Are Oklahoma taxpayer dollars being wasted on too many tax breaks for oil, gas companies?

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OKLAHOMA - Right now, every agency in our state is struggling with depleted resources from public education to corrections.

Some said the reason for our economic downtown is all because of the drop in the price of oil.

Others disagree.

The catastrophic budget crisis is all around us.

School districts are being forced to go to four-day weeks.

School programs are being eliminated.

Rural hospitals are closing.

Corrections officers are eligible for food stamps.

You can find experts on both sides of the aisle who blame the drastic cuts on plummeting crude oil prices.

“The recent declines most definitely are because we’ve seen almost a 70 percent drop in the price of oil,” said Oklahoma Council of Public Affairs President Jonathan Small.

But, others disagree.

“We’re suffering through a self-inflicted wound,” said David Walters.

Former governor and Harvard Business School graduate Walters said oil and gas prices are only a piece of the puzzle.

“The unfortunate decline in oil and gas rates has exacerbated this deficit, but it’s not responsible for the deficit. It’s responsible for 300 million, 400 million at most of a 1.3 billion dollar deficit,” Walters said.

The gross production tax is by far the biggest tax on oil and gas.

It goes directly to Oklahoma’s general revenue fund.

It’s about a quarter of the state’s budget.

In 2014, that was $664 million to the state.

In 2015, that was down to $541 million.

Our legislature gives tax credits to oil and gas companies who do business here.

It's a lot of money, even when oil prices are down.

According to figures from the Oklahoma Tax Commission, the oil and gas industry got over $600 million from the state last year between tax breaks and rebates.

“We’re at a point now where we are losing more from tax breaks than what we’re bringing in from the gross production tax. That scale has tipped,” said Oklahoma Policy Institute Executive Director David Blatt.

Two years ago, the legislature changed the way we tax oil and gas production.

Now, no matter what kind of well it is, it’s taxed at 2 percent the first three years then 7 percent after that.

That’s dramatically lower than other oil producing states, like North Dakota, where oil and gas is taxed at 10-11 percent.

“Those oil and gas riches are under our feet, it isn’t going anywhere and we should charge a fair price for pulling it out of the ground,” Walters said.

Those who want to keep oil and gas taxes low point to other industries also getting tax breaks from the state.

“If people are really concerned about some sort of subsidy, wind is actually the place to look for that, because it is actually a direct check that's being cut just for turbines spinning around in the wind,” Small said.

The Quality Jobs Act also provides $100 million to companies in various industries that provide jobs in Oklahoma.

Even the Oklahoma City Thunder gets millions from that.

“I think trying to do things to either raise taxes or change the current environment would just further hurt the most vulnerable who depend on those jobs that are still providing revenue in the state,” Small said.

Oil and gas subsidies aren’t going anywhere based on current budget proposals from Governor Fallin and Republican lawmakers, with the exception of one.

The Senate just passed a bill to eliminate a rebate for wells that don’t make a profit.

“Follow the money. You get a lot of contributions from the oil and gas community. Those companies come and ask for cuts and favors within state government and, as the numbers show, they’ve received a lot of what they’ve asked for,” Walters said.

The financial forecast is dire for Oklahoma.

State officials are projecting a budget shortfall for 2017 of $1.28 billion, just under the massive $1.3 billion shortfall this year.

“It’s an amazing giveaway we’ve gone through over the last 7, 8, 10 years of reducing our revenue, and something’s gotta give. Until we change that leadership, I don’t think we’re going to see much different policy,” Walters said.

The bill that passed the Senate to eliminate the rebate for at-risk wells is now headed to the House.

If passed, that rebate alone could save our state more than $100 million next year.

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