Straight off the press release. Note especially the “free and open to the public” part. Come cheer me on!

The University of Central Oklahoma Policy Institute will be host for a panel discussion – “Oklahoma’s budget crisis in the midst of recession: What policies should the state pursue to minimize the budget shortfalls?” – from 2 p.m. to 3 p.m. March 25 at UCO’s Nigh University Center.

Panelists will include state Sen. Clark Jolley, R-Edmond; state Rep. Ken Miller, R-Edmond; and David Blatt, director of the Oklahoma Policy Institute.

“Policymakers are facing budget challenges as a result of the current economy,” said Jeremy Oller, associate director of the UCO Policy Institute and assistant professor of economics at UCO’s College of Business Administration. “This presentation is intended to provide an open forum to discuss the current state of the Oklahoma budget, and to provide insight on the solutions that are or should be considered.”

The panel presentation is free and open to the public. The presentation is part of the 27th annual Southwest Business Symposium.

Even assuming that we are in the early stages of what will eventually be a robust economic recovery, Oklahoma’s budget crisis is not going to end anytime soon. Revenue collections this year and next are projected to come in 20 to 25 percent below their levels of FY ‘08, the year prior to the onset of the downturn. The Legislature has been able to use substantial amounts of non-recurring revenue from the federal stimulus bills and the state’s Rainy Day Fund to soften the shortfall and thus far avoid the catastrophic impact of budget cuts in the 20 – 25 percent range across the full range of state government.  However, next year’s cuts look to be substantially deeper than this year’s. After FY ‘11, most or all of the non-recurring revenues will likely be exhausted. As shown in the chart below, we project that  revenue collections are likely to remain 10 percent below those of FY ‘08 in FY ‘12, and may not return to pre-downturn levels until at least FY ‘13.

There are no easy or painless solutions to the problem of the budget hole that looms once federal stimulus funds have expired and the Rainy Day Fund is no longer available. One thing the Legislature can and should do, however, is not allow the hole to get needlessly bigger by allowing additional cuts to the top income tax rate to kick in automatically in FY ‘12.

Back in 2006, the Legislature voted to cut the state’s top individual income tax rate down from 6.25 percent to 5.5 percent over several years. It opted to further cut the top rate to 5.25 percent, but made that final cut contingent on General Revenue collections being projected to grow by at least 4 percent in the upcoming year compared to the current year. However, as soon as that trigger mechanism is enabled, the tax cut becomes permanent.  And more urgently, the trigger can be enabled any time revenues are projected to grow by at least 4 percent – even if projected growth would leave collections below previous levels.

In practice, revenues are likely to rebound in FY ‘12 but remain at only 85 percent or 90 percent of where they were four years prior.  Budget cuts are likely to remain in effect and perhaps get even more severe due to the loss of one-time revenues. But barring legislative action this session, the trigger lowering the top rate will go off automatically for Tax Year 2012. According to an analysis conducted for us by the Institute for Taxation and Economic Policy, the fiscal impact of reducing the top rate from 5.5 to 5.25 percent would be $112 million in lost revenue – nearly half of which, incidentally, would benefit taxpayers in the top 5 percent of households, those with annual income above $163,000.

Many of us will disagree over whether our top tax rate is too high or too low and whether it is better for the state’s economic prosperity to lower the income tax or invest more in education and infrastructure.  But at least over the course of the fiscal crisis, there has been a bipartisan consensus that while we are cutting budgets, eliminating programs, and laying off  teachers and state employees, tax cuts must take a back seat. If we can expect to continue to be facing large budget shortfalls past next year, shouldn’t our priority continue to be to attempt to restore funding for education, health care, social services and public safety to close to pre-downturn levels? Or should we be bound by a decision made by legislators years ago and let ourselves be dug over $100 million deeper into the budget hole?

From time to time, we use the OK Policy blog to post submissions we receive from Oklahomans who have interesting perspectives on important policy issues for the state. This entry is from Amy Santee, Senior Program Officer with George Kaiser Family Foundation in Tulsa. The opinions stated below are not necessarily the opinions of OK Policy, its staff, or its board. This blog is a venue to help promote the discussion of ideas from various points of view and we invite your comments and contributions. To see our guidelines for blog submissions, click here.

