What’s up this week at Oklahoma Policy Institute? The Weekly Wonk is dedicated to this week’s events, publications, and blog posts.

While tax day is still over a month away, the state tax structure got some serious attention this week from OK Policy.  Gene Perry made the case for sales tax reform in an Okahoman op-ed this weekend, citing a new issue brief that the sales tax doesn’t raise enough revenue to fund core public services and fails to evenly distribute the costs of governing.  The state income tax is set to be slashed again in January 2012; our new fact sheet, Cutting Oklahoma’s top income tax rate: Who benefits?, reports that the bulk of the cut goes to the top 1 percent, while forty-three percent of Oklahomans receive no tax cut at all.  Unless the legislature acts, the cut will reduce available revenues for FY’12 by $38 million, and when fully phased-in, by $120 million.  OK Policy’s perspective was also included in a Tulsa world editorial chastising state leadership for a top rate tax cut in a time of budget distress.

State spending as a share of the overall economy will reach a 30-year low in 2011, according to a fact sheet released on Wednesday.  While many in the state have cautioned that government shouldn’t be allowed to grow faster than the economy, the data reveals that the exact opposite is occurring, as 2011 marks the lowest percentage of state appropriated spending as a share of personal earnings in thirty years.  In fact, we may have reached a point where we are not making the investments in the core public services that support Oklahoma families, businesses, and communities.  An editorial in the Oklahoman on Thursday contends, “Not everyone will find this as alarming as does Blatt, but his point is well taken.” Read the rest of this entry »

Last March, we ran a blog post we titled “Kill the drill” commenting on a front-page  New York Times story on the  steep drop in drilling activity that accompanied plunging oil prices and gas prices in early 2009. The Times declared that, “The great American drilling boom is over,” and concluded that with prices plummeting, “the result for companies is that it is becoming unprofitable to drill.” The Times quoted Oklahoma’s Devon Energy as Exhibit A of the drilling hangover era:

“The big bonanza is over,” said Jay Ewing, the completion and construction manager for Devon Energy in the Barnett Shale field here, where so far this year his company has brought its rig count from 35 to 8. “Everyone is really shocked how fast everything has turned.”

Energy experts and company executives warn that oil and gas companies now cutting back on investments will be unable to respond quickly to a future economic recovery. John Richels, Devon’s president, said that if the slump lasted two years, it could then take 18 to 24 months for companies to reassemble rig crews.

We reproduced the Times’ chart showing “a precipitous decline in oil and gas drilling”: Read the rest of this entry »

All hail the interns

Over the course of the last several months, the Spring semester. OK Policy has had the honor of having two interns from OSU. Kai Mann and Austin Linton were our first two interns to come to us through the Political Science department at OSU. Both were extremely helpful on a variety of assignments during this legislative session, including spending some time at the capitol and working on our Numbers You Need releases. We hope that they both gained as much from this experience as we did from having them.

Below is an opinion blog post written by Kai Mann and inspired by one of his assignments for OK Policy.
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Retrofit, Baby, Retrofit!

In rough economic times, it is often helpful to turn an eye towards more positive aspects of the state’s economy. One piece of good news is the fact that natural gas production is increasing. Since 2003, significant gains have been made in the production of natural gas, and that is good news for the state, especially as crude oil production continues a decline.

The United States is the world leader in natural gas production and Oklahoma, being one of the leaders in natural gas production nationwide, the number five producer out of all the states, should take a more active role in utilizing this resource. Cheaper and cleaner burning than oil and gasoline, the state should make a concerted effort to tap the full potential of this fuel source. Retrofitting of state vehicles to run off of CNG (compressed natural gas) would be a great place to start. This would allow the state’s vehicles to run off of a product that is in abundance in the state as well as lessen some of the uncertainty of dealing with wildly fluctuating gas prices that were common last summer and always a threat.

Efforts to effectively utilize the natural gas produced here in Oklahoma would be a great step for the Oklahoma to take to support one the state’s largest industries, become more energy independent, as well as help out the environment.

OK Policy has released a new fact sheet looking at Oklahoma’s gross production taxes on oil and gas,which takes a special look at the tax exemptions offered for different forms of production. Over the past five years, producers have claimed $339 million in exemptions, or rebates, from the gross production tax, with almost three-quarters of the rebates claimed for deep well drilling and horizontally drilled wells, according to data supplied by the Oklahoma Tax Commission.

Most gross production tax exemptions are set to expire on June 30, 2009. The Legislature is considering two bills – HB 2062 and SB 313 that would extend the exemptions through 2012. So far, both bills have sailed through the legislative process with a minimum of debate. However, the titles have been stricken from the bills and they look headed to conference committee, which ensures that the Legislature will have at least one more opportunity to consider the matter before any extension of the tax exemptions is sent to the Governor.

Read the rest of this entry »

Numbers You Need is a monthly publication from OK Policy that presents key data on the state’s economy, work force, human services, and budget in one concise easy-to-read fact sheet.

April’s edition of Numbers You Need provides further evidence of the worsening economic situation in Oklahoma and the nation. The state’s seasonally-adjusted unemployment rate hit 5.5 percent in February, which is up from 5.0 percent in January but still well below the national rate of 8.1 percent. Personal income for the final quarter of 2008 rose by 0.1 percent in Oklahoma and fell by 0.2 percent nationally. Meanwhile, state revenue collections in March fell steeply for the third straight month, coming in 19.1 percent below last year’s amount and 17.2 percent below the certified estimate. The silver lining may be that inflation in the South region rose by 0.5 percent in February due in large part to rising energy prices, taming fears of deflation and providing some hope that the oil and gas sector may be rebounding. Read the rest of this entry »

Sunday’s edition of the New York Times had a front-page report on the steep drop in drilling activity that has followed plunging oil prices in recent months. Since last summer, the number of oil and gas rigs deployed to tap new energy supplies across the country has fallen by half, and the drop is accelerating, especially for natural gas production. The Times quotes Oklahoma’s Devon Energy as Exhibit A of the drilling hangover era:

“The big bonanza is over,” said Jay Ewing, the completion and construction manager for Devon Energy in the Barnett Shale field here, where so far this year his company has brought its rig count from 35 to 8. “Everyone is really shocked how fast everything has turned.”

Energy experts and company executives warn that oil and gas companies now cutting back on investments will be unable to respond quickly to a future economic recovery. John Richels, Devon’s president, said that if the slump lasted two years, it could then take 18 to 24 months for companies to reassemble rig crews.

Read the rest of this entry »