Weekly Opinion/Editorial
ONE SIZE DOESN’T FIT ALLby Steve Fair
Oklahoma state government faces over a billion-dollar budget shortfall in fiscal year 2011. Democrats blame the revenue shortage on the personal income tax cuts implemented after Republicans took control of the House in 2004. Democrats and at least one Republican blame tax credits for the lack of money flowing to state government.
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State Representative David Dank, (R-OKC) believes the ‘transferable’ type tax credits that can be bought and sold like commodities, have been abused. Dank cited a couple of examples. "In 2001, our Legislature gave approximately $18 million in transferable tax credits to developers of a proposed spaceport at Burns Flat," Dank said. The company, Rocketplane Holdings, sold the credits for $15 million and made $3 million dollars. Back in 2006, Dank says the state was trying to increase coal production and granted $4 million in ‘transferable’ credits to the coal industry. Instead of more coal being produced and more miners, Dank says the credits were sold to companies not in the coal industry. These remarks were made during an interview with http://capitalbeatok.com/
State Representative David Dank, (R-OKC) believes the ‘transferable’ type tax credits that can be bought and sold like commodities, have been abused. Dank cited a couple of examples. "In 2001, our Legislature gave approximately $18 million in transferable tax credits to developers of a proposed spaceport at Burns Flat," Dank said. The company, Rocketplane Holdings, sold the credits for $15 million and made $3 million dollars. Back in 2006, Dank says the state was trying to increase coal production and granted $4 million in ‘transferable’ credits to the coal industry. Instead of more coal being produced and more miners, Dank says the credits were sold to companies not in the coal industry. These remarks were made during an interview with http://capitalbeatok.com/
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The tax credits the Democrats want to reduce or eliminate are corporate tax credits for rural venture capital companies and small businesses. They also want to reduce the corporate tax credits for venture capital, income tax credit for investment in small business and the states Quality Jobs program.
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“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. “ Rep. Morgan added.
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Over half the states with a sales tax offer a discount to the retailers collecting the sales tax. In Oklahoma it can be as much as 2.25% of the amount they collect up to a maximum of $3,300 annually. The Oklahoma Tax Commission says the discounts cost the state $25.9 million last year. Morgan must think businesses that receive the discount don’t pass it along to the consumer and just take it to their bottom line. If so, he is woefully ignorant of the competitive retail marketplace. Dank is on the right track- Morgan is not.
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Here is how the Oklahoma State government deficit(or any deficit) should be addressed in order of priority:
First, cut spending. When facing a deficit, the first thing to do is cut spending. As Bill Earle says, “If your outgo exceeds your income, then your upkeep will be your downfall.” The legislature should identify wasteful and unnecessary spending and use this ‘hard time’ to make some tough decisions. One size doesn’t fit all.
The tax credits the Democrats want to reduce or eliminate are corporate tax credits for rural venture capital companies and small businesses. They also want to reduce the corporate tax credits for venture capital, income tax credit for investment in small business and the states Quality Jobs program.
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“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. “ Rep. Morgan added.
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Over half the states with a sales tax offer a discount to the retailers collecting the sales tax. In Oklahoma it can be as much as 2.25% of the amount they collect up to a maximum of $3,300 annually. The Oklahoma Tax Commission says the discounts cost the state $25.9 million last year. Morgan must think businesses that receive the discount don’t pass it along to the consumer and just take it to their bottom line. If so, he is woefully ignorant of the competitive retail marketplace. Dank is on the right track- Morgan is not.
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Here is how the Oklahoma State government deficit(or any deficit) should be addressed in order of priority:
First, cut spending. When facing a deficit, the first thing to do is cut spending. As Bill Earle says, “If your outgo exceeds your income, then your upkeep will be your downfall.” The legislature should identify wasteful and unnecessary spending and use this ‘hard time’ to make some tough decisions. One size doesn’t fit all.
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Second, implement zero-based budgeting. Across the board cuts at every state agency is not the right solution. Oklahomans must have vital, essential services like police protection, prisons, and inflasture the state government provides. But there are other services that are not so essential. Every state agency should be required to present a comphensive itemized budget every year that justifies every dollar they are requesting (zero based budgeting). One size doesn’t fit all.
Second, implement zero-based budgeting. Across the board cuts at every state agency is not the right solution. Oklahomans must have vital, essential services like police protection, prisons, and inflasture the state government provides. But there are other services that are not so essential. Every state agency should be required to present a comphensive itemized budget every year that justifies every dollar they are requesting (zero based budgeting). One size doesn’t fit all.
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Third, modernize/consolidate government. Millions of dollars could be saved if Oklahoma government did what the private sector has done for the past thirty years- consolidate. The largest employer in Oklahoma is the State of Oklahoma. Oklahoma has seventy seven counties and we could easily cut that number by one third- maybe more. Millions could be saved if Oklahoma education would simply share administrative services. Our cost per student on administrative costs is much higher than other states in the region. Politicians don’t like the ‘C’ word, but at some point some tough decisions will have to be made if Oklahoma is to compete in the modern marketplace. If legislators vote to just do ‘across the board’ budget cuts, then they are missing an excellent opportunity to make longterm, significant changes to Oklahoma government. One size doesn’t fit all.
Third, modernize/consolidate government. Millions of dollars could be saved if Oklahoma government did what the private sector has done for the past thirty years- consolidate. The largest employer in Oklahoma is the State of Oklahoma. Oklahoma has seventy seven counties and we could easily cut that number by one third- maybe more. Millions could be saved if Oklahoma education would simply share administrative services. Our cost per student on administrative costs is much higher than other states in the region. Politicians don’t like the ‘C’ word, but at some point some tough decisions will have to be made if Oklahoma is to compete in the modern marketplace. If legislators vote to just do ‘across the board’ budget cuts, then they are missing an excellent opportunity to make longterm, significant changes to Oklahoma government. One size doesn’t fit all.
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Fourth, empower the private sector. The long term solution to any budget deficit is to either grow the number of taxpayers or help the current taxpayer base to grow their income. We can’t just tax business and blindly believe they will absorb increases. Business is not a sponge, it’s like a pipe, providing a conduit for revenue to flow through.
Fourth, empower the private sector. The long term solution to any budget deficit is to either grow the number of taxpayers or help the current taxpayer base to grow their income. We can’t just tax business and blindly believe they will absorb increases. Business is not a sponge, it’s like a pipe, providing a conduit for revenue to flow through.
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Ronald Reagan once said, “We who live in free market societies believe that growth, prosperity and ultimately human fulfillment, are created from the bottom up, not the government down. Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefiting from their success- only then can societies remain economically alive, dynamic, progress and free.”
Ronald Reagan once said, “We who live in free market societies believe that growth, prosperity and ultimately human fulfillment, are created from the bottom up, not the government down. Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefiting from their success- only then can societies remain economically alive, dynamic, progress and free.”
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