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Oklahoma Senate Panel OKs $25M in Cuts to Tax Credits

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Associated Press

OKLAHOMA CITY -- A Senate budget panel voted Tuesday to suspend more than $25 million in income tax credits as lawmakers search for ways to plug an estimated $1.2 billion hole in the state budget.

The bill approved by the Senate General Conference Committee on Appropriations targets 30 separate tax credits, including certain job creating investments that cost the state an estimated $14.2 million annually.

Three separate tax credits for aerospace employers total more than $3.5 million. Other tax credits were for the purchase and production of coal, investments in agricultural processing facilities and the construction of energy-efficient homes.

Rather than eliminate the tax credits entirely, the bill proposes a moratorium from July 2010 through June 2012.

The proposal still must pass a similar House committee before it can proceed to the floor of the House and Senate for a vote.

"All I'm looking for is to close that (budget) hole we've got, and a lot of legislators are going to have to vote on something they really don't want to," said Senate Appropriations Chairman Mike Johnson, R-Kingfisher. "I've said all along it's a year where everyone is going to have to share in the pain if we're going to get this deal done."

An official with an association of businesses and industries in Oklahoma said he was disappointed lawmakers voted to take away tax credits that ultimately lead to the creation of new jobs in the state.

"This is the worst time in the world to do that," said Ron Cupp, senior vice president of government affairs for The State Chamber. "You're killing, or at least wounding, the goose that laid the golden egg."

Democratic Gov. Brad Henry is negotiating a budget deal with Republican leaders in the House and Senate in secret meetings. Lawmakers need three days to approve a budget, and the legislative session is scheduled to end May 28.

Senate Democrats withheld support for the GOP-sponsored tax credits bill because they don't know how the revenue fits into an overall budget agreement, said Senate Democratic leader Charles Laster, D-Shawnee.

"They're asking us to give them support on pieces of the budget deal, and we have to see the entire agreement before we know if we'll be for it," Laster said.

Democrats in the House and Senate have vowed to oppose any budget deal that does not include funding for senior nutrition and rural programs, a new hospital provider fee and an assessment on insurance claims.

Laster sent a letter Tuesday to Henry, House Speaker Chris Benge, R-Tulsa, and Senate President Pro Tem Glenn Coffee, R-Oklahoma City, reiterating the pledge to reject a plan without those four items.

Democrats only have enough votes in the GOP-controlled House and Senate to reject the emergency clause on a bill, which only would delay revenue-raising measures for 90 days. But Laster said only two Republican senators would have to oppose a general appropriations bill to keep the measure from passing.

Johnson said he's confident 25 Republican senators will support any budget plan that distributes cuts evenly across state agencies.

"As long as it looks like a fair approach to solve that problem, I think it will receive approval," Johnson said.

A sticking point in the negotiations appears to be the level of cuts to education. The governor has made protecting spending on schools a top priority, while some Republicans counter such a move could lead to devastating cuts to other agencies.

"I've said all along that education has to take their fair share of cuts," Johnson said. "You can't exempt one segment that has over 50 percent of the budget and not decimate other agencies."

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