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Kansas experiment yields valuable lessons (Guest post: Heidi Holliday)

by | June 9th, 2017 | Posted in Taxes | Comments (2)

Heidi Holliday

Heidi Holliday is Executive Director of the Kansas Center for Economic Growth.

You’re welcome, America. Our state, Kansas, just wrapped up a 5-year long experiment in governance from which the other 49 states can now glean some important lessons. The Kansas Legislature has voted to roll back much of the 2012 package of tax cuts that sent the state into a downward spiral of financial instability and weakened the Kansas’ public schools, universities, Medicaid program, and virtually everything else that the state funds.

With the state facing yet another budget shortfall of $900 million, government leaders decided that enough was enough. Governor Brownback, who heralded the 2012 experiment, was proposing yet more temporary band-aid approaches and more cuts deal with the shortfalls. The Legislature chose a different path and instead sent the Governor a bill that would raise more than $1.2 billion in new revenue over two years by, among other things, repealing a costly tax break for pass-through income, rebalancing individual income tax rates by reinstating a third tax bracket, and reversing course on the Governor’s plan to eliminate our state income tax. Brownback vetoed the legislation but, with bipartisan support, the House and Senate quickly overrode the veto.

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In The Know: Tobacco companies sue state to stop $1.50-per-pack cigarette ‘fee’

by | June 9th, 2017 | Posted in In The Know | Comments (0)

In The KnowIn The Know is your daily briefing on Oklahoma policy-related news. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. Click here to subscribe to In The Know and see past editions.

Today In The News

Tobacco companies sue state to stop $1.50-per-pack cigarette ‘fee’: Tobacco companies have sued the state in an effort to invalidate a $1.50 “fee” on cigarettes that lawmakers passed to raise revenue. The suit was filed Wednesday in the Oklahoma Supreme Court. It claims that the money assessed by Senate Bill 845 is not a fee but a tax that would require a supermajority to pass in the state House and Senate, which it did not receive. The measure was approved after four failed attempts to impose a $1.50-per-pack tax increase on cigarettes, according to the suit [Tulsa World]. The state budget is sitting on shaky constitutional foundations [OK Policy].

Details of Oklahoma Budget Agreement Conceal Cuts for Oklahoma Environmental Agencies: The $6.9 billion budget signed last week by Gov. Mary Fallin delivers 5 percent cuts to most state agencies. On paper, it looks like two environmental agencies received funding boosts, but a closer look at the numbers shows the increases aren’t what they appear. Trey Lam is often found off the beaten path, beyond low-water river crossings and through pastures accessible only by rocky, tire-jarring rural roads [StateImpact Oklahoma]. The budget left Oklahoma services massively underfunded [OK Policy].

FY 2018 Budget Highlights: OK Policy’s annual Budget Highlights issue brief is one of the most informative and accessible ways to track Oklahoma’s public spending. Today we’ve released the FY 2018 Budget Highlights, which includes a bullet point summary of the state budget, charts illustrating different aspects of the budget, and a table showing appropriations for every state agency going back to 2009 [OK Policy]. Next year’s budget starts over $400 million in the hole [OK Policy].

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In The Know: Kansas Tax Cut Experiment Comes To An End As Lawmakers Vote To Raise Taxes

by | June 8th, 2017 | Posted in In The Know | Comments (0)

In The KnowIn The Know is your daily briefing on Oklahoma policy-related news. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. Click here to subscribe to In The Know and see past editions.

Today In The News

Kansas Tax Cut Experiment Comes To An End As Lawmakers Vote To Raise Taxes: Kansas lawmakers have voted to roll back a series of major tax cuts that became an example for conservative lawmakers around the country but didn’t deliver the growth and prosperity promised by Gov. Sam Brownback, a Republican. A coalition of conservative Republicans, some of whom voted for sweeping tax cuts in 2012 or defended them in the years since, sided with moderates and Democrats to override Brownback’s veto of a $1.2 billion tax increase [NPR]. The Kansas tax cut experiment has a close cousin in Oklahoma [OK Policy].

Psych Hospital At The Center Of BuzzFeed News Investigation Will Lose State Funding: The state of Oklahoma is taking action against a Tulsa hospital owned by America’s largest psychiatric care companies, Universal Health Services, no longer sending children and adolescents in its custody to the facility and warning that it will cut off its Medicaid funding. The hospital, Shadow Mountain Behavioral Health, was the subject of a recent BuzzFeed News investigation that revealed that frequent violence endangers patients and staff, that children as young as 5 are separated from their parents and held in dangerous situations, and that wards were repeatedly understaffed [Buzzfeed News].

