New Measure Would Encourage Donations to Support Orphan Care

OKLAHOMA CITY – A measure focused on helping orphaned children has passed out of the House of Representatives.

House Bill 1919, by Speaker of the House T.W. Shannon, would allow for Oklahomans to deduct contributions to churches if those funds are used by the church for the care of orphaned children. 

“Ensuring proper care for Oklahoma’s orphans is important,” said Speaker Shannon, R-Lawton. “These children face tough situations not having a true home environment for safety, security and sustenance. Oklahomans should be motivated to help our faith-based institutions take care of these children so that they can live in a loving, secure environment. I believe this new deduction will do just that, so churches all over the state will have more financial options available to care for these children.”

Under the proposed legislation, a single person could deduct up to $2,500 in donations a year and married persons filing jointly up to $5,000. The proposed deduction would take effect Jan. 1, 2014.

HB 1919 will now move to the state Senate for further consideration.

Fallin, House, Senate Leaders Unveil Tax Cut, Tax Simplification Plan

OKLAHOMA CITY -- Governor Mary Fallin and leaders in both the House and Senate today introduced a joint plan for income tax cuts and tax code simplification. The proposal lowers the top income tax rate from 5.25 percent to 4.8 percent in Fiscal Year 2013 and includes a one-time additional tax cut tied to a revenue growth trigger in FY 2015. If state revenue grows by at least 5 percent in that year, the income tax rate would be reduced further to 4.5 percent.

The joint proposal represents a tax cut of over $218 million to Oklahomans when fully implemented in FY 2014, and would cut taxes by an additional $121.4 million in FY 2015 should the growth trigger be reached. Lost revenue is partially offset by tax reforms totaling $117 million when fully implemented in FY 2014. These reforms include the elimination of 33 tax credits, the elimination of certain deductions and the elimination of the personal exemption for single filers making over $35,000 and joint filers making over $70,000 (see attached one pager for new details).     

The new plan also simplifies the tax code by dropping the total number of tax brackets from seven to three. New rates will be set at 1 percent, 3.3 percent and 4.8 percent.

“This proposal represents a significant income tax cut and an important step forward for Oklahoma,” Fallin said. “Our plan is a responsible proposal that will go hand in hand with a budget that protects and supports all core functions of government. It also delivers a substantial tax cut that will allow Oklahomans to keep more of their hard-earned money while improving the environment for job recruitment and job retention in the state. I applaud both House and Senate leaders for coming together on this issue and giving the people of Oklahoma some well-deserved tax relief.”

House Speaker Kris Steele also spoke in support of the plan.

“Collections through April of this year are now $350 million higher than originally expected,” said Steele. “Oklahoma is growing. We have a choice to either spend all that money on more government, or give it back to the hardworking people of Oklahoma. We choose the latter. An income tax cut is not only the smart thing to do for Oklahoma’s economy, it’s the right thing to do for our citizens.”

Senate Pro Tem Brian Bingman said the tax cut would help small business owners while protecting core government services. 

“Today’s tentative agreement gives the people of Oklahoma a real and meaningful tax cut,” said Bingman.  “Senate Republicans have always believed lowering the tax burden is an important part of creating jobs and economic freedom in Oklahoma.  And today, we’ve taken an important step forward that shows the people of Oklahoma they can count on us to keep our word.  This plan will help more of our private sector citizens and small business owners be the innovators, entrepreneurs, and drivers of our state economy—all while protecting important core government services like teaching in the classroom.”

House Republicans outline tax credit reforms

OKLAHOMA CITY – Oklahoma’s tax credit system would undergo widespread reforms under a plan outlined by House Republican leaders last week.

“A tax credit should benefit taxpayers more than it costs them. Period. That hasn’t been the case in Oklahoma, but under this plan, it would always be the case,” said Rep. David Dank, R-Oklahoman City, chairman of the joint legislative Task Force for the Study of Tax Credits and Economic Incentives.

Dank said meaningful tax credit reform is an important first step for the Legislature to take as it considers reducing and phasing out the state’s personal income tax.

