Tuesday, June 30, 2009
Monday, June 29, 2009
Secretive Tax Credit Program to Come Under Legislative Review
If you have read my articles in the past, you know that I am a strong opponent of special perks and that I oppose efforts to build special loopholes into the tax code for a privileged few. I am happy to be able to report that one of the most secretive of these programs is about to receive some legislative review.
This type welfare takes place when the Legislature passes laws which financially benefit certain interests by creating a complicated scheme that enriches the proponents of the plan. Usually, advocates of these efforts carefully craft their arguments, claiming that if the Legislature provides them with special incentives, a massive amount of economic development will occur. This argument puts pressure on other legislators to support the incentive, since they do not want to be seen as voting against economic development.
Their legislation is created in a manner much like this:
a) Those who want to benefit from big government hire a powerful lobbying firm which has built strong relations with legislators by spending time with them, investing in their campaigns and providing them with personal gifts like free meals or entertainment;
b) Those lobbyists help draft the plan into law and utilize their relationships with powerful legislators to sponsor the legislation;
c) This legislation may be introduced late in the legislative session when few legislators understand what is being proposed and have very little time to understand the legislation's impact.
The people who are hurt the most by these schemes are Oklahoma small businesses owners who cannot afford to hire powerful lobbyists to build a special loophole in the law. These business still have to pay a high tax rate without benefitting from the special perks. Instead of paying for the creation of special loopholes, the state government should focus on reducing taxes across the board for Oklahoma individuals and businesses. It is this policy that will result in true economic development and will make it harder to the powerful to use the tax code as a way to achieve personal enrichment.
One of the most dangerous of the special perks is that of the state's transferable tax credit program. The reason this program is so dangerous is because it is very difficult to see who is claiming the millions of dollars to these credits which can then be sold to and claimed by a third party. These credits can be claimed and filtered through a number of LLC's which make it rather difficult to know who is benefiting and if these credits are really creating jobs, as their proponents would claim.
This year, Rep. David Dank and Senator Randy Brogdon, both outspoken critic of transferable tax credits, have won approval for a task force to conduct a study of the credits. The study should occur over the next few months and hopefully will be a starting point to allow people the opportunity to know who is using this program to benefit at the cost of the rest of the taxpayers. I think it is a great credit to Oklahoma's legislative leaders for allowing this important study to go forward.
I continue to believe that a strong majority of Oklahomans prefer small government and low taxation for all, as opposed to heavy taxation with loopholes for the privileged.
This type welfare takes place when the Legislature passes laws which financially benefit certain interests by creating a complicated scheme that enriches the proponents of the plan. Usually, advocates of these efforts carefully craft their arguments, claiming that if the Legislature provides them with special incentives, a massive amount of economic development will occur. This argument puts pressure on other legislators to support the incentive, since they do not want to be seen as voting against economic development.
Their legislation is created in a manner much like this:
a) Those who want to benefit from big government hire a powerful lobbying firm which has built strong relations with legislators by spending time with them, investing in their campaigns and providing them with personal gifts like free meals or entertainment;
b) Those lobbyists help draft the plan into law and utilize their relationships with powerful legislators to sponsor the legislation;
c) This legislation may be introduced late in the legislative session when few legislators understand what is being proposed and have very little time to understand the legislation's impact.
The people who are hurt the most by these schemes are Oklahoma small businesses owners who cannot afford to hire powerful lobbyists to build a special loophole in the law. These business still have to pay a high tax rate without benefitting from the special perks. Instead of paying for the creation of special loopholes, the state government should focus on reducing taxes across the board for Oklahoma individuals and businesses. It is this policy that will result in true economic development and will make it harder to the powerful to use the tax code as a way to achieve personal enrichment.
One of the most dangerous of the special perks is that of the state's transferable tax credit program. The reason this program is so dangerous is because it is very difficult to see who is claiming the millions of dollars to these credits which can then be sold to and claimed by a third party. These credits can be claimed and filtered through a number of LLC's which make it rather difficult to know who is benefiting and if these credits are really creating jobs, as their proponents would claim.
This year, Rep. David Dank and Senator Randy Brogdon, both outspoken critic of transferable tax credits, have won approval for a task force to conduct a study of the credits. The study should occur over the next few months and hopefully will be a starting point to allow people the opportunity to know who is using this program to benefit at the cost of the rest of the taxpayers. I think it is a great credit to Oklahoma's legislative leaders for allowing this important study to go forward.
