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Proposed budget leaves Oklahoma services massively underfunded

by | May 25th, 2017 | Posted in Budget | Comments (1)

Note: This post was updated May 28th to reflect current information. The General Appropriation bill passed the Legislature and is awaiting action from Gov. Fallin.

After months of wrangling and stalled negotiations, legislative leaders finally introduced budget bills late Tuesday evening, just three days before the deadline to adjourn legislative session. Separate House and Senate versions of the General Appropriations (GA) bill were rolled out; however, the Senate refused to consider the House version of the budget, leaving the Senate’s bill, SB 860, as the only budget moving forward.

This budget appropriates $6.863 billion for FY 2018 — almost the same amount as FY 2017 after mid-year cuts and supplemental appropriations. Compared to the FY 2009 budget of eight years ago, this budget is 3.3 percent less in nominal terms and more than 15 percent less when adjusted for inflation. After inflation, the appropriations budget has shrunk by about $1.25 billion compared to FY 2009.

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Statement: Lawmakers should vote down budget that breaks their promises

The Save Our State Coalition, including Oklahoma Policy Institute, released the following statement in response to the budget plan unveiled by House and Senate leaders late last night:

The legislative session began with promises to fix Oklahoma’s structural deficit, fund a teacher pay raise, and stop the reckless use of one-time funds that make our budget problems worse in future years. The conclusion of the legislative session can only be seen as a failure to meet those promises.

The source of that failure is a decision to cater to a few powerful interests instead of investing in an economy that works for all. Lawmakers had sensible, broadly popular options to protect our communities, like restoring a moderate gross production tax and rolling back wasteful income tax cuts for the very wealthy. Instead of taking these options, they cobbled together a budget using legally questionable gimmicks and even more cuts that will be passed down to regular Oklahomans.

The results of this budget will be a continuing exodus of teachers from Oklahoma schools, larger class sizes and fewer educational opportunities, failing protections for public health and safety, and collapsing support for children, seniors, and Oklahomans with disabilities — in other words, more of the same, but worse.

Oklahomans want and deserve better. The bright spot coming out of this legislative session is that a record number of lawmakers and regular Oklahomans have grown aware of our state’s revenue problems and the decisions that are perpetuating them. Despite the attempt to rush through a budget with late-night, last-minute votes, more Oklahomans than ever are watching and getting involved.

Oklahomans deserve better, even at the cost of coming back into special session to do this right. Lawmakers should vote down this budget and come up with a responsible plan. If this budget does make it through the Legislature, Governor Fallin should uphold her promise to veto a budget that does not fund core services. Oklahomans are calling on lawmakers to come back with a plan that puts regular people over special interests.

Amid budget deadlock, a reminder of what’s at stake

At the state Capitol, lawmakers remain deadlocked over how to find enough revenue to avoid crippling budget scenarios. The main barrier appears to be legislative leadership’s refusal to allow a vote on removing huge tax breaks for oil and gas producers. On Wednesday night, oil and gas industry lobbyists preemptively held an end-of-session party for lawmakers, but without a budget deal the session may not end anytime soon.

Meanwhile, school districts left in the dark about what their budgets will look like next year have already begun to make cuts. Tulsa Public Schools approved a plan to close three schools and lay off 37 teachers; Oklahoma City is increasing class sizes and selling their administration building; Woodward is shutting down a summer program and cutting staff; Muskogee is ending a popular STEM program. These cuts are only the latest in what is approaching a decade of squeezed education funding — students in 1st grade when we started cutting funding are now high school freshmen. More than 200 schools across the state have already gone to a 4-day school week, and dozens of school districts are looking at or have already shortened their school year.

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Focus on “government spending” instead of real people is leading lawmakers astray

by | May 17th, 2017 | Posted in Budget, Taxes | Comments (0)

Right now most Oklahomans are worried about how our lawmakers will fill a huge budget shortfall following years of cuts that have contributed to teachers fleeing Oklahoma classrooms, left Oklahomans with severe disabilities and children in the child welfare system at risk of losing basic protections, and created an extremely dangerous environment in prisons for both inmates and staff, among other damaging effects. State agencies large and small report having overstretched staff with stagnant wages and low morale; inability to maintain buildings and equipment; and serious struggles to maintain quality services or perform their core mission. These cuts are rippling out to threaten entire communities, especially in areas of small town and rural Oklahoma where residents have fewer local resources to make up for disinvestment by the state.