“We need to remember that we cannot accomplish real tax relief for all Oklahomans until we put an end to the costly sweetheart deals that have been handed to a very few in the past. Those giveaways cost us hundreds of millions of dollars each year. Ending tax credit abuse is one vital ingredient in assuring lasting tax relief for all,” Dank said.

The strategy outlined today would save between $250 and $300 million in fiscal year 2013 and continue saving millions of dollars annually in the future. It proposes:

• Extending the current moratorium on all tax credits another two years;
• Enacting a constitutional amendment establishing specific criteria for tax credits;
• Ending transferability of tax credits; and
• Requiring all future tax credits and all credits placed on moratorium to meet the constitutionally-required criteria and receive legislative approval in order to be enacted or removed from moratorium.

“Oklahoma’s tax credit system today is a big block of Swiss cheese with no rhyme or reason whatsoever to all its holes and cutouts. It’s time to wipe the slate clean and start over,” said House Speaker Kris Steele, R-Shawnee. “This policy is as pro-growth and fiscally conservative as it gets. It’s the right thing to do for taxpayers and will result in a better tax credit system that leads to economic growth without wasting taxpayer dollars.”

If all the reforms are enacted, all tax credits placed on moratorium would have to be brought back one-by-one by affirmative votes of the Legislature under criteria that would be in the state Constitution. Future credits would also require legislative approval and would have to meet the constitutionally-required criteria.

Steele plans to seek a constitutional amendment that would place the tax credit criteria adopted by the task force in the Oklahoma Constitution. House Joint Resolution 1089, by Steele, would send the criteria to a vote of the people in November. If approved, the criteria would be placed in the Constitution.

Under the criteria:

• All credits would require pre-approval by the Legislature;
• No tax credit would be transferable;
• All tax credits would be subject to full transparency and regular auditing by the State Auditor;
• Any proposed tax credit would have to be accompanied by a fiscal impact statement detailing how it would affect the state budget;
• All tax credits would be subject to caps and specific termination dates;
• No tax credit could be enacted within the final five days of any legislative session.

“It protects taxpayer dollars – plain and simple – and ensures all tax credits actually benefit the state,” Steele said. “But get ready, because as soon as we speak a word of this proposal, special interest groups are going to start lobbying tooth and nail in defense of their credits. Our message to them is simple: If the credit meets the criteria, the credit is useful and can stay, but if it fails the criteria, it’ll have to go.”

House Bill 2978, by Dank, would statutorily enact the criteria.

House Bill 2976, by Dank, would extend the tax credit moratorium that has been in place since 2010 for another two years. The extended moratorium only applies to tax credits. It does not apply to tax incentives such as the Quality Jobs program and certain engineering and oil and gas incentives that Dank said have adequate safeguards and produce net economic gains that exceed the cost of the incentives.

“An extended moratorium gives the Legislature additional time to consider the worthiness of each individual tax credit and to put in place specific criteria the task force believes must apply to all tax credits, be they existing or future proposals,” Dank said.

HB 2979, by Dank, would end transferability of tax credits.

“Transferable credits are bought and sold like poker chips by folks who’ve provided zero services to the state. This practice was identified by the task force as perhaps the most constitutionally questionable aspect of the entire system. It must end,” Dank said.

House Bill 2977, by Dank, would extend the Task Force for the Study of Tax Credits and Economic Incentives for another year, until January 2013.

“It benefits us to have the task force continue the analysis it started last year and serve as a watchdog as this reform process plays out over the next few years,” Dank said.

Rep. Earl Sears, the House Appropriations and Budget Committee chairman, said the reforms will have a direct benefit on the FY 13 state budget and future budgets.

“We’re talking about hundreds of millions of dollars here that we can use to fund core services or return to taxpayers. It’s a significant opportunity for us,” said Sears, R-Bartlesville. “I’ve been honored to be part of the task force and believe Chairman Dank’s leadership has been outstanding. This is what good, honest government is all about.”

NOTE: For accompanying video, go to http://www.okhouse.tv/iViewVideo.aspx?VideoID=403

Senate Tax Review Complete, Report Issued

OKLAHOMA CITY –The task force charged with recommending reforms in Oklahoma’s tax system has completed its work. Copies of the report were given to Gov. Mary Fallin, President Pro Tempore Brian Bingman and Speaker Kris Steele on Friday.