Currently, the State of Oklahoma incarcerates more women per capita than any other state in the nation, a rate of 134 per 100,000, compared to a national average of 69 per 100,000. Tulsa County incarcerates at an even higher rate, 169 women per 100,000.

This practice has a devastating impact on thousands of children around our state.  There are an estimated 4,500 minor children in Oklahoma with their mothers in prison.  These children are at greater risk of school failure, depression, drug and alcohol abuse. Without a successful intervention, they are likely to become the next generation of inmates at the Oklahoma Department of Corrections.  Incarcerating non-violent female offenders does not make economic sense, nor does it protect the public safety.  Is it not better public policy to provide these women with treatment and the tools to become better parents and productive citizens?

George Kaiser Family Foundation (GKFF) has made the issue of female incarceration a priority and has led efforts to make a systemic change to Oklahoma’s statistics.   GKFF has invested nearly two million dollars on diversion services, pre-release counseling and treatment, services to children of incarcerated parents and reentry services. In January, the Foundation helped sponsor the Summit on Incarcerated Women as part of the Complex Dialogues series at Oklahoma Christian University, which was an important step in raising public awareness of the need to promote alternatives to incarceration for non-violent female offenders.

GKFF’s principal funding has been in the investment of significant resources on model diversion services, as the Foundation believes that the true value is derived from rehabilitating these nonviolent offenders and reunifying families.  Recognizing the lack of viable alternatives to prison for women in Tulsa, GKFF, an organization committed to improving the lives of at risk young children, and Family & Children’s Services (F&CS), Tulsa’s premier family service and mental health provider, co-designed and implemented the Women in Recovery (WIR) pilot program in June 2009.

WIR, based on proven models, offers a cost-effective and holistic approach to diverting female offenders from incarceration in Tulsa County.  WIR has already served 33 nonviolent women offenders who together have 73 children. The Program is a true wraparound model, changing the way traditional services are delivered, allowing women the maximum potential to succeed by providing them the necessary tools to regain their independence financially and exit the judicial system.  Focusing primarily on substance abuse and mental health treatment, and providing safe housing and transportation from the beginning, each woman’s total needs are met.

In building on the success of Women in Recovery, HB2998 proposed this session by Rep. Kris Steele of Shawnee represents landmark legislation.  The bill would establish pilot programs, consisting of private donations and state funds, “to provide diversion programs to reduce the high rate of female incarceration and to provide reentry services that both employ evidence-based practices and techniques.”

George Kaiser Family Foundation proposes including a $500,000 cash match to the state funds.  Thus, $1 million will be appropriated to the implementation of a state pilot diversion program and a reentry program.  Half of these funds will supplement the work currently being undertaken by Women In Recovery to reduce female incarceration, while the other half will go to the implementation of a reentry programs that will provide support services, employment opportunities and other needed resources for female offenders and their children.

The need for change in Oklahoma’s criminal justice system is critical, and the total approach represented by this bill is impressive.  HB 2998 passed the full House in February by a unanimous bipartisan vote of 92-0. The bill would still need to pass the full Senate and be signed by the Governor to become law. However, these early successes provide real hopeful signs that the tide is beginning to turn and the issue of female incarceration is beginning to change.

If, as Judge Louis Brandeis famously stated, “Sunshine is the best disinfectant”, the Oklahoma Legislature seems to be on a bit of a cleaning frenzy. Several bills making their way through the legislative process this session HB 3422, SB 1633 and HB 3253 – would expand the amount of information on public expenditures that is made available online to the public.

The measures all build on the 2007 Taxpayer Transparency Act, authored by Sen. Randy Brogdon, which led to the state’s OpenBooks website. The site makes available data on expenditures by each state agency by year and purpose, including detailed payroll and vendor information. OpenBooks also provides information on individuals and businesses who claimed tax credits against the income tax (see our post on this subject).

