Al McAffrey

Oklahoma House Democrats
okhousedems.com

Democratic members of the Oklahoma House of Representatives today presented a plan to fill the billion-dollar deficit in the state budget for the coming year without damaging job cuts and service reductions.

Prompted by three months without any apparent progress by the majority party in dealing with the budget, Democrats today said Republicans have been willing to impose cuts of up to 10 percent on spending for the agencies and departments that provide important services to state residents, but have failed to consider cuts in the area where spending by government has increased the most, tax expenditures.

Tax expenditures is a category which includes tax breaks and loopholes of all kinds, such as incentive programs, credits, exemptions and deductions. Spending on tax breaks has increased by approximately $1 billion over a two-year period, and now total $5.6 billion per year, an amount nearly equal to the entire annual state budget. The bulk of the increase has gone to corporate recipients.

“At a time when we are asking our parents and children to accept teacher firings and larger class sizes, when we are asking our senior citizens to make do with less food, when we are asking everyone to make sacrifices, we cannot afford to continue running giveaway programs that provide dubious results,” said Rep. Scott Inman, D-Del City, House Minority Leader-elect.

“Some of these programs are intended to create jobs, and that is certainly a goal we support, but our research shows that we do not have adequate accountability in tracking whether these incentive programs are actually accomplishing anything,” Rep. Inman continued. “In some cases, we have found it cost $153,000 for each job created, but the salaries for those jobs were nowhere near that amount.”

Among the credits which Democrats believe should be reduced are:

• corporate tax credits for rural venture capital companies and small businesses, which rose from $2.7 million in 2006 to $45 million in 2008;
• corporate tax credits for venture capital, which rose from $1.66 million in 2006 to $26.6 million in 2008
• income tax credits for investment in small business capital companies, which rose from $1 million to $13.3 million in 2008
• income tax credit for investment/increased employment, which rose from $40.24 million in 2006 to $118.7 million in 2008.

“We believe we should be looking at these and many other tax credits and incentives that were put into place with the best of intentions, but which we can ill afford in the current situation,” said Democratic Leader Danny Morgan of Prague.

“Another thing we could modify is the vendor discount on sales tax, which allows big companies to retain as much as $3,000 per store out of the sales tax they collect each year. Just eight to ten companies are collecting something like 70 percent of the sales tax in the sate each year, and they are not the ones we need to be helping with tax breaks,” Rep. Morgan added.

“We will continue to address this crisis with more suggestions in the days to come,” he added.