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

This week OK Policy and the Corporation for Enterprise Development (CFED) co-released the 2012 Assets and Opportunity Scorecard, which showed that more than one in four Oklahoma households are “asset poor,” meaning they have little or no financial cushion to rely on in an emergency.  The Tulsa World and the Oklahoman covered Oklahoma’s Scorecard results in depth.

We pointed out that if legislators make the choice to prioritize tax cuts, they cannot pretend to be blameless when funds aren’t available for crucial services.  We hosted a debate about whether or not to require a prescription for pseudoephedrine, featuring Jessica Hawkins, the Director of Prevention Services for the Oklahoma Department of Mental Health and Substance Abuse Services, and former state Senator Ed Long.

Finally this week, the Associated Press quoted us in an article on a regional trend of GOP action to axe state income taxes. The Tulsa World presented a summary of our issue brief defending the income tax. The Journal Record cited our work on worsening poverty in Oklahoma and legislative proposals that would make it even harder to be poor. The OK Policy Blog featured a short video about ‘community schools,’ a comprehensive approach to education that makes the school the hub of the community.

Numbers of the Day

• $136 – Average tax increase on elderly Oklahoma couples with $35,000 in income under a legislative proposal to eliminate a slate of broad-based tax credits and exemptions.
• 8,100 – Number of manufacturing jobs added in Oklahoma from January to December of 2011, up 8.4 percent for the year.
• 178, 020 – Number of Oklahoma children under age 6 who need daily child care during the week because their primary caregiver/s participate in the labor force, 2009
• 6,592 – Number of Oklahomans who tested for their GED in 2009; 70.1 percent received their GED, just above the average national pass rate of 69.4 percent.
• 11^th – Oklahoma’s rank among the states in percentage of households with no computer in their home, 2010

In The Know, Policy Notes

• The Foundation for Child Development finds that states with higher taxes and greater investment in public programs score highest for Child Well-Being.
• The Economic Policy Institute points out that the massive tax cuts propose by GOP presidential candidates don’t square with professed concerns about public debt.
• Demos shows that the pay premium gained by joining the federal workforce is reserved largely for less-skilled workers, and rather than disparaging public sector pay levels, we should embrace them as standards from which the private sector has shamefully deviated over the last three decades.
• The Shriver Center examines the trend of states issuing public benefits through bankcards and the implications of card fees for low-income people.
• Bloomberg Businessweek reports on falling premiums for Medicare Advantage, a private health insurance option for Medicare beneficiaries.

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 »

Two years ago this month, the Oklahoman and Tulsa World announced a content-sharing agreement in which each paper would carry some stories created by the other. The papers also said they would “focus on reducing some areas of duplication, such as sending reporters from both The Oklahoman and the Tulsa World to cover routine news events.” With the agreement, the Capitol Bureau staffs of the two papers, which had consisted of six reporters a short time earlier, was pared down to three.

For many observers, this shrinking press pool of the state’s two major dailies marked another key moment in the erosion, and potential disappearance, of state political news coverage. According to a 2009 article in the Oklahoma Gazette (unavailable online), the Capitol press corps, which at its peak in 1977 counted 39 reporters, now numbers in the teens.  Smaller papers have eliminated their Capitol reporter positions, TV news stations (other than OETA) cover the Legislature only intermittently, if at all, and even the Associated Press has cut back its staff.  While a small nucleus of experienced, committed Capitol reporters remain, the ongoing capacity of the media to go beyond rewriting press releases and provide Oklahoma with in-depth, informed reporting on public affairs seemed very much in doubt. Read the rest of this entry »

Today’s Tulsa World has a strong editorial opposing legislative proposals to enact further restrictions on property taxes.  For those who haven’t been following, this week has seen a public flare-up of a long-simmering internal battle within the House Republican caucus over proposals to tighten the maximum annual tax increase on homestead properties from its current 5 percent cap down to 3 percent or 1 percent.  In Monday’s Tulsa World, Speaker Chris Benge was quoted opposing the proposal:

“I think it is bad timing,” said Benge, R-Tulsa. “We are looking at a very tough budget year. To date, it is about 25 percent or 26 percent below the estimate. We are looking at a very difficult time to fill a budget hole in which we are going to have to cut budgets. We are going to have to use reserves. I just don’t think that the timing is good to reduce revenue.”

Read the rest of this entry »

Plunging state tax collections are wreaking havoc on the state budget and having increasingly painful effects on public services in Oklahoma. Initial estimates were for tax collections for the current year, FY ‘10, to be more than $600 million below the prior year. Three months into FY ‘10, General Revenue  (GR) collections are already almost $400 million below estimate.  Even assuming the economy begins an immediate recovery, we are forecasting that this year’s GR collections will come in at least $1. 5 billion, or 25 percent, below levels in the year preceding the downturn (FY’08).

This acute drop in revenue collections has set off a debate among politicians, editorial boards, and others about whether tax cuts approved by the Oklahoma Legislature during the economic boom years of the mid-2000s are to blame. Read the rest of this entry »

If  you did not see last Sunday’s Tulsa World, it is well worth checking out their front-page profile of families hit by the economic downturn, titled “Faces of the Recession”. Reporters Ginnie Graham and Mike Averill tell the stories of six families hit by job losses who are doing everything in their capacities to stay afloat in these rough financial waters. The article is particularly compelling in portraying how the recession is hitting families that were formerly anchored in the middle class, leading many to seek out assistance from government, private charities, and family members to put food on the table and a roof over their heads. For those seeking assistance for the first time, in particular, the state’s 211 Helpline service (the link is to Tulsa 211, one of six regional centers that cover the state) is invaluable in helping connect families in need with social service providers who are available to lend a hand.

