POSTED ON NOVEMBER 16, 2011:
State Lawmakers may finally take steps toward doing right by their constituents
You won't know for sure until the sausage making is complete next spring, but Oklahoma taxpayers can be cautiously optimistic that state lawmakers finally are going to do the right thing when it comes to tax credits.
A task force headed by Tulsa Sen. Mike Mazzei and Oklahoma City Rep. David Dank appears poised to recommend to the full Legislature strict new controls on oft-murky and questionable corporate welfare that costs the state treasury hundreds of millions of dollars annually.
Some estimates indicate lawmakers have steered $2 billion of the taxpayers' money into tax giveaways that failed to create a single job.
This has been a favorite legislative game for years -- essentially rewarding big money campaign supporters and donors with taxpayer-financed incentives, all under the good-public-policy-sounding slogan "Oklahoma's Open For Bidness."
If they wanted to be truthful about it, they should have turned on a giant Red Light as well -- the world's second oldest profession?
Here's how it works: Silk-stocking, deep-pocketed corporatists --you know who they are -- steer thousands of dollars into the right campaign coffers. When the election is over, they come to the Capitol to collect -- wheedling hundreds of millions of dollars in tax breaks from a Legislature elected on the strength of those campaign contributions.
That's a breathtaking return on investment. And your hard-earned tax dollars are helping to make it so -- and helping to propel these greedsters onto the Forbes 400-type lists.
Some will sniff and say it's just good bidness. No, it's rigging the system. It's not free enterprise capitalism. It's using the taxpayers -- to enhance profits and socialize losses.
Dank himself declared at least week's task force meeting that he blamed the tax credit mess on those who "gamed the system" and on past Legislatures that "passed defective legislation."
Why should you care?
First, I don't know that I've ever heard anyone who didn't want to get as much bang as possible for the tax buck. The notion that a few rich guys with outsize influence on the legislative process are suckling away at the taxpayers' trough is unacceptable anytime -- least of all during a deep recession that helped produce deep cuts in state services.
Second, look around you: How crowded are your public school classrooms? How poorly paid are its teachers? Had bad a shape are our roads and bridges? You don't think we could use $300 million a year to shore up vital state services?
The corporate welfare stench was reaching feedlot levels. That's why Dank, in particular, fought so hard to win approval from legislative leadership to investigate the tax credits, one by one.
Since mid-summer, the task force has met eight times, poring over these "incentives." Now, it is developing a blueprint to end the legalized looting of the state treasury -- proposals it will present to the Legislature for consideration in the next session that begins Feb. 6.
The broad, early outlines are encouraging:
Task force members seemed generally to agree it was a good idea to eliminate transferable tax credits. Don't let your eyes glaze over -- this is important: Under the current system, if a business qualifies for $50,000 in tax credits (because the Legislature wants to offer incentives to a particular industry), but its tax liability is only $25,000, it can sell the remaining $25,000 in credits to other businesses (regardless of whether they are connected to the incentive-targeted industry) as a means of lessening the amount of taxes they owe.
Example: A homebuilder's left-over credits can be sold to a big insurance company to reduce its tax liability. What the heck does incentivizing homebuilding have to do with car insurance?
The task force also seems intent on preventing tax credits from being sneaked into bills in the Legislature's final, oft-frantic days when few lawmakers can possibly read, much less fully understand the implications of, all the proposed measures moving swiftly along the sausage-making conveyor belt.
And it may well suggest tax credits undergo periodic analysis -- either regular audits (perhaps every two years) or legislative review (every three years) -- to ensure they're providing the job-creating incentives that lawmakers envisioned.
But here's one point where the entire process could bog down -- and where dreams of fixing a broken system could die. Legislative Republicans live in constant fear they will be accused of "empire building" -- in other words, growing government. They campaigned on, and were given legislative majorities, in part because they promised they would be the party of smaller government.
In order to ensure tax credits are properly scrutinized, lawmakers may have to spend more money -- perhaps by adding employees to the state auditor's office, if that's who ends up reviewing the incentive programs on a regular basis.
It doesn't matter that the i ncreased expenses may very well end up saving the state much, much more. It's an issue that political opponents could -- and probably would -- demagogue. And Republicans should know: They've been masters at it in securing their legislative super-majorities.
When most of the electorate isn't paying close attention anyway, it's much easier to sell the notion that an incumbent has broken promises and grown the size of government than it is for the incumbent to explain, well, yes, we did increase the size of the auditor's office, but we saved the state three times as much money as we spent by identifying tax incentives that weren't working and eliminating them.
"The temptation to grow empires is huge," warned state Treasurer Ken Miller, himself a former GOP House member.
You almost could see task force members at last week's meeting squirm as they considered the electoral implications -- good public policy be damned.
To his credit, Dank stressed doing the right thing for taxpayers: If it means spending more money to ensure the tax incentives are regularly, thoroughly audited, so be it.
"If that's growing government," he said, "it's growing government in a way the taxpayers could agree with."
Will a majority of legislators agree?
--Arnold Hamilton is editor of The Oklahoma Observer; www.okobserver.net
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