In 2004, Oklahoma voters approved a series of measures intended to raise new revenues for education and health care through a state lottery (SQ 705 and 706), gaming compacts (SQ 712), and increased tobacco taxes (SQ 713).  OK Policy has now released a set of newly updated fact sheets that explains how these revenue sources operate and sets out out how much revenue each generates and where the dollars are allocated. You can access all three 1-page fact sheets as a single document, or you can download the PDF separately for the lottery, gaming and tobacco.

We found that during the most recently completed budget year, FY ‘10, Oklahoma collected $335.4 million from these three revenue sources. This is an increase of $12.2 million, or 3.8 percent, from FY ‘09, reflecting a clear slowdown in revenue growth from these sources compared to prior years. Some key findings:

• Gaming revenues continued to grow in FY ‘10, reaching $132.1 million, an increase of $13.1 million, or 11 percent from FY ‘09. Of total gaming revenues, 89.5 percent ($118.2 million) came from tribal gaming and 10.5 percent (13.9 percent) from gaming terminals at racetracks that were also authorized by SQ 712.  However, the growth in tribal gaming revenues slowed noticeably in FY ‘10, which likely reflected both the weak economy (nationally, total casino gaming revenues and tribal gaming revenues fell in 2009) and the state gaming market approaching saturation;
• Tobacco revenues declined slightly in FY ‘10, falling by 2 percent to $133.3 million. Of total revenues from the new tobacco taxes approved in 2008, $102.6 million was collected by non-tribal retailers and $30.7 million by tribal retailers. Tobacco sales have actually fallen quite sharply the past two years, from 313.8 million packs in FY ‘08 to 262.8 million in FY ‘10. Revenues have managed to hold steady due to the success of various measures aimed at curtailing the purchase and resale of cigarettes taxed under a tribal “exception rate” of just 5.75 cents per pack. Instead, most tribal tobacco sales are now taxed at a rate of 85.75 cents or 57.5 cents per pack, compared to the rate of $1.03 per pack for sales by non-native retailers. (See our discussion of this issue in this blog post from last fall);
• Net proceeds from lottery sales were $70.0 million in FY ‘10, an increase of less than $1 million from FY ‘09. Since 2005, lottery sales have remained remarkably consistent, coming in every year between $69 million and $72 million, regardless of the ups and downs of the economy, the addition of new lottery games, and growing competition from casinos and the new state lottery in Arkansas.

Overall, the promise of these revenue streams to provide additional revenues to help fund education and health care seems to have been fulfilled. However, as we stressed in this paper in 2008, while the new revenues generated by these so-called “sin taxes” have boosted funding for education and health care, these gains have been more than offset by the revenue impact of cuts to the personal income tax approved by the Legislature in the mid- and late-2000s. This trade-off of increased “sin taxes” for cuts to the income tax has placed more of the responsibility of paying for public services on the shoulders of lower-income taxpayers. And as we reach the point where revenue growth from the new revenue streams is slowing, and may soon even begin to decline, this is yet another factor contributing to the fiscal gap between the cost of services we are committed to supporting and the revenues we generate to pay for them.

John Thompson is an Oklahoma City teacher with 18 years of urban high school experience and an education blogger at thisweekineducation.com. He contributes regularly to our blog on education issues.

In 2000, when serving on the Steering Committee for MAPS for KIDS, I grinned as arch-conservative Leland Gourley demanded a “warranty” that Oklahoma City Public School students would be reading at grade level by 3^rd grade. Little did I know that cognitive and social science research would soon show that Gourley had identified the key to closing the achievement gap.

I recalled Gourley’s prescience recently when the liberal Schott Foundation for Public Education announced that New Jersey has the nation’s highest graduation rate for Black males. In contrast to the national rate of 47 percent, or Oklahoma with a rate of 52 percent, in New Jersey 69 percent of  Black males graduate from high school. The Schott Foundation also reported 4^th grade NAEP Reading test results showing 66 percent of Oklahoma Black males score Below Basic, as do 58 percent of Black Males nationally. In New Jersey, 45 percent of Black males score Below Basic, 40 percent score Basic, and 15 percent score Proficient or Advanced.  Better still, in contrast with the normative trend where Black NAEP scores drop by the 8th grade, there was no fall-off in New Jersey.  This is crucial because social scientists have long used New Jersey as evidence that the best way to help poor children is to invest whatever is necessary so that elementary children read for comprehension.

» continue reading John Thompson: Liberals and conservatives agree, early reading comprehension is the key

The recent history of state appropriations, displayed here from our FY ‘11 Budget Highlights fact sheet, shows a  series of successive ups and downs:

We see that the state appropriated budget for the current year, FY ‘11, is 5.8 percent less than two years ago and slightly less than the budget in FY ‘07.  With revenue collections having plummeted by more than 20 percent compared to pre-downturn levels, only the  adoption of various revenue enhancements and the injection of almost $2 billion in non-recurring revenues from the federal stimulus bill, Rainy Day Fund and other sources have averted more drastic cuts to agency budgets. Still, over half of all appropriated state agencies will have absorbed funding cuts of at least 15 percent, and across state government, shortfalls have forced agencies to eliminate programs and services, reduce hours of operation to the public, cut payments to private providers, and lay off or furlough employees (our online budget presentation runs through the full story).

Some have drawn a different conclusion from these numbers.  If you look at the period prior to the downturn, you see a substantial increase in the state budget – about $1.9 billion in growth between FY ‘04 and FY ‘08. Doesn’t that suggest that state government grew too big, and that the current period represents more of a healthy correction that a crisis? In addition, even with the cuts of the last two years, state appropriations remain 8 percent higher than they were in FY ‘06.  If the state could operate with a $6.2 billion budget six years ago, surely it should be able to manage with a $6.7 billion budget in FY ‘11?

