Tax incentives panel faces challenges

As the Oklahoma Incentive Evaluation Commission prepares to evaluate its third round of state tax breaks offered to businesses and individuals, the panel could face more challenges than before.

Of the 14 incentives up for review this year, just half come with an estimated cost to the state. Over the next several months, a private company used by the commission will analyze each of the incentives to better understand their real value, along with who benefits.

“A lot of the big ones, the Legislature suggested they wanted them done earlier in the process,” said Randall Bauer, a consultant with PFM Group who has worked with the commission. “Some of these are less clear as to how much they’re used, how much impact.”

The incentives include tax breaks for inventors earning royalty payments, companies that create manufacturing jobs, payments for research scientists and credits for energyefficient home construction. Commissioners already have issued recommendations for larger, more popular and more successful benefits.

Part of the review structure includes setting benchmarks for what a successful incentive is, then determining whether a particular law meets those goals. That can’t be done if there isn’t enough information available about each tax credit, exemption, rebate or other benefit.

“I think our consultant’s going to have to do more diving into the data at the (Oklahoma) Tax Commission in order to get that,” said Commission Chairman Lyle Roggow.

Roggow said pulling the necessary information from the OTC is hard because the agency’s systems are, as he described it, antiquated.

“If we had the sophistication that we think we should have, then I think our process would be a whole lot easier and we could get data much more readily available to us,” he said.

Sometime this year, Bauer’s firm will provide the Incentive Evaluation Commission with a final report and recommendation that the commission can accept or amend. Those recommendations are then handed over to lawmakers.

The suggestions are optional and don’t have to be considered by the Legislature.

Roggow said the third year of the commission’s work will include more incentives that were likely conceived with high hopes that they would spur business and economic growth.

“But maybe they never got legs under them and took off. While it was a good idea, there just wasn’t enough takers,” he said. “Why is it on the books if it isn’t being used correctly and isn’t an effective tool to have?”