Congress is trying to strip away Americans’ protections from predatory lending: Last month, Governor Fallin made the right choice when she vetoed HB 1913 – a bill that would have expanded predatory lending in Oklahoma. In her veto message, Fallin pointed out that Oklahomans frequently take out high-interest loans at a high cost to them and their families. Gov. Fallin wisely chose not to add another predatory product to the market that could trap Oklahoma families in even more debt. Predatory lending is not just an Oklahoma problem [OK Policy].

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Congress is trying to strip away Americans’ protections from predatory lending

Last month, Governor Fallin made the right choice when she vetoed HB 1913 – a bill that would have expanded predatory lending in Oklahoma. In her veto message, Fallin pointed out that Oklahomans frequently take out high-interest loans at a high cost to them and their families. Gov. Fallin wisely chose not to add another predatory product to the market that could trap Oklahoma families in even more debt.

Predatory lending is not just an Oklahoma problem. Only 15 states and the District of Columbia prohibit payday lending with interest rate caps.  Interest rates in the remaining states range from an average of 154 percent in Oregon to an astronomical 677 percent in Ohio. The average rate in Oklahoma on a payday loan is nearly 400 percent. Payday borrowers often end up paying more in interest than what they get through the loan, and repeat borrowing is common.  Payday loans, auto title loans, and small installment loans are a debt trap for working families in America, and most states have not taken action to protect them.

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In The Know: Tulsa senator’s resignation creates seventh legislative vacancy this year

by | June 7th, 2017 | Posted in In The Know | Comments (1)

In The KnowIn The Know is your daily briefing on Oklahoma policy-related news. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. Click here to subscribe to In The Know and see past editions.

Today In The News

Tulsa senator’s resignation creates seventh legislative vacancy this year: Oklahoma state Sen. Dan Newberry has announced he will resign his seat to pursue a private-sector promotion. In a Facebook post, the third-term business-friendly senator said he will remain in senior management at TTCU The Credit Union and plugged his forthcoming book, titled “The Rich Young Ruler.” The Tulsa Republican thanked his supporters for his more than nine years of elected office [NewsOK].

Governor Mary Fallin Signs Criminal Justice Reform Bill: Governor Mary Fallin today signed the remaining criminal justice reform bill that was the result of recommendations from her Oklahoma Justice Reform Task Force, saying it was disappointing other proposed measures that would have had more of a direct impact on Oklahoma’s over-capacity prison population stalled in the House of Representatives. Those measures addressed the governor’s criminal justice reform task force report that said without reform, Oklahoma is on pace to add 7,218 inmates over the next 10 years. That would require three new prisons and cost the state an additional $1.9 billion in capital expenditures and operating costs [My High Plains]. The Task Force’s reforms, most of which failed to pass this year, were the solution that Oklahoma desperately needs [OK Policy].

Next year’s budget starts over $400 million in the hole: When Governor Mary Fallin delivered her State of the State address in February, she made a strong call for lawmakers to end the practice of balancing the state budget through the use of one-time revenues. Governor Fallin proposed a budget that filled the hole and provided targeted funding increases without one-time revenues, but the bulk of her new recurring revenue relied on the expansion of the sales tax to nearly 150 additional services, which proved to be a total non-starter in the Legislature [OK Policy].

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Next year’s budget starts over $400 million in the hole

by | June 6th, 2017 | Posted in Budget | Comments (0)

“hole” by Jon Rawlinson is licensed under CC BY 2.0

When Governor Mary Fallin delivered her State of the State address in February, she made a strong call for lawmakers to end the practice of balancing the state budget through the use of one-time revenues, saying:

Oklahoma will continue to struggle if we don’t fix the structural deficits of our budget… So, as our state’s top leaders, let’s focus on the REALITY of our state budget deficit. To start, for decades we have attempted to balance our budget for too long with the use of one-time resources. We cannot afford to pass another budget using a large amount of non-recurring revenue.

Governor Fallin proposed a budget that filled the hole and provided targeted funding increases without one-time revenues, but the bulk of her new recurring revenue relied on the expansion of the sales tax to nearly 150 additional services, which proved to be a total non-starter in the Legislature.

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In The Know: Tougher Reading Test Means Thousands More Students Could Be Held Back

by | June 6th, 2017 | Posted in In The Know | Comments (0)

In The KnowIn The Know is your daily briefing on Oklahoma policy-related news. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. Click here to subscribe to In The Know and see past editions.

Today In The News

Tougher Reading Test Means Thousands More Students Could Be Held Back: Oklahoma is raising the bar on its pivotal, high-stakes reading test administered to third graders, which is likely to leave more students at risk of repeating the third grade. Twelve percent of third graders, those who scored “unsatisfactory” – the lowest level – were flagged for retention in 2016. Beginning in 2017-18, students will have to score “proficient” in reading to receive automatic promotion to fourth grade — a level above what is required now [Oklahoma Watch].

