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Oklahoma lawmakers scrutinize state tax credits

Sean Murphy
Ventura County Star
November 12, 2010

Oklahoma CITY - Oklahoma CITY (AP) - Oklahoma lawmakers will conduct an extensive review of a variety of tax credits that cost the state hundreds of millions of dollars each year, including ways to measure the effectiveness of the incentives.

State Rep. Jeff Hickman will oversee Monday's study of the various kinds of tax credits, exemptions and incentives that cost the state more than $5 billion annually. Hickman, who has been elected to the No. 2 leadership post in the House, said he also expects a briefing from a Tax Incentive Review Committee that has been analyzing state tax credits.

"We need to make sure we have mechanisms in place to make sure the credits are creating jobs and that they're not costing the state more than they're creating," said Hickman, R-Dacoma. "There are obviously some great programs out there that require a product to be produced or a job to be created, but I don't think that's the case with all of these."

Desperate to fill a $1.2 billion hole in the state budget last year, state lawmakers eliminated some tax credits and placed a moratorium on more than two dozen others.

Officials from some targeted industries, like aerospace, say they plan to fight to get some of those tax incentives restored next session. Three separate tax credits offered to aerospace companies to help boost compensation packages for skilled employees, like engineers, were placed on hold by lawmakers last year.

"That's got to be changed," said Mary Smith, executive director of the Oklahoma Aerospace Alliance, which represents about 350 aerospace companies across the state. "That's a terrible message we sent to companies that are already here and companies looking to locate here."

Gov. Brad Henry, who proposed the elimination of more than $80 million in tax credits last session, acknowledged the importance of the aerospace industry to Oklahoma's economy. But he said the most critical factor to consider about tax credits is whether they're necessary.

"The key question ... is to study and determine whether they would be making that investment without that credit," said Henry, a Democrat. "If so, it becomes a giveaway, and it ought to be eliminated. If not, then it is a valuable economic development tool that actually works and has an important place in our economy."

Monday's meeting of the House Appropriations Subcommittee on Revenue and Taxation will be held at 1 p.m. at the state Capitol.

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