should be held personally responsible for every tax credit sold.”
In his remarks to the panel, Chairman Dank laid out the basis for what would amount to significant reform of the programs, preserving the ones deemed effective while eliminating several and enhancing transparency.
Earl Sears, House Appropriations and Budget Chairman, largely aligned himself with Dank’s objectives, as did Auditor Jones.
State Finance Director Preston Doerflinger joked, in brief remarks, that Sears had essentially delivered his speech. There seemed to be consensus among these four voting members to bring transferable tax credits to an end.
Articulating a more cautious view about changes in the programs was state Treasurer Ken Miller. While saying there should be fewer credits and other incentives, he cautioned the state must remain competitive with others in the region and around the country in seeking to attract businesses. Expressing cautions about more government audits of private businesses. Miller also said he did not believe there was enough evidence to conclude transfer-ability is inherently a bad thing
The task force will meet again on November 30, formally to approve standards for review of the tax credits, then face a December 31 deadline for submission of a final report that will likely provide a basis for several major reform bills.