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All articles by David Blatt

Understanding Oklahoma’s new tax rates on oil and gas production

by | June 30th, 2015 | Posted in Blog, Taxes | Comments (0)

With the start of the new fiscal year tomorrow (July 1), many new laws are set to take effect. Perhaps the most consequential new law is one passed last session, HB 2562, which extended and made permanent tax breaks for the state’s oil and gas producers.

Under current law, the standard tax on gross production is 7 percent. However, over the years the Legislature has enacted a series of exemptions that lower the tax rate for various forms of production, including enhanced recovery projects, inactive wells, new discovery wells, and 3-dimensional seismic shoots. The most significant of these exemptions is for horizontally-drilled wells, which are taxed at just 1 percent for the first 48 months of production. As the lion’s share of new oil and gas drilling in Oklahoma has shifted from vertical to horizontal production over the past decade, the cost of the horizontal tax break has ballooned to $282 million in FY 2014 from just $2 million in FY 2004. The cost in FY 2015 was projected at $379 million by the Tax Commission in December.

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Our new Director of Operations and Development

by | June 29th, 2015 | Posted in Blog, OK Policy | Comments (0)

Shiloh KantzOklahoma Policy Institute is very pleased to announce that Shiloh Kantz has been promoted to the position of Director of Operations and Development effective June 1, 2015.

In the newly-created position, Kantz’s responsibilities include financial management, fundraising and development, event coordination, strategic initiatives, and human resources. She is also coordinating the Summer Policy Institute, an annual program that brings 60 students from across the state to Tulsa in August for a four-day training in state policy issues.

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Taking a little off the top

by | June 24th, 2015 | Posted in Budget | Comments (0)

This past session, as Oklahoma grappled with a $611 million budget shortfall, a lot was heard about off-the-top apportionments, or tax revenues that are allocated directly to various funds without legislative appropriation. In this year’s State of the State address, Gov. Fallin contended that the reason Oklahoma currently faces substantial budget challenges “is because the General Revenue Fund… is growing smaller. It is shrinking, both in dollars and as a percentage of overall collections, due to the increasing cost of mandatory off-the-top apportionments.”

As state leaders worked to bridge the budget gap, they considered various proposals to curb off-the-top allocations. Ultimately, only modest changes were adopted directing more revenue to the General Revenue Fund, and it remains unlikely that shuffling more money around can ever by itself fix Oklahoma’s chronic budget problems.

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Budget challenge asks, “What part of ‘nothing but appropriations’ do you not understand?”

by | June 15th, 2015 | Posted in Blog, Budget | Comments (1)

Jerry Fent

Jerry Fent

Early in May, former State Representative Mike Reynolds, represented by Oklahoma City attorneys Jerry Fent and Ted Pool, filed a lawsuit against Governor Mary Fallin and other officeholders on behalf of the taxpayers of Oklahoma. The suit challenges how the state carries out one of its primary budget responsibilities – the writing of the annual General Appropriations (GA) bill that provides over $7 billion in annual funding to some 70 state agencies.The lawsuit called on the District Court to strike down the GA bills from the last three years. Its timing was also clearly intended to warn  lawmakers then developing the FY 2016 budget to change their ways or risk having this budget overturned – a warning that went largely unheeded.

continue reading Budget challenge asks, “What part of ‘nothing but appropriations’ do you not understand?”

Flat funding still means cuts for Oklahoma’s core services

by | June 9th, 2015 | Posted in Blog, Budget, Education, Healthcare | Comments (0)

In crafting a budget in the face of a large drop in available revenue, lawmakers this year made a sincere effort to minimize cuts to key agencies in the areas of education, health, and safety. Whereas most agencies took cuts of 0.25 to 7 percent, the Department of Education received flat funding, and the Oklahoma Health Care Authority, Department of Corrections, Department of Human Services and Department of Mental Health and Substance Abuse Services received modest funding increases.

Yet even these agencies weren’t funded enough to keep up existing services when faced with growing caseloads and enrollment, rising costs, reduced funding from other sources, and other factors. As a result, most will need to make cuts to next year’s budget.