Senator Mike Mazzei served as Co-chair of the task force. He told the governor and legislative leaders that as they and members of the Legislature consider the panel’s proposals, it was his hope that the taxpayers of Oklahoma would be the main priority throughout the process.

“The non-partisan Tax Foundation has rated Oklahoma’s overall tax structure 30th in the nation when rating our job creation environment,” said Mazzei, R-Tulsa. “We must transform the tax code; it is simply wrong when a special interest group benefits from an obsolete or ineffective tax preference at the expense of hardworking Oklahomans who deserve to keep more of their hard-earned income.”


The report includes recommendations on reforms which will enable reductions in the top income tax rate from 5.25 to 4.75 percent over a two-year period as well as reducing corporate income taxes from 6 to 5 percent. Additional recommendations would offset those reductions through the elimination of select tax credits and a thorough review of existing tax preferences with an expectation of reduction or elimination of a number of tax credits.

Sen. Rick Brinkley, R-Owasso, served as Vice-chair of the task force.


“These reforms are aimed at simplifying tax law and reducing rates for individuals and businesses,” Brinkley said. “The overall goal is to grow our economy while continuing to make crucial investments in core government services such as education, transportation and public safety,” Brinkley said.


The final recommendation of the task force stresses that other important reforms must be examined should the Legislature consider making Oklahoma a no income tax state.


Throughout the interim, the task force heard from a variety of speakers, including representatives from the Oklahoma Council of Public Affairs, the Oklahoma Policy Institute, the National Conference of State Legislatures, state and local chambers of commerce, economists, specialists in tax and business law and the National Federation of Independent Business.


“I want to thank the members of the task force and all those who participated for their hard work throughout this process,” Mazzei said. “This report is a blueprint that will benefit Oklahomans while attracting the jobs and businesses that will result in the kind of economic development necessary to boost per capita income and quality of life throughout our state.”

Task Force Evaluates Proposed Tax Credit Reforms

OKLAHOMA CITY (November 30, 2011) – State Rep. David Dank, chairman of the Task Force on State Tax Credits and Economic Incentives, today challenged task force members to rethink the role of government in tax policy.

“Are we truly satisfied with the culture that has emerged here at the state Capitol in recent years that places so much emphasis on what state government is willing to give away?” Dank, R-Oklahoma City, said.

Dank said there is broad agreement that transferable tax credits must end and listed other proposed reforms, including an end to late-session bills containing tax credits, a requirement that tax credits be tied to job creation or retention, an annual audit of every tax credit, a sunset provision for every tax credit, and “full and complete” transparency.

“I want to remind everyone of a very basic truth: every dime we hand out in tax credits results in one of two things – either someone else has to pay that extra dime to make up the difference or we have to reduce state services,” Dank said. “But we are not talking about dimes. We are talking about tens, or even hundreds, of millions of dollars. I refuse to tell the taxpayers we represent that they could not get a road repaired or that they had to pay more taxes because we gave a bushel basket full of money to someone else.”

The task force will meet Dec. 21 to approve the 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.

NOTE: For accompanying video, see http://www.okhouse.tv/iViewVideo.aspx?VideoID=397

Information, Applications Posted on Newest School Choice Law

Oklahoma Equal Education Opportunity Scholarship Act Begins Work

OKLAHOMA CITY (September 8, 2011) -- The Oklahoma Tax Commission has posted applications on its website for both educational improvement grant organizations and scholarship-granting organizations in response to Senate Bill 969, a tuition tax credit program, which took effect August 26. 

Supt. Janet Barresi

“I’m glad this important reform has taken effect,” State Superintendent of Public Instruction Janet Barresi said. “This bill allows Oklahoma parents the opportunity to make the best choice for their children’s education. It gives much-needed support to low-income families and helps bring innovative programs to our schools.”

SB 969, by State Sen. Dan Newberry, R-Tulsa, and State Rep. Lee Denney, R-Cushing, is a key plank in Superintendent Barresi’s 3R Agenda to rethink, restructure and reform Oklahoma’s education system.

