, Muskogee, OK

April 11, 2013

House panel passes new tax credits

Associated Press

— OKLAHOMA CITY (AP) — While Republican legislators in Oklahoma continued wrangling over how to scale back costly tax credits, lawmakers approved three new tax breaks for tickets to sporting events, construction of affordable homes and the purchase of helicopters.

The Appropriations and Budget Committee passed all three bills, including one for the purchase of helicopters that narrowly failed in the committee last week.

Rep. Charles Ortega, R-Altus, said the tax credit was designed to show state support for a helicopter training center in southwest Oklahoma, but he acknowledged that the center already is planning to open without the credit.

A fiscal analysis of the proposed tax credit shows it will cost the state about $1 million in the next fiscal year  and an additional $535,000 in fiscal year 2015.

The credit applies to the purchase of rotary-winged aircraft used exclusively for training.

The issue of tax credits, exemptions and rebates — known collectively as tax expenditures — has been a thorny one for legislators who have considered ways to eliminate or overhaul them to shore up the state budget or pay for a Republican-backed income tax cut.

Gov. Mary Fallin’s ambitious tax cut proposal last year began to fall apart when lawmakers balked at eliminating some of the tax exemptions and credits used to help pay for the lost revenue. This year, Fallin’s simpler proposal for a one-quarter of 1 percent cut in the state’s top income tax rate was gutted in the Senate and replaced with a new approach that ends the transferability of five separate tax credits for coal mining, wind power, rehabilitation of historic buildings, energy-efficient home construction and railroad modernization.

Tax expenditures offered as incentives to businesses often cost the state millions of dollars in lost revenue, but are fiercely protected by teams of lobbyists.