» continue reading Crisis or correction? Exploring the sharp swings in state spending

Earlier this year, we called attention to one of the stranger loopholes in the Oklahoma tax code, the case of the “double deduction” of state income taxes.  Federal tax law allows taxpayers who itemize their deductions to claim a deduction for state income tax, along with such expenses as home mortgage interest payments, charitable contributions, local property taxes and extraordinary medical expenses. While Oklahoma is among 31 states that allow taxpayers to itemize their deductions on their state income tax return as well, only in Oklahoma and five other states are taxpayers allowed to claim a deduction for state income taxes on their state tax return. In the context of the state’s huge revenue shortfalls and painful budget cuts, we urged the Legislature to follow New Mexico’s lead in taking action to disallow this deduction, which, according to estimates provided us by the Institute on Taxation and Economic Policy (ITEP), would generate $118 million in additional revenue. Since only a minority of mostly wealthier taxpayers itemize their deduction, eliminating the deduction for state income taxes would also help address the inequities of our tax system, where low- and middle-income Oklahomans pay more of  their income in state and local taxes than do the wealthy. This proposal generated some interest but did not make its way into the final FY ‘11 budget agreement.

ITEP is now out with a new report that provides a critical look at the subject of itemized deductions more broadly. Their basic argument is that itemized deductions  are an extremely regressive component of tax systems:

Itemized deductions impact tax fairness: low-income families receive virtually no benefit from these deductions, and the biggest benefits are reserved for the upper-income families who arguably need them the least

» continue reading Limiting itemized deductions would improve the fairness and adequacy of the state income tax

Ryan Kiesel, the author of this guest blog, has served as State Representative from District 28 since 2004 and is not seeking reelection.  Ryan is the leader of the Oklahoma Lawyer Chapter of the American Constitution Society.

This November, Oklahoma voters will decide State Question 756, determining whether Oklahoma will participate in what is likely to be a futile attempt to block the recently approved federal health care reform.  In 2014, as part of the health care reforms contained in the Affordable Care Act, “most individuals who can afford it will be required to obtain basic health insurance coverage or pay a fee to help offset the costs of caring for uninsured Americans“.  Individuals and families that fall below certain income levels would be exempt from the mandate and tax penalty.  Opponents of the Affordable Care Act argue the federal government does not have the authority to mandate coverage.  However, this argument runs counter to over a century of Constitutional precedent, and a challenge to the law would only precipitate lengthy, frivolous, and costly litigation that Oklahoma would ultimately lose.

The author of the measure that placed SQ 756 on the ballot said “this measure will hopefully bring about a court case that we need to have.”  Perhaps if the legal questions at issue were unsettled, litigation would be necessary to establish a clear interpretation of Congress’ authority to act and the ability of states to nullify or opt out of federal law.  But that is not the case.  While the politics of health care reform are still evolving, the legal issues raised by health care reform have long been settled, and barring a sweeping dismissal of precedent by an activist court, we already know the outcome of state-based challenges.

» continue reading Guest blog (Ryan Kiesel): SQ 756 – Voters to decide fate of health care reform. But not really

Okay, we’ll give this another shot.

We’re not OPI (although we like the ‘dedicated to excellence’ part):

A family-owned company committed to the highest quality products and to our customers’ well-being, OPI has long been a leader in the community and within the Professional Beauty Industry. Quite simply, we are dedicated to excellence.

We’re not Opie

Not us either:

Definitely not us:

Us: 

The Oklahoma Asset Building Coalition is hosting a series of regional meetings on asset building strategies for increasing the financial security of families and communities throughout Oklahoma. Anyone working in the private sector, public sector or a non-profit with an interest in how building assets can expand and strengthen economic security is invited to attend these meetings that will be held from 10:00 AM to 2:00 pm, with lunch provided, on the following days:

• Broken Arrow, August 31st;
• Durant, Sept. 14th;
• Oklahoma City, Sept. 28th;
• Lawton, Sept. 29th;
• Woodward, Sept. 30th

  » continue reading Regional meetings to look at assets and economic security

This is the fourth in an ongoing series of posts looking at the impact of the new federal health care reform law on Oklahoma and Oklahomans. Our previous posts have explored the “cliff effect” , the  impact on state budgets and the Temporary High Risk Pool. For full information on health care reform, the Henry J. Kaiser Family Foundation website is excellent. If you have thoughts on health care reform, we encourage you to contribute a comment or a guest blog.

Most people who have been following the Affordable Care Act, the new health care law passed earlier this year, know that the law will strengthen the individual market for health insurance coverage, by offering subsidized coverage on the new health insurance exchanges, and expand access to public coverage for low-income families through Medicaid. What is less well known and understand is that the Affordable Care Act also includes several important mechanisms for strengthening the beleagured employer-based system of health insurance coverage, especially for small businesses that currently face the greatest challenges in offering coverage to their workers and where the rates of the uninsured are currently the highest.

A recent report from Families USA looks at one of the most important provisions of the new law, tax credits for small businesses that will provide significant help with the cost of coverage. Beginning this year, businesses with fewer than 25 workers and average wages of less than $50,000 will be eligible to receive a tax credit for the health insurance premiums they provide to their employees.  The smallest firms with the lowest wages will be eligible for the maximum credit, which is 35 percent of the cost of coverage, or 25 percent for non-profits. The credit will phase down for businesses with more employees and higher average wages. Businesses that are already offering coverage, as well as those opting to cover the workers for the first time, will be eligible for the credits. After 2014, when the new health insurance exchanges will be operating, credits will increase to 50 percent of the cost of coverage, or 35 percent for non-profits.

» continue reading Health care reform (4): Tax credits for small business