Amid all of this turmoil, the Oklahoma Council of Public Affairs is working hard to convince lawmakers that our budget problems don’t exist. In a series they’re calling the “bogus budget”, they add up all of the spending by various state agencies and argue that if the total hasn’t plummeted, we don’t need to worry about their funding.

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Statement: Republican budget proposal ignores popular solutions

Oklahoma Policy Institute released the following statement in response to Republican leaders’ new budget proposal:

The proposal announced today by Republican leadership does not address the hundreds of millions Oklahoma is giving away each year to the oil and gas industry. Oklahoma’s effective tax rate on oil and gas drilling is less than half what it is in peer states. Phasing out the state’s generous tax break on drilling after 18 months instead of 36 months would bring in nothing to close next year’s budget shortfall. In future years, this proposal would continue the tax break during months when wells produce 35 to 45 percent of their total 10 year production.

Oklahoma can legally change a higher tax rate on oil and gas production in exactly the same way as Republicans are proposing higher taxes on cigarettes and motor fuels. As a recent memo by Oklahoma tax experts Jerry Johnson and Michael Clingman explained, “The gross production tax is a tax on production and the incidence of the tax occurs when the oil or gas is actually produced. It is appropriate to adjust the rate for future production.”

Restoring the historical tax rate of 7 percent would bring in as much as $313 million for next year’s budget. Restoring a 5 percent rate would bring in as much at $198 million.

A balanced approach to fixing our budget cannot only include revenue increases that fall most heavily on moderate- and low-income Oklahomans while leaving in place tax cuts that primarily benefit the wealthy. In addition to restoring the historical gross production tax, other measures like ending the capital gains exemption, limiting itemized deductions, and restoring the Earned Income Tax Credit need to be part of the mix.

Many of the options being ignored by Republican leadership have broad popular support. The latest proposal leaves these good options on the table for no legitimate reason. Lawmakers need to do better to develop a budget that puts Oklahomans first and saves our schools, public safety, health care, and other vital services from deeper cuts.

Will legislators again pass a last-minute budget without time for scrutiny?

by | May 16th, 2017 | Posted in Budget | Comments (0)

With fewer than two weeks left in Oklahoma’s legislative session, we still have little idea of what the state budget will look like. The budget is the single most important responsibility of lawmakers, but we’re again expecting a last-minute deal that will be rushed through in the final days and hours of session.

Last year, a budget deal was announced May 19th. That same day, the General Appropriations bill , which ran 100 pages, included some 200 sections, and made appropriations of $6.8 billion to over 70 state agencies, was introduced and passed out of committee. It was approved by the House the next day and given final passage by the Senate on May 22nd. Most bills are required to be made public for at least 48 hours before they are voted on, but the Legislature ignored that requirement for the budget — even holding a vote open for almost an hour as legislators were pressured to vote to suspend the rule.

The result was a budget that went into law with very little scrutiny from most lawmakers, the media, or the public. That’s how they passed a budget that provided a big funding increase for legislative staff while slashing nearly every other area of government services. That’s how they passed a budget that on the surface held common education harmless but in reality eliminated $33 million in funding for textbooks.

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A test of leadership for Speaker McCall (Capitol Update)

by | May 12th, 2017 | Posted in Budget, Capitol Updates | Comments (2)

Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol.

With only two weeks of session remaining (one week to pass revenue bills), legislators seem determined to paint themselves into a corner. This week, the logjam needs to be broken. There is nearly unprecedented support, almost demand, for increased revenue. This is not because Oklahomans have suddenly become a population of tax-and-spend liberals. It’s because the combination of tax cuts, the decline in record-high oil prices, and reliance on a hoped-for quick economic recovery have created a crisis. The cupboard is bare, and everyone except the willfully blind can see it.

