Rep. Dank outlines layered scrutiny of tax credits and incentives
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Published: 13-Oct-2011


In comments at the latest meeting of the Task Force on State Tax Credits and Economic Incentives, state Rep. David Dank asked for suggestions from other members of the panel on how to seek greater scrutiny of varied business incentive programs.

The Oklahoma City Republican also pointed to work House staff is performing to enable legislators (and the public) to understand the often-complex operation of the programs. And, he reported on efforts to gain the input of other state officials to detail gains in state tax revenues attributable to the moratorium on the incentive programs presently in effect (but due to lapse next summer).

Today, Dank pointed anew to a 2010 opinion by former Attorney General Drew Edmondson contending that some existing tax credits were not constitutional. Dank summarized that opinion this way:

“First, does it serve the public purpose? Second, is it supported by adequate consideration, which means to me does it bring more benefits than it costs? And, third, are there adequate controls and safeguards in place?”

Dank said at the hearing on Wednesday, October 12, “we should ask the Attorney General [note: now Scott Pruitt] for a clarification on how we can access the Oklahoma Supreme Court to ask for their ruling on some of the tax credits we are examining. 

“Specifically I believe we need to ask the court to apply that three-part test to those tax credits the Attorney General determined to be constitutionally infirm. I think we need to get that process of testing these tax credits before the Supreme Court underway, and I would welcome the task force’s input on how best to proceed.

“We have reviewed enough of these tax credits so far to know that the controls and safeguards in place are often a joke,” Dank said. “In many cases, they are nonexistent.”

The Oklahoma City Republican noted Edmondson’s opinion, while significant, is advisory and not binding on state officials. It notes, “Only a court of competent jurisdiction can issue a binding opinion that a legislative act is unconstitutional.”

Dank also said, in comments circulated after the hearing, “I believe we need to ask the court to apply that three-part test to those tax credits the Attorney General determined to be constitutionally infirm.” 

In his opening comments today, Dank continued, “The House staff is preparing a detailed matrix of all the tax credits and incentives the Task Force is dealing with to give us a solid overview on when they were enacted, who is eligible to receive them, their costs, their purposes and, if possible, their benefits. I am hopeful we will have that in early November.

“I will also be asking them to determine how each tax credit matches up with the three constitutional tests laid down in the Attorney General’s landmark opinion.”

Dank also said, “I am asking the Tax Commission, Office of State Finance and the State Treasurer’s office to give us information on a question that I suspect has intrigued many of you. 

“As you know, we imposed a moratorium on many tax credits in response to the state’s budget crunch. Since then we have seen some encouraging increases in state revenues. The question I will ask them to answer is what part that moratorium has played in those more promising budget numbers. 

“I know some of it is from general revenue increases, but what part of our better budget picture resulted when we stopped giving so many tax credits? And what will happen to our budget next year when our moratorium expires?”

In addition to the matters raised in his comments today, Dank had previously told CapitolBeatOK he would seek legislative language designed to end transferable tax credits. 

Throughout the hearings process, the panel has typically heard from one program that even critics say operates well, and a second program that has faced stricter scrutiny. 

Wednesday’s hearing was less contentious than some have been. The focus was on railroad reconstruction and rehabilitation and tax credits in the morning, and motion picture production incentives. Scrutiny of the latter program was more critical than the former. 

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