I continue to believe that a strong majority of Oklahomans prefer small government and low taxation for all, as opposed to heavy taxation with loopholes for the privileged.
Friday, June 26, 2009
Tuesday, June 23, 2009
Monday, June 22, 2009
Reducing Some of the Waste in Government Spending
During the last two weeks, I have written about two unfortunate aspects of this year's session. First, property tax reform was not allowed to take place and second, stimulus dollars thwarted an excellent opportunity to significantly shrink the size of state government.
That does not change the fact that there is a lot of good news resulting from this year's legislative work.
Early in the year, legislative leadership in the House and Senate committed to reforming and streamlining government functions in order to eliminate obvious inefficiencies and save taxpayer dollars through the application of new technologies.
Because of their commitment, many of the streamlining concepts were successfully presented and signed into law in the form of House Bill 1032 (Omnibus Modernization) and House Bill 1170 (IT Streamlining).
There were a number of very good concepts in these bills, namely: enhancing transparency (which I plan to write about very soon), attempting to stop agencies from passing on unfair fee increases, and reorganizing purchasing and IT infrastructure in order to save money.
These bills have the potential to save millions of taxpayer dollars that would have otherwise been unnecessarily wasted. The only reason they were successful was because legislative leadership, working in partnership with the Governor, stuck to their guns and ensured passage despite some legislative and agency level opposition.
In doing so, legislative leaders were able to trim off some of the obvious waste of taxpayer dollars.
In my view, this was the logical starting place for shrinking the size of government. If we had not been successful in reducing the obvious inefficiencies, it would have been impossible to take on those reforms which will be more comprehensive and difficult to achieve.
Many of the ideas originated from a study on government modernization commissioned by former Speaker Lance Cargill and current House Appropriations Chairman Ken Miller in 2007. It has taken two legislative years to win approval of the reform observed during that study.
During the legislative interim, I will be asking the Speaker of the House to allow the House committee which I chair to hold several interim studies so that we can study the suggestions to be incorporated in a new round of money-saving legislation.
In the meantime, I would very much appreciate your suggestions and observations on saving taxpayer dollars and reducing some of the waste in government. Your observations are vital to having the necessary information to confront and eliminate that waste.
That does not change the fact that there is a lot of good news resulting from this year's legislative work.
Early in the year, legislative leadership in the House and Senate committed to reforming and streamlining government functions in order to eliminate obvious inefficiencies and save taxpayer dollars through the application of new technologies.
Because of their commitment, many of the streamlining concepts were successfully presented and signed into law in the form of House Bill 1032 (Omnibus Modernization) and House Bill 1170 (IT Streamlining).
There were a number of very good concepts in these bills, namely: enhancing transparency (which I plan to write about very soon), attempting to stop agencies from passing on unfair fee increases, and reorganizing purchasing and IT infrastructure in order to save money.
These bills have the potential to save millions of taxpayer dollars that would have otherwise been unnecessarily wasted. The only reason they were successful was because legislative leadership, working in partnership with the Governor, stuck to their guns and ensured passage despite some legislative and agency level opposition.
In doing so, legislative leaders were able to trim off some of the obvious waste of taxpayer dollars.
In my view, this was the logical starting place for shrinking the size of government. If we had not been successful in reducing the obvious inefficiencies, it would have been impossible to take on those reforms which will be more comprehensive and difficult to achieve.
Many of the ideas originated from a study on government modernization commissioned by former Speaker Lance Cargill and current House Appropriations Chairman Ken Miller in 2007. It has taken two legislative years to win approval of the reform observed during that study.
During the legislative interim, I will be asking the Speaker of the House to allow the House committee which I chair to hold several interim studies so that we can study the suggestions to be incorporated in a new round of money-saving legislation.
In the meantime, I would very much appreciate your suggestions and observations on saving taxpayer dollars and reducing some of the waste in government. Your observations are vital to having the necessary information to confront and eliminate that waste.
Sunday, June 21, 2009
Saturday, June 20, 2009
Monday, June 15, 2009
The Stimulus Nightmare
Earlier this year, I wrote about this year's state budget shortfall and explained how I thought the shortfall would provide an excellent opportunity for state government to get smaller. I felt that the shortfall would force state government to cut the most wasteful and inappropriate functions.
