Weekly Capitol Wrap

House Votes to Phase Out Venture Capital Tax Credits

            House lawmakers voted this week to phase out the issuance of tax credits through programs associated with the Oklahoma Capital Investment Board. The board was launched roughly two decades ago when Oklahoma was still reeling from the impact of the oil bust.

            Created to facilitate venture capital for start-up companies in Oklahoma, the fund has millions in tax credits at its disposal to aid in that mission. The tax credits are used as collateral to support both bank loans and investments in certain venture capital partnerships. Today, approximately $30 million in tax credits have been sold because of losses.

            However, last year the Task Force on State Tax Credits and Economic Incentives determined that tax credits were used to support activity occurring largely outside Oklahoma, even though the OCIB was created to bring jobs to Oklahoma.

            During the task force meetings last year, the OCIB was not able to show “who, what, where, when and why” when asked those basic questions about its investment and results.

            As a result, House lawmakers have approved Senate Bill 1159, which would gradually phase out the OCIB tax credit programs in an orderly fashion.

            Under the bill, entities that obtained tax credits from the OCIB venture capital by contract prior to 1996 would be allowed to fully utilize those credits.

            Moving ahead, the bill prohibits the Oklahoma Capital Investment Board from entering into or modifying any contract authorizing or requiring the investment of any funds in a general partnership, limited partnership, corporation, limited liability company, private equity or hedge fund or any other lawfully recognized business entity. 

            After all required debt has been repaid, any profit payments to the board in the future will be deposited in the state’s General Revenue Fund under Senate Bill 1159.

            The reason for the long-term phase-out of the program is to allow business entities that received tax credits under good-faith efforts in the past to use those credits as promised. The legislation is designed to reduce the likelihood of the credits being sold in a greater amount than originally designed, which could occur if the program was ended immediately. Instead, it is hoped that the venture capital program will come to an end while minimizing the state’s revenue loss and ensuring that tax credit purchasers are protected based on contracts executed in the early 1990s.

            The legislation will steadily reduce the state’s exposure through the program by preventing the issuance of new credits as the old ones are expended or expire.

            Senate Bill 1159 passed the Oklahoma House of Representatives on a 67-27 vote. The bill now returns to the state Senate for consideration.

House Approves Reform of Insure Oklahoma

Members of the Oklahoma House of Representatives have approved a bill directing the Oklahoma Health Care Authority to create a sliding scale for the state’s premium assistance program (Insure Oklahoma). Under the legislation, premium assistance provided to employees will decline as their salaries increase.

Insure Oklahoma is funded by dedicated revenue received from Tobacco Tax along with matching Federal Medicaid dollars.  The program provides those funds as a match to small employer contributions for health insurance, making coverage an option at many businesses that would otherwise struggle to afford employee coverage.

By requiring more buy-in from employees as their salaries increase, the legislation will free up money to help other low-income workers who might otherwise not be able to afford insurance while making too much to qualify for Medicaid.

Senate Bill 1397 passed the Oklahoma House of Representatives on an 82-0 vote and is now expected to go to a conference committee.

House Votes to Reform Pet Breeder Regulation

House lawmakers have voted to approve legislation abolishing the Oklahoma State Board of Commercial Pet Breeders.

Senate Bill 1919 would put the state Department of Agriculture in charge of regulating dog kennels, transferring that power from the Board of Commercial Pet Breeders, which would be eliminated.

The current system of regulation had become wildly controversial because the Pet Breeder Board imposed rules more stringent than federal regulations and threatened many businesses with significant fines and closure.

Senate Bill 1919 passed the Oklahoma House of Representatives on an 86-1 vote. The bill now returns to the state Senate.

House Approves Personhood Resolution

A resolution approved by the Oklahoma House of Representatives declares that a fetus or embryo is a person and that all people are created free and have inalienable rights.

            House Resolution 1054 declares that a person means a human being at all stages of human development of life, including the state of fertilization or conception, regardless of age, health, level of functioning or condition of dependency. It also declares that all persons are created free and have inalienable rights.

            Although the resolution does not have the force of law, it declares the official position of the House. The bill’s author said the resolution does make a statement to speak for those who cannot speak for themselves.

            House Resolution 1054 was approved by a vote of 74-13.

Governor Signs Privacy Bill

Legislation that makes information on the deferred deposit lenders’ database confidential and exempt from open record requests has been signed into law by Governor Mary Fallin.

            Senate Bill 1082 states that information contained in the deferred deposit lenders’ database shall be confidential and exempt from disclosure under the Oklahoma Open Records Act.

            Under the legislation, the database may still be accessed by deferred deposit lenders to verify whether a transaction is outstanding for a particular person and by the Department of Consumer Credit for regulatory purposes.

Human trafficking bill signed into law

A measure to better protect youth from human trafficking was signed into law this week.  House Bill 2518 strengthens Oklahoma’s human trafficking laws in the hopes of deterring the industry in the state.

Unfortunately, Oklahoma’s location along the I-40 and I-35 corridor makes it a prime location for trafficking people from Mexico and Texas port cities.

Officials with U.S. Immigration and Customs Enforcement say that human trafficking is one of the fastest growing crimes in the country.  It is estimated that over 300,000 young girls in the U.S. are enslaved in human trafficking each year and that number is expected to increase in the future.  

            House Bill 2518 modifies the definition of “human trafficking for commercial sex” to include the recruiting, enticing, harboring, maintaining, transporting, providing, purchasing or obtaining, by any means, a minor for purposes of engaging the minor in a commercial sex act. 

            Currently, under Oklahoma law if a minor consents to a sex trafficking recruiter then that recruiter is provided some legal protection.  Under HB 2518, consent of a minor cannot be used as a defense in court. 

            Furthermore, under current law sex traffickers can only be penalized if they recruit through fraud, deception or coercion.  Under the new law, anyone found recruiting for sex trafficking, regardless of how they do it, will be penalized.

            House Bill 2518 goes into effect November 1, 2012.

Bill to Encourage Charitable Clinics Signed into Law

Legislation signed into law would encourage greater access to health care in the form of charitable clinics.

            House Bill 2521 redefines a free clinic as a charitable clinic and limits liability for volunteer physicians and other health care providers working at the clinic. The legislation defines a charitable clinic as a nonprofit entity organized for the purpose of providing health care services at no charge or for a minimal fee.

Bill to Sell Unneeded State Properties Signed into Law

Legislation recently signed into law authorizes the sale of unneeded state properties and directs that the money generated be used to maintain other buildings.

            House Bill 2262 creates a Maintenance of State Buildings Revolving Fund, which will receive the revenue generated by proceeds from the sale of state-owned land and buildings. Money in the fund would then be used to maintain and repair other state properties and buildings.

            In addition, the bill requires that the state’s Long Range Capital Plan include an index ranking state buildings based on maintenance needs. Money in the Maintenance of State Buildings Revolving Fund would be allocated to projects based on those with greatest need.

            House Bill 2262 builds on the Oklahoma State Government Asset Reduction and Cost Savings Program, a measure enacted last year. That legislation required the Director of the Department of Central Services to identify 5 percent of the most underutilized state-owned properties on a yearly basis with an eye toward liquidating them.

            There are thousands of state-owned properties, according to recent estimates.