School Officials Lying about Impact of Senior Property Tax Freeze, Dank Says

OKLAHOMA CITY (March 22, 2012) – Claims by school lobbyists that a freeze on property taxes paid by senior citizens would cut school funding are simply false, the legislator who sponsored the measure said today.

“We ought to expect more from those who speak for our schools than outright falsehoods,” said state Rep. David Dank (R-Oklahoma City), whose House Joint Resolution 1001 would have allowed the people to vote to freeze property taxes owed by seniors at current levels for as long as they own their homes.

“The head of the state school board association actually alleged on Tuesday that this would cut school funding,” Dank said. “That is simply a lie. This measure would not cut one penny from any school or county budget anywhere in the state. All it would do would be to give Oklahoma’s 600,000 seniors assurance that their property taxes would not increase while they struggle to remain solvent and in their homes.”

HJR1001 was amended in the Senate committee to simply raise the current income level that already qualifies some seniors for a property tax freeze. That action came after school lobbyists claimed that the full freeze for all seniors would cut their budgets, even though it was evident that no actual reductions were involved.

“This is in no way, shape or form a tax cut,” Dank said of the measure. “It is bogus to claim that it is. The people who claim to speak for schools ought to have more regard for the truth.”

Dank said the property tax freeze for seniors was promoted by pleas from many seniors who are hard-pressed to live on fixed incomes with steadily rising utility, fuel and prescription bills, while also facing annual property tax increases. In some cases, he said, seniors facing medical costs or the need to place a spouse in a nursing home may be forced to sell their homes because of larger yearly property tax bills.

“You could give the school bureaucrats all the money in the world and they’d still want more,” he said. “We have a grossly inefficient public school system with far too many small districts. We have also seen superintendents get big pay raises even in the worst of the recession and now we are hearing them complain about a tax cut that isn’t a tax cut at all.”

Dank said he was especially concerned by statements by the head of the Oklahoma State School Boards Association, who was quoted as saying that the measure as originally written would cause an “erosion of the tax base” and result in “another reduction in funding for schools.”

“Aren’t the schools he claims to represent teaching basic arithmetic?” Dank asked. “One hundred percent is still 100 percent, even when it does not become 105 percent. This resolution was written specifically to hold schools and counties harmless. They would still receive the same amount each year in ad valorem revenues, plus any increases from higher valuations of property that are owned by those under 65.”

Dank said Oklahoma can remain an attractive location for retirees by being fair to seniors, or it can drive them out with excessive taxes.

“Every senior who is forced out of his or her home by more and more bills from the taxman represents a dead loss to Oklahoma,” he said. “Doesn’t it make more sense to help them remain independent and in their homes as productive seniors than to drive them into nursing homes or assisted living centers because they can no longer afford the tax bill?”

Dank praised state Sens. Steve Russell and Greg Treat for their defense of the measure in the Finance Committee, and urged senators to reconsider restoring the full senior freeze before they vote on it on the floor.

“Someone needs to tell the tax hogs that enough is enough, and that you cannot hound people literally into the grave without a reaction,” Dank said.

Lawmakers outline $853 million in unnecessary government spending

OKLAHOMA CITY – Over $853 million in unnecessary state government spending of taxpayer dollars was outlined today by a group of lawmakers who want to use the savings to make Oklahoma a no-income-tax state.

The group is advancing a proposal to phase out Oklahoma’s personal income tax over 10 years.

“We believe Oklahoma should be the state where people keep more of the fruits of their labor than anywhere else,” said state Rep. Leslie Osborn, R-Mustang. “This will make us a magnet for job creators and set us on a path of vibrant economic growth and long-term prosperity.”

The group’s proposal aims to achieve full phase-out of the tax without raising other tax rates, negatively affecting core state government services, or harming retirees, senior citizens or veterans.

To do so, the lawmakers say their proposal requires a total of $525 million in total reductions in state government outlays that must be found over a two-year period. Because the savings can be found over two years instead of just one, annual savings found for Fiscal Year 2013 could also be counted again in Fiscal Year 2014 toward the total savings necessary.

In offering a list of $853 million in total savings options over the next two budget years, the lawmakers maintain there is plenty of room to reduce wasteful, unnecessary state spending while avoiding cutting core services, and still put Oklahoma on track to become the tenth state in the nation without a personal income tax.