Many of the residents of my house district can articulate their belief that government is wasteful with our tax dollars. I agree with them and see a budget shortfall as the perfect tool to make politicians and bureaucrats cut some of this waste.
For example, during one budget committee meeting hearing this year, a state agency testified that by rearranging some office space and giving up a conference room, they were able to realize $40,000 savings per year in rent fees. The way I see it, budget shortfalls which rid state government of $40,000 conference rooms are a huge blessing.
During the next economic upturn when state revenues will once again increase, it was my hope that conservative legislative leaders would return the increased revenue back to the people in the form of tax reduction instead of using the money to once again grow government. The result of the downturn which forced spending reductions, coupled with tax relief during the upturn, would be a smaller, more efficient state government. I am convinced that over the next few years, this simple strategy would be effective in returning government to a much more limited role.
Earlier in the legislative year, it appeared that this was about to occur. As the economic shortfall worsened and state government revenues dropped, state leaders were under the gun and facing tremendous pressure to take the necessary steps to start reducing state government spending.
Then everything changed as the federal stimulus money started becoming available. Because of this funding, not only did state government not get smaller this year, it will actually spend slightly more money.
It is hard to tell how many strings are going to be attached to the stimulus funding. For instance, in order for Oklahoma to accept stimulus money for one state agency, the state had to loosen its unemployment funding eligibility criteria, even though Oklahoma's eligibility guidelines are already extremely liberal. Once a program like this is expanded, it will be very difficult to shrink it back down to the appropriate size.
This is why I maintained a policy this year of voting against budget bills where it was apparent that stimulus money was being received. Not only has the stimulus greatly harmed the future of our nation, it has also made it much more difficult to eliminate waste in state governments all across our country.
Many of the residents of my house district can articulate their belief that government is wasteful with our tax dollars. I agree with them and see a budget shortfall as the perfect tool to make politicians and bureaucrats cut some of this waste.
For example, during one budget committee meeting hearing this year, a state agency testified that by rearranging some office space and giving up a conference room, they were able to realize $40,000 savings per year in rent fees. The way I see it, budget shortfalls which rid state government of $40,000 conference rooms are a huge blessing.
During the next economic upturn when state revenues will once again increase, it was my hope that conservative legislative leaders would return the increased revenue back to the people in the form of tax reduction instead of using the money to once again grow government. The result of the downturn which forced spending reductions, coupled with tax relief during the upturn, would be a smaller, more efficient state government. I am convinced that over the next few years, this simple strategy would be effective in returning government to a much more limited role.
Earlier in the legislative year, it appeared that this was about to occur. As the economic shortfall worsened and state government revenues dropped, state leaders were under the gun and facing tremendous pressure to take the necessary steps to start reducing state government spending.
Then everything changed as the federal stimulus money started becoming available. Because of this funding, not only did state government not get smaller this year, it will actually spend slightly more money.
It is hard to tell how many strings are going to be attached to the stimulus funding. For instance, in order for Oklahoma to accept stimulus money for one state agency, the state had to loosen its unemployment funding eligibility criteria, even though Oklahoma's eligibility guidelines are already extremely liberal. Once a program like this is expanded, it will be very difficult to shrink it back down to the appropriate size.
This is why I maintained a policy this year of voting against budget bills where it was apparent that stimulus money was being received. Not only has the stimulus greatly harmed the future of our nation, it has also made it much more difficult to eliminate waste in state governments all across our country.
Sunday, June 14, 2009
Friday, June 12, 2009
Thursday, June 11, 2009
Sunday, June 7, 2009
No Property Tax Reform This Year
One of the bills that was lost late in the session this year was property tax reform in the form of SJR-5. This was probably the single most disappointing occurrence of the session.
Last April, chances are that you received your property tax assessment. I would also guess that regardless of whether or not your property appreciated in value, your bill reflects a 5% increase in your payable assessment over last year. This is the time of year when my office receives calls or e-mails from citizens experiencing the challenge of coming up with a larger-than-ever property tax payment. Second only to road improvements, the issue of higher property taxes is of major concern to my constituents.
SJR-5 would have allowed the people to vote on decreasing the 5% assessment increase cap to 3%.
I believe property tax to be the most unfair form of taxation. This tax actually punishes a person for land ownership and taxes them year after year for the same property.
