Session End, Part 3 – Fiscal Policies Going Forward

By Rep. Mike Sanders

There is ongoing heartburn in Oklahoma over the state’s fiscal policies. Tax cuts, spending decisions, tax credits and even the budgeting process are all continually under scrutiny and criticism.

I find this heartburn to be natural. The state budget is the most important product of the legislative session. Why shouldn’t it receive scrutiny and criticism? In fact this year, I voted against the budget on principle, even though I supported many of its spending priorities. I voted against the budget because the good strides it made were on the back of transportation funding. Like education, I consider infrastructure funding to be a top priority of state government. I think recent flooding has further highlighted how important our county road and bridge funding, which took a hit in this year’s budget, really is.

On taxes, I believe that conservative policies have held up well to the intense pressures around fiscal decisions. Our state has seen economic growth and diversification since conservatives took office. The state does have many fiscal challenges. Our prison system is overburdened. We have a population that suffers from health problems, educational challenges and regular natural disasters. These problems are often equated with conservative policies, but the simple truth is that these problems emerged before our time and will continue to be a headache in future years. The most recent tax cut will not take effect until Jan. 1, 2016. Tax cuts in the past have had a positive effect on revenue because of the broader base of taxes we receive when more businesses open and relocated in our state.

What about tax credits? Tax credits and incentives do eat into our revenue that could be used for state services. On the other hand, they grow industry in our state, which translates to jobs and also taxable revenue growth.

However, in the case of some tax credits, we have seen their usefulness outlived. Such is the case of wind industry incentives, which we are now retiring.

This year, Senate Bill 498 was enacted. It phases out the current property tax exemption for wind power generating facilities. Senate Bill 502 removes a job creation tax credit from wind facilities. The governor said about the two measures: “When these tax credits were originally conceived, they were meant to support a new and groundbreaking form of alternative energy. Today, Oklahoma’s wind industry is among the strongest in the nation and is an integral part of our power grid and our economy. Wind energy is here to stay. It no longer needs the same level of support and encouragement from the state.”

The retirement of these tax credits do not represent an acknowledgement of a failed policy, but simply a product of their own success.

Two other tax credit reforms were approved by the Oklahoma Legislature and signed into law by the governor. House Bill 2182 creates a process to provide legislators with independent data on economic incentives, including estimated fiscal impacts and assessments of whether incentives are achieving their goals. Senate Bill 806 requires that any economic incentive include a measurable goal or goals when enacted.

Two bad fiscal policies enacted this year were the two museum bonds approved. The first one dealt with the American Indian Cultural Center and Museum. Legislative leaders were able to win support for the bill because many legislators felt like it was the only way to get the museum off our hands. As a conservative, I voted against the bill, because I believe core services trump non-essential projects. I also voted against the OKPOPS museum bond. In order to pass this bond, legislative leaders had to pull in support from across the aisle, because they could not get a majority of conservatives to support the measure. The two measures will set up back $50 million in bonds, or several million dollars each year for a decade or two to come.

The budgeting process itself will change slightly this year. Under one measure, agencies will now have to justify their expenses according to a set of goals set forward by your elected officials. We did not enact a reform that would have created a budget-only session. There is still interest in that policy, but there are reservations that we would be blocking important policy work we do each year.

I think our overall fiscal approach is good, but could be improved and could be more conservative. I and other like-minded legislators will continue to push for core services over non-essential spending and pro-growth tax policies.

This interim, I will be in the district as I always am. I look forward to your thoughts, concerns and suggestions. Have a wonderful summer and thank you for all that you do for our district and state.

My door is open to you at all times. If we don’t already know each other, you can reach me through my legislative office at (405) 557-7407 or at my e-mail mike.sanders@okhouse.gov.


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