Evidence OTC has been under reporting tax credit program cost by reporting amounts less than 20% and one as little as 2% of information found on other OTC documents. OTC reported two programs as receiving no money yet other OTC documents reveal $281 million.
This is the explanation for graphic depictions of the extent of false reporting used to hide fraud inflicting the current financial disaster on Oklahoma taxpayers by state legislators.' Fraud ridden tax credit programs funded using the state's untracked and unaccounted Tax Expenditure program.
With Oklahoma, already experiencing tax revenue short falls ranging in the 25 to 30% of the state's current, $7 Billion FY 2010 appropriations budget, with only $6 Billion in revenue. Oklahoma taxpayers will be facing tax increases to make up what could eventually amount to a $1.5 Billion shortfall; then fund expected future shortfalls that can't be absorbed in spending cutbacks. The economy, which we have little control, is only partly to blame for the shortfalls, and the least responsible. The more insidious cause is the result of rapidly increasing use of funding tax credit programs using "off the books" Tax Expenditures. State officials have never treated Tax Expenditures the same as appropriations spending. Leaving Tax Expenditures free of budgeting restraints, oversight, tracking and accountability.
When this new fangled thing called tax credits was discovered by government officials in the early 1980s, the tax credit programs were put under Tax Expenditures. Soon creative uses like allowing tax credits to be sold for cash opened the door allowing funding with the illusion there was no increase in budget spending. Tax credits are a way to allow beneficiaries to skim off incoming tax revenue before it reaches the state's coffers and accountability. This spending does not appear as appropriations spending but is reflected in tax revenue shortfalls.
The only information provided the Oklahoma public about Tax Expenditures is in a biannual Tax Expenditure report (TER) prepared by the Oklahoma Tax Commission (OTC). While OTC reported $5.4 Billion in Tax Expenditures for 2008 the $5.4 Billion only accounts for 150 of the 500 Tax Expenditure programs. The remaining 350 are reported as "Zero" or N/A. Only 38 of the state's 80 plus tax credit programs show values which total $68 million
Examining other state reports that could be obtained, including other OTC reports' reveals those 38 tax credit programs cost $370 million, a 545% under reporting. Two of the 4 fraud ridden programs where reported as costing $4.8 million and the examination revealed $98 million, under reported by 2,040%. OTC has been reporting $0 cost for the other two of the 4 fraud ridden programs going back to 2005. Examination reveals OTC authorized $281 million in tax credits for those two programs.
These two unreported programs are the Small Business Ventures (SBV) and Rural Small Business Ventures (RSBV), not to be confused with the Small Business Capital Company (SBC) and Rural Small Business Capital Company (RSBC) tax credit programs. The close similarity of terms confuses most into believing the SBC and RSBC are the same or include the numbers for SBV and RSBV. SBV and RSBV are the two programs structured to allow secret involvement in a public funded program paying out $100s million in unearned public funds. Nowhere could we find were OTC reported either the amounts or identities of those receiving tax credits under these two programs.
Given the fact Oklahoma has no law preventing public officials from benefiting from public funded programs these two programs, I submit were created and are operated to reward state official for allowing and protecting the fraud.
The only sign of these two programs is an entry on OTC's Incentive Review Capco report labeled, not with the proper names, but with the vague term "in conjunction." There we find some very large numbers, including the largest single entry found on any tax credit report, $133 million attributed to one of the Altus Ventures group of LLCs. The connection to SBV or RSBV can only be found buried in the boring details of the law creating the program. Nowhere else can one find OTC labeling any tax credit amounts authorized or used by the proper terms Small Business Ventures (SBV) and Rural Small Business Ventures (RSBV).
The only accountability state officials provide for reportedly nearly $5.4 Billion of public spending is so riddled with discrepancies and falsehoods the public is being purposely prevented from learning how one-half of its taxes are used. Mislead and deceived about where the money is going, how the money is used and what if any benefits.
In reality, we should need no proof of the actual acts of wrong doing to see the irresponsible way state officials are operating. Handing out keys to an unguarded state treasury is begging for fraud.
Tulsa World reporter, Randy Krehbiel, and others, inside and outside Oklahoma, have been have been warning of the dangers of Tax Expenditures for several years. Those warnings have been ignored. Tax Breaks Increase With Revenue