As property taxes continue to rise, more citizens are priced into lower housing brackets than what they could afford if they didn't have to pay the high taxes. Others are faced with the dilemma of whether to sell their properties or pay the high tax rates. The challenge faced by individuals with fixed incomes is forcing the legislature to make exceptions to the number of people who have to pay increased rates. These exceptions place the burden of paying property tax onto a shrinking base of property owners.
The passage of this legislation would have been a good start to slowing the increase of property taxes. But it should only be viewed as a temporary solution.
In order to have true reform and property tax reduction, we must address the problem at its source. Approximately 85% of local property taxes go to Oklahoma’s education system. This money is in addition to approximately 3.5 billion dollars that we appropriate for common and higher ed and does not include the amounts from all other sources such as some federal grants. A report by the Oklahoma Council on Public Affairs demonstrates that Oklahoma taxpayers probably spend more than $10,000 per year for each student.
Oklahoma should offer a $4,000 tax credit to those parents who choose to educate their children in the private sector where they can receive a more cost-effective education. This would empower parents with the ability to determine where their children receive an education (one of the most important choices a parent will make), and would save taxpayers thousands of dollars per student. This very practical move could allow dramatic reduction in property taxation and would take a tremendous amount of pressure off the public education system because the schools' case loads would be reduced.
Perhaps this reduction in property tax burden could allow for a restructuring of the property tax so that instead of being paid every year, the tax could be paid when a house was bought or sold.
The reform would also significantly shrink the size of state government in that government would not have nearly the same control of people's lives through the education system. Smaller government is an important value that I believe most Oklahomans share. This is one of the reforms I am committed to supporting in the future as your State Representative and consider the failure of property tax reform to be one of the biggest failures of this legislative session.
If the Legislature does not take action on this reform during the spring session then I believe it is time for the people to seek the reform through an initiative petition effort.
Last April, chances are that you received your property tax assessment. I would also guess that regardless of whether or not your property appreciated in value, your bill reflects a 5% increase in your payable assessment over last year. This is the time of year when my office receives calls or e-mails from citizens experiencing the challenge of coming up with a larger-than-ever property tax payment. Second only to road improvements, the issue of higher property taxes is of major concern to my constituents.
SJR-5 would have allowed the people to vote on decreasing the 5% assessment increase cap to 3%.
I believe property tax to be the most unfair form of taxation. This tax actually punishes a person for land ownership and taxes them year after year for the same property.
As property taxes continue to rise, more citizens are priced into lower housing brackets than what they could afford if they didn't have to pay the high taxes. Others are faced with the dilemma of whether to sell their properties or pay the high tax rates. The challenge faced by individuals with fixed incomes is forcing the legislature to make exceptions to the number of people who have to pay increased rates. These exceptions place the burden of paying property tax onto a shrinking base of property owners.
The passage of this legislation would have been a good start to slowing the increase of property taxes. But it should only be viewed as a temporary solution.
In order to have true reform and property tax reduction, we must address the problem at its source. Approximately 85% of local property taxes go to Oklahoma’s education system. This money is in addition to approximately 3.5 billion dollars that we appropriate for common and higher ed and does not include the amounts from all other sources such as some federal grants. A report by the Oklahoma Council on Public Affairs demonstrates that Oklahoma taxpayers probably spend more than $10,000 per year for each student.
Oklahoma should offer a $4,000 tax credit to those parents who choose to educate their children in the private sector where they can receive a more cost-effective education. This would empower parents with the ability to determine where their children receive an education (one of the most important choices a parent will make), and would save taxpayers thousands of dollars per student. This very practical move could allow dramatic reduction in property taxation and would take a tremendous amount of pressure off the public education system because the schools' case loads would be reduced.
Perhaps this reduction in property tax burden could allow for a restructuring of the property tax so that instead of being paid every year, the tax could be paid when a house was bought or sold.
The reform would also significantly shrink the size of state government in that government would not have nearly the same control of people's lives through the education system. Smaller government is an important value that I believe most Oklahomans share. This is one of the reforms I am committed to supporting in the future as your State Representative and consider the failure of property tax reform to be one of the biggest failures of this legislative session.
If the Legislature does not take action on this reform during the spring session then I believe it is time for the people to seek the reform through an initiative petition effort.