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An easier target

by | June 1st, 2015 | Posted in Blog, Taxes | Comments (1)

Wind farm near Weatherford, OK. Photo by Travel Aficionado used under a Creative Commons license.

Wind farm near Weatherford, OK. Photo by Travel Aficionado used under a Creative Commons license.

An earlier version of this post appeared as a column in the Journal Record.

One day when I was in junior high, some friends and I came across a schoolyard fight between two of our classmates. A number of children were taunting one of the combatants, Bobby, and I must confess that I joined in the name-calling. After losing the scrap, an incensed Bobby looked around at those who’d been mocking him from the sidelines. Though not blameless, I had not been the loudest taunter in the crowd, or the cruelest – but I was one of the smallest. Bobby came charging over and socked me hard.

I was reminded of this incident by the Legislature’s actions this session regarding  tax breaks for the wind-power industry.

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Former Bellmon top advisor, non-profit director join OK Policy board

Oklahoma Policy Institute is pleased to announce that Andrew Tevington, who served for many years as a top advisor to Governor Henry Bellmon, and Felicia Collins Correia, whose experience includes over 25 years as CEO of major non-profit organizations in Tulsa, have been elected to its Board of Directors.

“We are delighted to add two widely-admired and respected individuals who have made outstanding contributions to our state through their professional careers and community service,” said Vince LoVoi, OK Policy’s Board Chair. “Felicia and Andrew will add to our tradition of building a strong, nonpartisan board that is thoughtful, far-sighted, policy-focused, and comprised of individuals who bring a wide range of personal and professional experiences to the table.”

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The state budget deficit is not just oil prices

by | May 12th, 2015 | Posted in Blog, Budget, Budget & Tax Basics, Taxes | Comments (4)

Oklahoma lawmakers are now struggling to write a budget with $611 million less revenue available than what was appropriated last year. It’s easy to blame falling energy prices and accompanying job losses for the shortfall – until we recall that last year, when oil prices were over $100 a barrel and the state was enjoying stronger economic growth than the national average, we still faced a $188 million shortfall. In order to balance last year’s budget and provide some modest funding increases for education and a few other agencies, the Legislature used up over $400 million in one-time revenues from cash reserves and agency revolving funds, and imposed 5 percent cuts on most agencies.

The reality in recent times is, in good times as well as bad, Oklahoma can’t balance its budget. Our state tax system is no longer generating the revenue needed to pay for basic public services. There are numerous indicators of a chronic and deepening budget gap, also known as a structural budget deficit:

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No, halting the tax cut doesn’t need a supermajority

by | May 7th, 2015 | Posted in Blog, Taxes | Comments (0)


Oklahoma Supreme Court

Unless the Legislature acts to halt it, the state’s top income tax rate will fall from 5.25 to 5 percent next January based on legislation passed last session, SB 1246,  that tied the top rate cut to a revenue trigger. Even though the trigger was supposed to ensure that the tax cut would not take effect unless revenues were growing, the trigger was drafted in such a way as to kick in despite falling oil prices and projected revenue drops.

The tax cut contributes $57 million to the state’s $611 million budget shortfall for the upcoming fiscal year and $147 million in 2017, while providing just $31 in savings for the average household. A majority of Oklahomans oppose moving ahead with the tax cut given the state’s budget situation, and close to 100 businesses, foundations, and organizations have joined a call for the tax cut to be halted.

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House bill threatens Oklahoma’s Promise

by | April 27th, 2015 | Posted in Blog, Education | Comments (3)

In today’s economy, a college education is more important for finding a good job and earning a decent income. Yet for children of low- and moderate-income families, the cost of higher education can be a substantial barrier to enrolling in and completing college. Over the past two decades, the Oklahoma’s Promise financial aid program has been the key for thousands of students to get a college degree – but legislation being considered this session could put the program out of reach for many students.

Oklahoma’s Promise, also known as the Oklahoma Higher Learning Access Program, or OHLAP, is an early commitment financial aid program that covers tuition for students with family income below $50,000 at the time of application. Students must apply prior to the start of the 11th grade and complete a series of requirements before graduating from high school. Once enrolled in college, students must maintain a minimum GPA and follow behavioral guidelines.

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