Legislators have plan to trim state tax credits, two top lawmakers say
BY RICK M. GREEN
Capitol Bureau rmgreen
Top Oklahoma lawmakers have a plan to eliminate or reduce tax credits to fill part of a $1.3 billion budget hole for the fiscal year starting July 1.
Sen. Mike Mazzei, chairman of the Senate Finance Committee, and Rep. Earl Sears, chairman of the House Appropriations and Budget Committee, confirmed Tuesday a series of proposals to be put into legislation.
“These are items and concepts for an overall tax credit reform package that we’ve agreed on with our House counterparts” Mazzei said.
“The package was specifically designed so that we’re addressing both the personal income tax side and tax breaks for business”
Not to be touched are specific economic development incentives involving quality jobs, aerospace engineering and historic rehabilitation programs.
“We don’t want to negatively impact very worthwhile programs that generate jobs, higher income and higher tax revenue ” the senator said.
Some items involve caps on certain economic development tax credits, meaning the full credit would remain in place but a portion of the benefit would be claimed in future years.
Tax credit reforms could yield $200 million in savings per year, Mazzei said.
Senate leaders also have their own, separate plans that could yield an additional $200 million to $300 million in savings.
These savings would come through elimination of an unusual provision that lets taxpayers deduct state income taxes twice and through reductions in off-the-top spending, or money spent outside the normal appropriations process. Some proposed cuts in this category involve aid to counties.
Other ideas are still on the table, as well. House budget officials are discussing proposals for expanding sales and use taxes and covering some road spending with bonds.
Gov. Mary Fallin planned a news conference for Wednesday to discuss her proposals. She previously called for a $1.50 per-pack cigarette tax. She has also called for placing into the general fund certain revolving fund money, or agency savings.
• Capping at $25 million a year a tax rebate for gross production taxes paid on wells operated at financial risk. The oil downturn has increased this category greatly. The cap would save $105 million a year.
• Elimination of the child care credit. Savings would be $27 million.
• A 25 percent reduction in the sales tax relief credit, saving nearly $9.7 million.
• A 25 percent reduction in the earned income tax credit, saving $8.8 million.
• Capping at $25 million an investment/new jobs credit, saving $8.7 million.
• Capping at $10 million the zero-emission facilities credit, which applies to wind power generation, saving $7.9 million.
• Capping at $5 million the clean-burning fuel equipment credit, saving nearly $6 million.
• Capping at $3 million the affordable housing investment credit, saving $1 million.
• Elimination of a coal production benefit, saving $1.75 million.