The bill offers a 50 percent state income tax credit to businesses and individuals making contributions to scholarship-granting organizations. Those organizations, in turn, provide tuition scholarships to families earning less than 300 percent of the requirement for the federal free and reduced lunch program or whose children attend a school identified as needing improvement under the No Child Left Behind Act of 2001. Funds generated from the tax credits also could be used to finance grants for innovative education programs in rural public schools across the state.

Contribution limits are up to $1,000 per person, $2,000 per couple or up to $100,000 per business entity. Up to $5 million in tax credits can be raised each year, half from individual tax filers and half from corporate tax filers. Any credits earned during the time period beginning August 26, 2011, through December 31, 2012, may not be claimed until tax year 2013.

Scholarship and grant organizations will be established as nonprofits, contributing at least ninety percent of annual receipts to eligible recipients and reporting annually to the Tax Commission. 

Sen. Dan Newberry
R-Tulsa

“In order to give every student a chance to learn, we must empower students and families with freedom of choice,” said Newberry in May after the Senate passed the final version of SB 969. “This legislation will encourage private sector investment in the success of our low-income children, removing barriers to achievement and helping children build better lives. Expanding choice will create a more fertile climate for learning, improving our education system.”

Newberry noted the measure would increase the overall amount spent on primary education while saving the state tax dollars.

Rep. Lee Denney
R-Cushing

“This legislation provides an opportunity for Oklahomans to help poor children obtain a quality education,” said state Rep. Lee Denney, R-Cushing. “It provides a much-needed new source of education funding to benefit the students who are most at-risk.”

Organizations interested in applying can go to http://www.tax.ok.gov/btforms.html.

Tax Credits Task Force Discusses Capital Investment Incentives

OKLAHOMA CITY – The Task Force on State Tax Credits and Economic Incentives heard presentations on some of the state’s largest tax credits and incentives today.

State Rep. David Dank, chairman of the task force, said the task force is concerned that the Oklahoma Capital Investment Board Tax Credits are being used by out-of-state businesses when they were created to bring jobs to the state.

Rep. David Dank
R-Oklahoma City

“I think we’re finding out that there are far too many dollars that are being invested in companies and corporations outside the state borders,” Dank (R-Oklahoma City) said. “I think these are the things we are going to have to focus on.”

The Oklahoma Capital Investment Board has made commitments to 19 venture funds. More than $130 million has been invested. Dank said the board will have to do a better job of demonstrating exactly how those funds have been spent if it expects to receive future funding.

“I don’t think they have been able to really show the results of who, what, where, when and why,” Dank said. “I don’t think they’ve been able to provide that information and I think they’ve come up short. I think we have a lot more questions to have answered before we would even consider allowing them to continue to use taxpayer dollars.”

The task force also examined the Small Business Venture Capital Formation Incentive Act and the Rural Venture Capital Formation Incentive Act.

“We want to be able to understand in detail how each and every one of these tax incentives are being used and how they have benefited Oklahoma,” Dank said.

OCPA Website Empowers Oklahomans To Hold Government Accountable

The Oklahoma Council of Public Affairs recently unveiled a new transparency website AccountAbilityOK.com. The site allows anyone to search, in a very user-friendly format, financial data for state government. The data for the website comes from the Oklahoma Office of State Finance, but the site uses innovative business-intelligence software called QlikView which allows for fast navigation through the data.


Jonathan Small, Fiscal Policy Director for OCPA, points out in a statement:

"In years past, scrutiny of Oklahoma government spending largely has been reserved for a few powerful legislators, staffers, and the occasional lucky journalist who stumbles upon a confidential tip. AccountAbilityOK.com changes all that. As the name implies, it gives citizens the ability to search the accounts—and thus empowers citizens to bring accountability to government."

I have included this new website in my State Government Links on this blog. I continue to encourage my constituents and all Oklahomans to take advantage of sites like this and to share your thoughts and findings with your legislators. I appreciate OCPA's work on fiscal responsibility and transparency in State government. 

Legislature Sends Major School Choice Bill To Governor

The state Senate voted this week to increase educational opportunity for needy children through a new scholarship tax credit program.

Senate Bill 969, by state Sen. Dan Newberry and state Rep. Lee Denney, would create the “Oklahoma Equal Opportunity Education Scholarship Act.”