Funding raid to slow Oklahoma agency’s transportation plans: The Legislature’s decision to divert about $150 million in Oklahoma Department of Transportation funding to help close a hole in next year’s state budget is expected to delay the start of some projects in its eight-year construction plan, the agency’s director said Monday. But Director Mike Patterson told members of the Transportation Commission that ongoing construction projects will not have to be suspended, as was initially feared when lawmakers were discussing the possibility last month of cutting funding by more than $250 million [Associated Press].

Public schools recoil at Trump’s budget emphasis on school choice: President Donald Trump says he wants to offer parents more choices on where they educate their children by dramatically boosting federal spending on vouchers and charter schools and slashing it for a slew of public school programs. … In Oklahoma, for instance, State School Superintendent Joy Hofmeister said in an interview she worries the cutbacks could worsen a teacher’s shortage that’s forced the state to allow an unprecedented number of applicants with no professional training to become teachers [CNHI].

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In The Know: Republicans, Democrats agree that Oklahoma has a revenue problem; Tax equality needed to spur OK success; and more

by | June 5th, 2017 | Posted in Blog, In The Know | Comments (0)

In The KnowIn The Know is your daily briefing on Oklahoma policy-related news. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. Click here to subscribe to In The Know and see past editions.

Today In The News

Republicans, Democrats agree that Oklahoma has a revenue problem: Republicans and Democrats don’t agree on much, but several of them agreed Friday that Oklahoma state government has a revenue problem. That Democrats think state government has been starved beyond its ability to function effectively is no surprise. The difference now is that some Republicans, including Gov. Mary Fallin and House Appropriations and Budget Committee Chairman Leslie Osborn, are saying it, too. [Tulsa World] OK Policy agrees that the state has a revenue problem – on revenue options, the right choice is “All of the Above” [OK Policy]

Tax equality needed to spur OK success: In a year where we passed a budget that holds flat many state agencies that were in desperate need of a funding increase, the Legislature once again failed to raise the state’s gross production tax in a meaningful way. Instead, the Legislature opted to raise fees on working class Oklahomans and cut several agencies that just can’t afford it anymore. [Rep. Dennis Casey/Stillwater News Press] How much new revenue will ending oil and gas tax breaks bring in? [OK Policy]

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The Weekly Wonk: Despite disappointing legislative session, public engagement provides reason for hope

by | June 4th, 2017 | Posted in Blog, Weekly Wonk | Comments (0)

the_weekly_wonk_logoWhat’s up this week at Oklahoma Policy Institute? The Weekly Wonk shares our most recent publications and other resources to help you stay informed about Oklahoma. Numbers of the Day and Policy Notes are from our daily news briefing, In The Know. Click here to subscribe to In The Know.

This Week from OK Policy

Executive Director David Blatt reviewed the legislative session in his Journal Record column, pointing out several shortcomings but also a few reasons for hope that things might be better next year. Steve Lewis’s Capitol Update explored the possible constitutional issues with this year’s budget, such as the cigarette fee and the sales tax on vehicles. Intern Maggie Den Harder discussed the use of mobile food trucks by two Oklahoma school districts to provide summer meals to food insecure children.

OK Policy in the News

Blatt was interviewed by Governing magazine for a story about the comparatively severe cuts to public education that Oklahoma has endured – Oklahoma now spends $1 billion less on K-12 public education that it did a decade ago. OK Policy’s statement on the disappointing budget agreement was quoted by The Ada News for their piece about the shortcomings in next year’s budget.

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State budget sitting on shaky constitutional foundations (Capitol Update)

by | June 2nd, 2017 | Posted in Budget, Capitol Updates | Comments (0)

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.

Wow! I admit I never saw this coming. When the legislature returned for its last week of regular session, I thought members would quickly come to some sort of revenue and budget agreement to at least keep the state going, if not to fix our fiscal dilemma. I thought that because I know there are enough people of good will in the House and Senate, both Republicans and Democrats, who understand the situation and want to make things work. Apparently, they tried briefly on Monday to do that, and then the governor and legislative leadership decided to move on into troubled legal waters.

If you’re looking for a silver lining, the bright side of this is that, even in the face of a fiscal crisis, Republican legislative leaders decided not to proceed with alarming budget cuts to state agencies, most of whom — from education to corrections — are already unable to responsibly fulfill their duties to the public. But my fear, and prediction, is that the relief of the fiscal crisis is only temporary and will soon be replaced with both a fiscal and constitutional crisis. Legislative leaders, with the active collusion of the governor, decided to simply interpret away State Question 640. I don’t like SQ 640. I didn’t vote for it when it passed a vote of the people, and I regret that it passed. But, for the love of Life, it is now Article V Section 33 of the Oklahoma Constitution!

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