Tax subsidies eat into Oklahoma's general fund collections

Sean Murphy, Associated Press

Tax rebates and incentive payments to businesses and industry are eating into available revenue for Oklahoma and are partially to blame for collections last month to the General Revenue Fund falling more than 13 percent below the estimate, state finance officials reported Tuesday.

 

OKLAHOMA CITY (AP) — Tax rebates and incentive payments to businesses and industry are eating into available revenue for Oklahoma and are partially to blame for collections last month to the General Revenue Fund falling more than 13 percent below the estimate, state finance officials reported Tuesday.

For the fourth time in the last year, the state's main operating fund last month received no corporate income tax collections, Oklahoma's Secretary of Finance, Administration and Technology Preston Doerflinger said. Corporate tax refunds of $14.8 million last month exceeded collections by $5 million, forcing officials to borrow money from personal income tax collections to help pay for the subsidies, he said.

Doerflinger said $3.3 million of those payments last month were made to wind companies under a program in which the state pays producers of wind power.

"The state paid more to wind companies in May than the general fund netted from all other corporate income taxpayers combined," Doerflinger said in a statement . "How messed up is that?"

A decade ago as Oklahoma lawmakers looked for ways to attract businesses to the state, they offered generous subsidies to the wind industry. But now that the number of wind farms in the state has skyrocketed, so has the cost of those tax rebates.

In the 2015 legislative session, legislative leaders and industry officials agreed to end two of three tax incentives, but some legislators want to slash the subsidies even further. A bill to pare back an incentive that offers state payments to wind developers based on the amount of electricity produced passed the Senate, but was derailed in the House.

Doerflinger said the zero-emission tax credit is now projected to cost the state more than $900 million over the next 15 years.

Jeff Clark, executive director of The Wind Coalition, an industry trade group, criticized Doerflinger in a statement for singling out wind incentives and said all of the state tax breaks offered to the industry are set to expire in 2020.

"The incentives for wind energy development were needed when the industry was starting out and they worked, with great benefit for the state," Clark said. "We're building a diverse, cleaner, cheaper, modern power generation fleet, and Oklahoma is perfectly positioned to lead and prosper from it. That is unless Secretary Doerflinger and a small group of anti-wind activists succeed in driving wind development out of the state."

Overall collections in May to Oklahoma's General Revenue Fund of $377.2 million were $58.8 million, or 13.3 percent, below the official estimate and $25.5 million, or 6.3 percent, below collections in May 2015.

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