» continue reading Piling on the Sunshine: New measures would make more spending information publicly available

As revenues have come in significantly below estimates this year, funding to state agencies was cut 5 percent a month from August to November and 10 percent each month since (see our updated fact sheet). OK Policy’s intern Matt Gardner has been tracking media reports of the ways that cuts in state funding over the course of the downturn. He provides this report of some of what’s transpired in recent months.

Budget cuts in recent months appear to have affected Oklahomans from all walks of life. Many agencies have been forced to cut jobs, offer bailouts, or implement furlough days, but cuts have required agencies to go further and eliminate services altogether.

Some examples:

• The Bill Willis Community Mental Health Center faces more cuts, despite having eliminated its 20-bed men’s substance abuse program. That was to save $1.2 million. Now, the center has been asked to trim $300,000 more. According to Executive Director Margaret Bradford, “without this type of treatment you’re going to see more and more people end up in the criminal justice system,” costing the state more money than the treatment.

  » continue reading Hurting all over: A survey of some recent state and local budget cuts

With Oklahoma facing a gaping budget hole for the upcoming fiscal year of anywhere from $850 million to $1.6 billion,  depending on one’s calculations, the search for new revenues to fill the gap and avoid devastating cuts to services has assumed real urgency. The Governor in his FY ‘11 Executive budget proposed a long laundry list of revenue enhancing proposals that were estimated to generate over $700 million in additional revenue for FY ‘11. His proposals ranged from appropriating unused balances in agency revolving funds and issuing bonds to raising fees, eliminating tax credits, and collecting taxes on online purchases.

But what about SQ 640? Few discussions of revenue options in Oklahoma get very far before being met with: “But what about SQ 640″?. Last week, for example, House Democrats tried unsuccessfully to argue that a bill containing a fee increase should be ruled out of order due to SQ 640. But while the specter of SQ 640 casts a giant shadow over policy discussions, its actual scope is not always well understood.

» continue reading Of tax increases, revenue bills, SQ 640… and ducks

From time to time, we use the OK Policy blog to post submissions we receive from Oklahomans who have interesting perspectives on important policy issues for the state. This entry is from Tom Daxon, an Oklahoma City CPA who served as State Finance Director from 1995 – 2001 under Governor Frank Keating and is a noted conservative voice in Oklahoma. The opinions stated below are not necessarily the opinions of OK Policy, its staff, or its board. This blog is a venue to help promote the discussion of ideas from various points of view and we invite your comments and contributions. To see our guidelines for blog submissions, click here.

State government spends too much money.  It should spend less.  However, even this strong conservative realizes some government is necessary and further, we should pay for it currently.  As former Chief Justice Oliver Wendell Holmes observed, “Taxes are what we pay for a civilized society.”

Good tax policy dictates that when we tax, we should impose the tax on the largest possible base to keep the rate to a minimum.  Unfortunately, all the tax credits, exclusions and preferences that riddle Oklahoma’s tax code have led some to note that our tax code resembles Swiss cheese.

Perhaps we should consider a “TRACC” – tax realignment and credit commission – modeled after BRACC that successfully closed unneeded military bases at the federal level.  TRACC would be a bipartisan committee including both House and Senate members with participation from the Governor’s office.  TRACC would prepare a list of tax expenditures for elimination.  The legislature would then consider the list in a straight up or down vote, without amendment.

» continue reading Guest blog (Tom Daxon): Putting tax expenditures on the right TRACC

The latest state revenue collections announced today provided mixed news:

State revenue collections in February exceeded the official estimate for the first time since December 2008, but fell short of prior year collections for the same month, State Treasurer Scott Meacham announced today.

Preliminary reports show General Revenue Fund collections in February are $220.6 million. That amount is:

• $17.3 million, or 7.3 percent below the prior year; but,
• $0.8 million, or 0.4 percent above the estimate.

February collections were buttressed by $25 million in gross production taxes on oil that were allocated to the General Revenue Fund and by stronger-than-expected income tax collections. After tax refunds, the state took in net income tax collections of $10.7 million in February, whereas the official estimate was for a net loss of $9.1 million in income tax payouts.

» continue reading Ambidextrous revenue report: One the one hand…on the other hand…