Friday, June 5, 2009
Wednesday, June 3, 2009
Tuesday, June 2, 2009
Monday, June 1, 2009
Asking for Constituent Input for Next Year's Agenda
I receive a number of suggestions for bills each year and I carefully sort through these ideas to establish a legislative agenda for the next year. I try to balance my portfolio with aggressive bills that call for reform and easier-to-achieve bills with necessary, smaller changes in law that are requested from my district.
Last week I wrote about the success of House Bill 1294 which would allow rural Logan County road districts to pave roads without issuing long term debt. I introduced the bill in 2008 and 2009 after receiving a request from a Logan County constituent and although the bill was defeated in 2008, it was approved this year. I believe this bill could serve as a starting point for allowing local government entities to conduct capital projects without issuing debt. I am also pleased to report that two other bills requested from Logan County were also recently signed by Governor Henry.
This year, I served as the House author for Senate Bill 794 which was authored by Senator Clark Jolly. SB 794 establishes a Human Services accountability tool and was requested by the Peppers Ranch organization. Located west of Guthrie, Peppers Ranch provides foster care services and they requested the law because they witnessed children being returned to the foster system after going through an unsuccessful adoption process. They wanted to put in place a system to publicly document how many failed adoptions were occurring. They suggested that the Department of Human Services report the number of unsuccessful adoptions each year because it is very difficult to analyze the current efficiency level of the placement process without a basic accountability tool.
Being able to understand why adoptions are unsuccessful may make it possible to analyze what is working and what is not working in the state's foster care system.
Late last year, as I was going door to door as part of the 2008 campaign cycle, I visited a constituent who works for one of the state commissions in charge of professional licensing. She described to me how professional license holders had discovered a loophole in the law that allowed them to ignore the requirement to correct any outstanding state tax liabilities prior to renewing their license.
My biggest resource to provide valuable insight into what is occurring regarding government bureaucracy is the feedback from the state employees in my constituent base. State employees have a firsthand point of view of changes that need to occur, and I enjoy the opportunity to benefit from their experience.
In this case, the state employee asked if I could sponsor legislation to close the tax loophole. With Sen. Jolly's help as the Senate author of House Bill 1295, we were able to receive legislative approval for the reform.
Over the next few months, I will put in place my 2010 legislative agenda. I need your help in developing the bills for which I will advocate. Should you have suggestions or ideas that you would like to see advocated in the legislature next year, please let me know.
Last week I wrote about the success of House Bill 1294 which would allow rural Logan County road districts to pave roads without issuing long term debt. I introduced the bill in 2008 and 2009 after receiving a request from a Logan County constituent and although the bill was defeated in 2008, it was approved this year. I believe this bill could serve as a starting point for allowing local government entities to conduct capital projects without issuing debt. I am also pleased to report that two other bills requested from Logan County were also recently signed by Governor Henry.
This year, I served as the House author for Senate Bill 794 which was authored by Senator Clark Jolly. SB 794 establishes a Human Services accountability tool and was requested by the Peppers Ranch organization. Located west of Guthrie, Peppers Ranch provides foster care services and they requested the law because they witnessed children being returned to the foster system after going through an unsuccessful adoption process. They wanted to put in place a system to publicly document how many failed adoptions were occurring. They suggested that the Department of Human Services report the number of unsuccessful adoptions each year because it is very difficult to analyze the current efficiency level of the placement process without a basic accountability tool.
Being able to understand why adoptions are unsuccessful may make it possible to analyze what is working and what is not working in the state's foster care system.
Late last year, as I was going door to door as part of the 2008 campaign cycle, I visited a constituent who works for one of the state commissions in charge of professional licensing. She described to me how professional license holders had discovered a loophole in the law that allowed them to ignore the requirement to correct any outstanding state tax liabilities prior to renewing their license.
My biggest resource to provide valuable insight into what is occurring regarding government bureaucracy is the feedback from the state employees in my constituent base. State employees have a firsthand point of view of changes that need to occur, and I enjoy the opportunity to benefit from their experience.
In this case, the state employee asked if I could sponsor legislation to close the tax loophole. With Sen. Jolly's help as the Senate author of House Bill 1295, we were able to receive legislative approval for the reform.
Over the next few months, I will put in place my 2010 legislative agenda. I need your help in developing the bills for which I will advocate. Should you have suggestions or ideas that you would like to see advocated in the legislature next year, please let me know.
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