In the last days of this year’s legislative session, House Bill 2250 passed with little fanfare. HB 2250 puts a  tax on wire transfers–$5 plus one percent on the amount over $500, with proceeds going to the Bureau of Narcotics and Dangerous Drugs. It’s  a good example of how bad law–in this case, an unfair and regressive tax that hurts Oklahoma businesses, threates to create an illegal money transmission market, and risks legal challenges–happens when people aren’t watching.

Don’t be surprised if you have not heard of this bill. The tax was never publicly discussed before appearing in a conference committee report just days before the Legislature adjourned. All indications are that few legislators were aware that the final version of the bill added a new tax. That suggests something is fundamentally wrong with our legislative system.

What did we get from this exercise in closed-door government? Three potential problems, at a minimum:

• The new law hurts low-income people. Person-to-person wire transfers are most often used by those who don’t have bank accounts, are transient, or are here from other countries. While the last group was the intended target, many others will be hurt. The law’s provision for an income tax credit for the wire transfer tax does not eliminate its sting. People with incomes below a certain threshold are not currently required to file federal and state income tax returns and so will be unlikely to claim the remittance credit. Even Oklahomans of all income levels who do file state tax returns–including parents sending money to college students– will face a substantial administrative burden to qualify for the credit. Many will fail to claim the credit for all their transfers and will end up paying a tax not intended for them.
• The law punishes legitimate businesses and encourages illegitimate ones. Wire transfer agents provide an important service and they are regulated by both the federal and state governments. This law cannot help but to reduce their revenue in an already difficult economy. Worse, some federal agencies have previously expressed concern that laws like this will drive transfers out of legitimate businesses and into the underground money transfer market, which is widely recognized as supporting money laundering practices. Appleseed, a network of public interest justice centers,  has called upon the U.S. Department of the Treasury to issue a statement about the risks of this illicit market and has asked the administration to issue a statement similar to the one President Bush issued on cutting costs of remittances.
• The new remittance charge may  open the state up to needless, costly legal challenges, which Mike Jones describes in the Tulsa World:

There is a question, however, whether it is a tax and a revenue bill or simply a fee. If it is a tax it could be in violation of the state Constitution because it passed in the final five days of the legislative session and takes effect Nov. 1, less than 90 days from passage, which is prohibited by the Constitution.

Similar laws have been challenged in other states, including Georgia and Texas. To be classified as a fee it has to go to the entity regulating the service for which the fee is charged. Under this bill, the beneficiary of the fee seems to be the Oklahoma Bureau of Narcotics and Dangerous Drugs, which has no authority over illegal immigration, other than drug issues.

It also could be challenged as a restraint of interstate commerce. Congress has the power to regulate commerce among the states and states cannot place undue burden on that commerce.

At Oklahoma Policy Institute, we believe Oklahoma should be a model for open government, policies that do not punish people based on their income, and programs that encourage and protect individuals who want to improve their financial security. This law does not move us in that direction, but away from it. We hope all Oklahomans–those affected directly by this law and those who share our goals for the state–will learn more and ask if this is where our state should be headed.

OK Policy is pleased to launch a new monthly Stimulus Update publication. Each month we will take a quick look at one set of federal stimulus (American Recovery and Reinvestment Act, or ARRA) programs. Each issue includes a short review of the program and its funding and rules. Then we address the status of the program in Oklahoma: Where are we in the funding process? How do we compare to other states? How do we plan to use the money? How much have we received and spent? Graphs show how funds are allocated and track the speed at which funds are flowing.

Our first issue looks at the two biggest stimulus programs, which provide states with federal funding for education, Medicaid, and other programs to help make up for falling state revenue.You’ll find out how these programs helped maintain state services, which agencies benefited, and how we compare to other states.

There are many other sources of stimulus news and information you may want to be aware of. Our new stimulus page includes links to many sources and we’ll update it as we find new ones. Here are some high points:

• Oklahoma’s state recovery site, http://www.recovery.ok.gov, has been expanded and improved recently. It includes recent agency news releases and links to six state agency recovery pages. Several of these agencies have been improving their sites so taxpayers can get a better idea of how money is being used and so local and nonprofit service providers can apply for appropriate funding.
• Stateline.org, a news service concentrating on state government issues, has created a new page, http://www.stateline.org/live/static/The_Stimulus_and_the_States, which provides charts of how the stimulus is divided up and when it is expected to be spent, along with links to state stimulus oversight efforts and news stories.
• Closer to home, the Tulsa World has created a new stimulus tracker page, which puts all the World stimulus stories in what place, http://www.tulsaworld.com/news/category.aspx?l=stimulus_tracker.

Read the rest of this entry »

Last week I sat down with the editorial board of the Tulsa World to discuss the state’s worsening fiscal outlook. Julie Delcour’s column in today’s Opinion section sets out some of our main messages about the severity of the problem and the difficult choices for keeping the budget in balance.

“Budget shortfalls of this magnitude will lead to difficult and painful choices between cutting deeply into public services, raising new revenues, and tapping into budget reserves. If the downturn is of a similar magnitude to the one following the last recession of 2001,” Oklahoma could face shortfalls in the future of $2.4 billion,” warns Blatt, an economist and analyst who monitors the budget and state revenues with the precision of a surgeon.

Read the rest of this entry »