In our kind of government there are times when each of our leaders must take his turn at leading. This is a genuine test of the nascent administration of House Speaker Charles McCall and his leadership team. Speaker McCall, in his fifth year in the legislature and first year as Speaker, is at the helm of a sinking ship of state. If it’s not apparent now, it will be in a few weeks if the Legislature doesn’t act. It’s not his fault, but it is his turn. The House must start the revenue-raising process, and if they don’t do it, nothing can happen.

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On revenue options, the right choice is “All of the Above”

by | May 10th, 2017 | Posted in Budget, Taxes | Comments (1)

With less than three weeks left in the legislative session, there is still no overall budget agreement. Facing a budget hole of close to $1 billion, a bipartisan consensus has emerged at the Capitol on the need for substantial new revenue to avert budget cuts that could have a catastrophic affect on Oklahoma communities and families. There is not yet, however, a firm consensus on which revenues to raise.

Republicans are promoting a $1.50-per-pack increase in the tobacco tax and a six-cent per gallon hike in the fuel tax. Democrats are holding out on both these measures, which require a three-fourths majority in both chambers to pass under the terms of State Question 640. Democrats are instead calling for an end to Oklahoma’s large tax break for oil and gas drilling, a change which Republicans are resisting. To attract Democratic votes, Republicans have introduced, but have not yet advanced, several revenue bills that contain aspects of the Democrats’ Restore Oklahoma budget plan. These include partly restoring the state Earned Income Tax Credit, narrowing the capital gains income tax exemption, and adopting combined corporate reporting. 

Which of these revenue measures should be approved? The right answer is “all of the above.”

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How would you fix the budget?

by | May 3rd, 2017 | Posted in Budget | Comments (2)

Oklahoma lawmakers have just a few more weeks to balance the state budget. Their budget decisions are deeply important for Oklahomans’ lives, yet with so many budget needs and revenue proposals flying around, it can be hard for the average voter to see the big picture.

That’s why we’ve created an online budget simulator with Together Oklahoma, where you can put yourself in lawmakers’ shoes and choose how to fix the state budget. In three easy steps, the budget simulator allows you to choose where to find the $750 million in new revenue needed to close Oklahoma’s budget shortfall and avoid devastating cuts to core services. You can also choose to make additional investments in Oklahoma services, like funding a teacher pay raise, making sure rural hospitals can stay in business, and diverting people away from prison with smart on crime mental health treatment.

After deciding on your spending priorities, you can choose from numerous options of how to pay for that spending in a responsible way. These options include policies that have been proposed by the Save Our State coalition (including OK Policy), by House Democrats, by Governor Mary Fallin, or that we know are being considered by the Legislature.

We invite you to try the budget simulator and share your decisions on social media to help more Oklahomans understand the options we have to invest in ourselves this year. After you’ve done that, you can sign up to stay informed about actions you can take to make that budget a reality.

Are we breaking ‘free at last’ from anti-tax dogma? (Capitol Updates)

by | April 28th, 2017 | Posted in Budget, Capitol Updates | Comments (1)

Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol.

Free at last! There was an interesting exchange on the House floor last week between Rep. Earl Sears, Chair of the House Finance Subcommittee and Democratic Leader Scott Inman. Sears was presenting SB 170 repealing the income tax cut that could have been triggered by a slight uptick in the economy. Sears explained that if the tax cut were to occur it would cause a larger hole in the budget.

Inman, unable to resist the opportunity to needle Sears, asked him if it is true, as Republicans say, that tax cuts produce more tax revenue, why would we repeal a potential tax cut? Sears replied that we are just dealing with the facts as they are, and we can’t afford this tax cut now. He said the Republican Caucus will get back to “good tax policy” when the economy permits. The bill passed 75-12 with Inman and other Democrats voting “yes.” All 12 “no” votes were Republicans, and 9 of the 11 “excused” from voting were Republicans. Some of those 9 excused were out of the chamber on other legislative business, but some were likely “walking” the vote.

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