OKLAHOMA CITY – A task force on Wednesday approved recommendations for strict controls on tax credits and economic incentives.
The Task Force on State Tax Credits and Economic incentives recommended eliminating the transferability of future tax credits.
Rep. David Dank, R-Oklahoma City, chairman of the panel, said it was not his intent for the state to go back on promises it has already made to those who currently are involved with transferable tax credits. But the worst abuses occur with transferable tax credits, which can be sold to reduce the tax liability of an entity or individual, he said.
State Auditor and Inspector Gary Jones said the recommendation needs to include a “clearly defined phase-out period.”
The panel approved a recommendation that Jones’ office audit every tax credit annually. Such a move would require additional funds and personnel for Jones’ office.
The office currently has 120 employees, down 50 from 2006, Jones said.
The task force agreed to recommend that all future tax credits must contain a description of the fiscal impact to the state. Some estimate tax credits already on the books reduce the state’s revenue by up to$500 million.
The panel agreed that tax credits must create jobs or retain jobs.
The task force recommended that those seeking state tax credits must disclose whether or not they are accessing other tax credits and incentives, such as those available from the federal government or local entities.
“The reason for this is that there is so much double-dipping,” Dank said.
The panel recommended that future tax credits have caps and expiration dates.
Finally, the task force recommended banning the creation of additional tax credits in the final days of the legislative session.
“We’ve got to stop the midnight deals that resulted in so may of these abuses as well,” Dank said. “No more late-session bills that give away the store.”
The task force held its ninth meeting with its final meeting date set for Dec. 21. The task force will approve its final report, which must be submitted to legislative leaders and the governor by Dec. 31. The report will be used to craft legislation for the 2012 legislative session.
At that meeting, the panel will also discuss recommending the creation of a panel to approve economic tax credits. It will also discuss making all credits transparent.
“A lot of the worst tax credits we have discussed here would not have been passed or allowed to continue if the taxpayers and the Legislature had known how little we were getting for our money,” Dank said.
The panel has spent months reviewing dozens of tax credits and economic incentives. The incentives benefit an array of industries and individuals, including filmmakers, wind energy, insurance companies and oil, gas and coal producers.