Under the provisions of SB 969, students meeting financial need requirements or living in school districts identified for improvement under No Child Left Behind will be eligible for scholarships.

“In order to give every student a chance to learn, we must empower students and families with freedom of choice,” said Newberry, R-Tulsa. “This legislation will encourage private sector investment in the success of our low-income children, removing barriers to achievement and helping children build better lives. Expanding choice will create a more fertile climate for learning, improving our education system.”

The bill would allow a tax credit equal to 50 percent of the amount contributed to a scholarship-granting organization up to $1,000 per person, $2,000 per couple or up to $100,000 per business entity.

The total credit authorized could not exceed $1.75 million annually.  

“This legislation provides an opportunity for Oklahomans to help poor children obtain a quality education,” said state Rep. Lee Denney, R-Cushing. “It provides a much-needed new source of education funding to benefit the students who are most at-risk.”

Scholarships funded through the tax credit program would serve children from low-income families and allow them to attend private schools. The privately funded scholarships would pay up to $5,000 or 80 percent of the average per-pupil expenditure in the school district where the recipient student resides. Scholarships for special needs students under the bill would cover up to $25,000.

Dank Praises Passage of Tax Exemption Tradeoff

Rep. David Dank
R-Oklahoma City

State Rep. David Dank (R-Oklahoma City) today praised the members of the House Revenue and Taxation Committee for trading a sales tax exemption he called “nonsense” for one that benefits the surviving spouses of disabled veterans.

In an unusual move, Dank successfully urged the committee he chairs to remove a 2006 sales tax exemption granted to rock quarries and replace it with one that extends an existing sales tax exemption for 100-percent disabled veterans to their surviving unmarried spouses.

“This was a victory for common sense,” Dank said. “I can’t recall a time when we tossed out one of those last-minute giveaway tax benefits that are simply nonsense and replaced it with one that makes real sense.”

The rock quarry sales tax exemption was added to legislation in the closing hours of the 2006 special legislative session. Dank said a lobbyist apparently convinced a legislative leader to add the measure.

“There was no reason for it,” he said. “It was simply one of those backroom giveaways. Why should rock quarries be exempt from sales taxes and not sandpits or brickyards?”

Dank said the fiscal impact of the 2006 exemption for rock quarries was estimated at about $360,000. The impact of extending the existing sales tax exemption for disabled vets to their widows or widowers was set at some $400,000.

“So I proposed a trade to the committee,” Dank said. “Dump this wasteful special interest tax break that does nothing for the average taxpayer and replace it with a benefit that recognizes and rewards families that gave so much in service to our country.”

Dank said the rock quarry tax exemption is “just one more example of those last-minute deals written into the tax code to give special treatment for narrow special interests. It is why we need to move ahead with a complete examination of our tax code.”

Dank’s amendment stripping the rock quarry sales tax exemption from law was added to the bill extending the exemption to vets’ survivors, which is sponsored by Sen. Don Barrington and Rep. Ann Coody (both R-Lawton). The amended bill will now go to the House Appropriations and Budget Committee for action.

Rep. Dank to Examine Tax Incentives

Rep. David Dank
Chair, Tax & Revenue
Committee

By Patrick B. McGuigan, CapitolBeatOK.com

State Rep. David Dank, an Oklahoma City Republican, is leading a critical examination of tax credits, exemptions and other business incentives in the 2011 session of the State Legislature, which begins Monday, February 7. 

In his capacity as Chairman of the Revenue and Taxation Subcommittee, he answered a quartet of questions from CapitolBeatOK this week. 

The perspective he brings to the issue is, he says, nuanced: “There is a place for incentives and even tax credits when the jobs those incentives would create are substantial. New jobs return more revenue to the state through added payroll, and they especially help our economy grow. But too many tax credits enacted in the past failed to pass that test. Some were simply giveaways. 

“We need to ask a couple of fundamental questions about any tax credit. Will it create or sustain added jobs? And is it fair to everyone involved, especially the taxpayers, who are the ones footing the bill? That means we need to halt the practice of issuing transferable tax credits in particular. A legitimate tax credit should benefit only the industry it was supposed to help and not be bought and sold like securities or commodities.”