Billion-dollar budget hole causes confusion over multitudes of tax breaks

Wednesday, February 17, 2010
By Scott Cooper

If Oklahoma had a dollar for every tax credit and tax exemption in the books, there might not be such a thing as a budget shortfall. The state tax code provides so many deductions and incentives that a dog-training, mushroom delivery driver who moonlights as a volunteer firefighter and lives in an energy-efficient home would send any tax preparer to the medicine cabinet.

Did you contribute to a political campaign? You can get a tax break. Did you produce a film in the state? There's a credit. Have you purchased a ticket to an Oklahoma City Thunder basketball game? You may have noticed there was no sales tax attached.

"There are more incentives than you can shake a stick at," said Larkin Warner, Oklahoma State University professor emeritus of economics and a member of a state tax credit review committee.

In 2008, an estimated $5.5 billion was handed out, exempted or reduced from the state's piggy bank due to Oklahoma's tax laws. That's more than half of the state's total budget, and more than four times the size of 2011 fiscal year's projected budget hole of $1.2 billion. The inclination for lawmakers is to cut spending.

But is there another way?

"The default principle has been when you have budget shortfalls, that all of the sacrifices fall on programs that are funded directly through the (legislative) process," said David Blatt, executive director of the nonprofit Oklahoma Policy Institute think tank. "None of it falls on the vast array of benefits and preferences we do through the tax code."

Some of the tax credits and exemptions are universally accepted by conservatives, moderates and liberals - things like the personal exemption on income taxes or a credit for child-care expenses. 

Click here to read the full story on the Oklahoma Gazette website