“We can make these reductions and not touch one dollar of actual core spending in education, transportation, public safety, or the safety net for the truly needy,” said state Rep. David Brumbaugh, R-Broken Arrow. “In return, we can repeal our state’s income tax in a responsible amount of time and see an influx of new jobs and investment in Oklahoma at levels we’ve not seen before.”

The list of $853 million over two years includes savings from three areas: wasteful, inefficient or unnecessary state expenditures; corporate tax credits that have not exhibited a high enough return on taxpayer investment; and modernization, consolidation and technology reforms within state government bureaucracy that are still in the process of being implemented.

“Some of our colleagues may feel uneasy about eliminating taxpayer subsidies for things like golf courses or rodeos that may be in their home district,” said state Rep. Tom Newell, R-Seminole. “Or they may think it’s inconvenient to make state agencies operate efficiently. But our constituents sent us to the Capitol to use common sense and fix what needs fixing. And they don’t deserve for their hard-earned tax dollars to be spent wastefully.”

Newell said the goal in releasing the list was to compile credible savings ideas from several sources. Working from this list, the lawmakers hope to encourage their colleagues to build a consensus around which areas of nonessential state spending could be trimmed over the next two years.

One source lawmakers credited was the work in recent months by state Rep. David Dank, chair of the House Appropriations & Budget Subcommittee on Revenue & Taxation, and state Sen. Mike Mazzei, chair of the Senate Finance Committee, to bring attention to ineffective corporate tax credits.

Another acknowledged source was a recently released list of state budget reduction ideas from the Oklahoma Council of Public Affairs (OCPA), a free-market think tank.

State Rep. Charles Ortega said he and his colleagues, when examining the savings recommendations from these and other sources, adopted some and left others for another day.

“The goal here is to put together good ideas from several different places and start reaching a consensus on what’s possible, both politically and practically, in order to find enough savings to phase out our income tax,” said Ortega, R-Altus. “We have great respect for the ideas put forward in recent weeks and months by Chairman Dank, Chairman Mazzei, groups like OCPA and others. Some of these ideas have legs right now, and some may not. We believe repealing Oklahoma’s income tax is essential for our state, so we’re asking our colleagues to work with us to determine where we can reduce unnecessary taxpayer expenditures in order to make it happen.”

Click here to see a list of suggested cuts

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

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

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.

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.

Senior Property Value Freeze Passes House Vote on Way to the People

A resolution that would send a property tax valuation freeze for Oklahomans over the age of 65 to a vote of the people Passes the House today 82-13.

Bill Summary: HJR1001 by Rep. David Dank, R-Oklahoma City, directs the Secretary of State to refer a proposed constitutional amendment to a vote of the people. The constitutional amendment would allow people aged 65 and older, regardless of their income level, to qualify for a property tax benefit so long as they own and occupy the property. For the purposes of property taxes, beginning January 1, 2013 the fair cash value of the property would not increase above the value placed on the property in the year the owner turned 65 years old; any improvements made would be added to the assessed value.

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.”

Rep. Nelson named by Speaker-elect Steele to Working Group to Reform House Rules

Reform of conference committee process to increase transparency

OKLAHOMA CITY – House Speaker-elect Kris Steele today announced the creation of a working group to consider procedural reforms that will make the legislative process more transparent.

“While we have made tremendous strides towards increased transparency in recent years, I believe we can build on those successes and give citizens greater access to the legislative process,” said Steele, R-Shawnee. “I believe increased public scrutiny and oversight is vital to a healthy democracy, and technological advances now allow us to be more user-friendly than ever. I am serious about bold reform and am confident the members of the working group will develop proposals that significantly change the way things are done at the Oklahoma Capitol.”

Among other things, the working group will consider rule changes that open the conference committee process to allow actual meetings and public votes on conference committee reports. In addition, the group will consider reforms that could end the practice of voting on “shell” appropriation bills that contain no actual budget numbers.

The members of the working group are as follows:

State Rep. Jeff Hickman, R-Dacoma

State Rep. Gary Banz, R-Midwest City

State Rep. Jason Nelson, R-Oklahoma City

State Rep. David Dank, R-Oklahoma City

State Rep. Dan Sullivan, R-Tulsa

The committee will also consider putting in place a hard 24-hour rule that requires a House conference committee report to be filed and posted online for a full day before it can be considered on the House floor. Currently, there is no 24-hour rule during the final two days of session.

As part of that proposal, conference committee reports would also be posted online for member and public review with a link to previous versions of the bill available so changes can be more easily spotted.