Treasurer Ken Miller takes critical view of some reform ideas before tax credit task force

At yesterday’s hearing of the Oklahoma Task Force on Tax Credits and Economic Incentives, state Treasurer Ken Miller laid out concerns he has about possible changes to pro-business incentives. 

Miller worried about “growing government” in response to potential increased authority for the Auditor & Inspector’s office, while agreeing there should be fewer tax credits and exemptions/abatement’s than in the past.

In his comments to the Task Force, on which he serves, Miller said he believes it is “important to evaluate these programs based on reality as it exists today, and not on the basis of ideology.” He encouraged members leaning toward a range of significant reforms to “be sensitive to the economic impact of our actions. We cannot set policy in a vacuum.”

He suggested a structure to judge business incentive programs “on the merits,” agreeing that all programs should henceforward be subject to “sunset” — and that programs should “stand on merits or fall on demerits, on a regular basis.”

Miller took a respectful yet critical stance toward some ideas advanced by other members of the panel, including Chairman David Dank, House Appropriations and Budget Chairman Earl Sears and Auditor & Inspector Gary Jones. 

Miller reflected that it seemed to him “moving ahead is about two things: the mechanics of transparency and accountability; and the public policy goals — to ask whether the credits are appropriate and prudent, and what things the state should be encouraging.”

With Jones sitting near him in the House chamber, where the hearings were held, Miller said that he was “not yet opposed to enhancing the auditor’s authority, but also not yet convinced or persuaded to grow government.” He said he was concerned whether or not proposals to increase the auditor’s role could be done with existing resources, or if more spending would be needed.

Miller argued that court review and transparency provisions, with regular legislative scrutiny of programs, could be considered forms of “audit.” He observed, “The Legislature has perhaps the best form of audit, which is the process of regular oversight.”

He parted company, in part, with Dank, Sears and Jones on the subject of tax credit transfer-ability. The trio, and other state officials, have expressed a desire to end transfer-ability provisions, which allow program participants to buy and sell tax-financed credits. 

Miller said he was not sure enough research has been done on the effectiveness of transfer-ability provisions. He said, “If the Legislature determines there is a certain cost and benefit and that the policy is a good one, I’m not sure it matters who gets the benefit.”

He commented that on the transfer-ability issue, and indeed on the question of effectiveness of incentive programs in general, a common reflection among members of the task force (and observers) is, “Great Plains, bad example. Shortline Rail, good example.” 

The reference, in the first case, is to one of most costly and disastrous instances of financial loss to taxpayers in the last two decades of business incentives. In the second case, availability of transferable credits to finance railway upgrades and bed improvements have resulted in positive forward momentum for railroads in the state, according to testimony the task force heard in recent weeks. 

Miller pressed his point, saying, “Something is not bad just because we keep saying it is bad.” He admonished, as several speakers have done in past hearings of the task force, that Oklahoma should “not throw the baby out with the bathwater.”

Other task force members speaking at Wednesday’s hearing included state Sen. Mike Mazzei of Tulsa (via telephone), Sen. Andrew Rice of Oklahoma City, and Cabinet Finance Secretary Preston Doerflinger. Also speaking were two non-members of the task force, state Rep. Mike Reynolds of Oklahoma City and former state Sen. Dave Herbert, now a lobbyist.