Commentary: Joint legislative accountability committee a good

Journal Record, The (Oklahoma City), May 12, 2008 by William O Pitts

An ambitious step toward making state government more efficient and reviewing the efficacy of tax incentives for economic growth hopefully is nearing a satisfactory conclusion.

Senate Bill 1865 by State Senate Co-President Pro Tempore Glenn Coffee, R-OKC and Speaker of the Oklahoma House of Representatives Chris Benge, R-Tulsa establishes a Joint Committee on Accountability and Innovation.

The bill requires performance audits of state agencies and the review of tax incentives to ensure taxpayer funds are being used efficiently and effectively and state agencies are using the best practices available.

The joint committee would be composed of five members each of the House and Senate appointed by the Speaker and President Pro tempore respectively. No more than three members may be from one political party in each case.

A proposal for reviewing state agencies was tried last year by former House Speaker Rep. Lance Cargill, R-Harrah, but HB 2100 failed to get through the Senate. Authors are optimistic this time their expanded measure will succeed.

Recently passed the House by a vote of 65 (53 Republicans - 12 Democrats) to 28 (all Democrats) SB 1865 was returned to the Senate for consideration of minor House amendments including restoring the title originally struck to insure the Senate another shot at the bill. It remains essentially as originally passed by the Senate on a vote of 41 (24 Republicans and seven Democrats) to six (all Democrats).

It has been estimated there are 300 or more tax incentives or credits that have been put on the books by legislatures in the past. For the most part they are designed to spur economic growth and investments in Oklahoma. They range from tax credits for businesses as in the Quality Jobs Program, which has proven to be an effective economic development tool, to incentives to encourage drilling for oil and gas in Oklahoma.

Some of them like the deep drilling inducements are designed to sunset periodically and are subject to extension by legislative action. Senate Bill 1658 by Coffee and state Rep. Ken Miller, R- Edmond is an example. It extends the tax incentive for deep well drilling for oil and natural gas in Oklahoma. That bill appears headed for a joint conference committee.

This particular incentive has worked well to keep drilling activities going in the state during times of low prices. It still is working to retain drilling investments here rather than elsewhere. The result has been ever increasing gross production tax revenues for the state's coffers.

While these are notable examples of tax incentives that work many others may or may not be accomplishing their reason for being. It is good fiscal policy for the legislature to have an office to review them objectively to see if and to what degree they are justifying their existence and the resultant benefits to the state's economy.

Not later than January 1 of each year the committee will determine and publish a list of tax incentives on which a review will be conducted.

The same is true of the hundreds of state agencies consuming taxpayer dollars. Periodic performance audits will help reveal if they are doing the jobs for which they were created and doing them efficiently.

The Joint Accountability Committee is required to determine and publish a list of state agencies or programs not later than March 1 of each year for which a performance audit will be conducted. It is authorized to enter into contracts with independent auditors as may be necessary to accomplish the intent of the Act.

The office of Accountability and Innovation is created as part of the Legislative Service Bureau and would be funded the first year to the tune of $1 million through surplus funds in that bureau.

Enactment of SB 1865 could well be one of the most significant acts of the 2008 legislature, and a giant leap toward a more efficient state government and a fiscally sound and economically defensible tax incentive policy.