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Nearing exhaustion: As recession drags on, long-term unemployed risk losing benefits

by | October 15th, 2009 | Posted in Blog, Economy | Comments (0)

Our October edition of Numbers You Need is now out, providing a snapshot of economic and budget trends in Oklahoma through monthly data on jobs, inflation, public benefits, and state revenues, as well as the most recent quarterly data on building permits and an annual update on the poverty rate.

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Continuing bleak revenue collections provide no easy solutions

by | October 14th, 2009 | Posted in Blog, Budget | Comments (0)

Yesterday’s announcement of state revenue collections for September marked the end of a truly dismal quarter. Collections for the 1st quarter of FY ’10 were 29.5 percent below the first three months of FY ’09. The graph below shows that this continued and amplified the trend of the final two quarters of last year, when revenues  dropped by 15.3 percent and 26.3 percent, respectively. The graph also shows how much more severe the current fiscal crisis is than the one earlier this decade, where the worst quarter saw revenues fall by just over 12 percent.

RevbyQuarter-FY10Q1

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Taking credit: Task Force explores use and misuse of transferable tax credits

by | October 13th, 2009 | Posted in Blog, Taxes | Comments (0)

Are tax breaks for businesses a legitimate tool of economic development, or a form of corporate welfare? The fact is they can be either. The challenge is telling the two apart and ensuring through clear legislative language and ongoing oversight that policies that provide tax credits or other preferential treatment to businesses are meeting their goals.

Last week, a Joint Legislative Task Force created by legislation authored by Rep. David Dank and Sen. Randy Brogdon met to begin examining transferable tax credits. These are  tax incentives where one company qualifies for a tax  and sells that credit for cash to another company that wants to reduce its tax obligations.

According to a presentation by House staff attorney Mark Harter, the “general rule is that a tax credit can only be used by the person or entity who performed some economic activity or who invested money in some way.” Yet the Task Force heard that two of the state’s most notorious transferable tax credits – for non-stop coast-to-coast air service (Great Plains Airline) and for space transportation vehicle providers (Burns Flats spaceport) – provided much weaker standards. In those cases, taxpayers ended up on the hook for tens of millions of dollars for projects that failed (literally) to get off the ground.

But even where eligibility requires performance of certain economic activity, either job creation or capital investment, oversight and compliance is often uncertain. Rep. Dank was especially critical of the state’s coal credit intended for the purchase of Oklahoma mined coal. Businesses and individuals claimed anywhere from $5 million to $12 million in coal credits in 2007. Yet, according to Rep. Dank (quoted in the Journal Record, subscription only):

But there is no evidence that these were ever used to produce more coal or to hire more miners. Instead, tax credits given to the coal industry in Oklahoma were sold to companies that had nothing to do with coal, reducing revenues to the state with no economic gain.

The next meetings of the Task Force will no doubt dig deeper into how particular credits have been used, or misused.

Over the past several years, the state has made genuine progress in improving accountability and transparency of tax incentives.  An Incentives Review Committee, created by statute, has been reviewing major tax credits and making recommendations; their work was responsible, in part, for the decision to allow one of the most expensive and controversial incentive programs, the Venture Capital Credit, to expire at the end of 2008. As we discussed in this blog post, implementation of the Taxpayer Transparency Act (SB 1) led earlier this year to the launch of a searchable online database that generates lists of all individuals and businesses that claimed tax credits (so far information is available only for 2007).  And for the first time ever in the state, the Legislature this session passed a tax credit bill, SB 929,  that included a “clawback provision” allowing for the state to demand repayment of credits in the event that companies failed to uphold their obligations – as promptly occurred when Mercury Marine announced it was pulling up stakes from Stillwater and returning over $1 million in payments.

So what more can be done? One interesting idea was proposed recently by Good Jobs First, a national policy organization that focuses on corporate accountability:

We also need responsible budgeting. Let’s also require each state to enact a Unified Development Budget: an annual report to the legislature itemizing all forms of spending for jobs—both appropriations and tax expenditures. Tax breaks typically dwarf appropriations by ratios of 4 to 1, 6 to 1, 8 to 1 or more, so we need the whole iceberg up on the table for an annual check-up.

While Oklahoma has made strides in making available information on tax incentives with the Taxpayer Transparency Act and biannual Tax Expenditure Report, it remains difficult, if not impossible, to find comprehensive information on the full array of tax credits, especially regarding credits claimed on taxes other than the income tax (insurance premium tax, gross production tax, ad valorem tax).  A Unified Development Budget such as proposed by Good Jobs First could go a good ways towards helping pull the various pieces together into a single picture – and ultimately help policymakers with the tough but essential goal of reaching informed decisions about which tax credits are working to promote good jobs and investment, and which are purely handouts to special interests.

No free lunch: The cost and national security implications of school lunch

by | October 12th, 2009 | Posted in Blog, Healthcare | Comments (1)

On September 30th, I attended a Leadership OK conference with an emphasis on health. Oklahoma and the United States have some disturbing statistics related to our health, specifically the obesity rates. The surprising part is how far reaching the implications are.

Along with presentations from Oklahoma state leaders, the conference had Chef Ann Cooper, the “Renegade Lunch Lady” as one of the speakers. She  is a classically trained chef who works to expose the problems of and solutions to the high fat and low nutrition school lunches that are provided in most districts around the country.  Those of you with school aged children should spend some time looking at the information on thelunchbox.org.  Even if you don’t have children, the rest of this post will explain why you need to be aware of this and concerned about the implications of this policy. She emphasized how important it is to start good habits while children are young.

The next speaker was even more sobering, but had some of the same themes related to the obesity epidemic in the U.S. Dr. Michael Rozien is the Chief Wellness officer for the Cleveland Clinic. Among other themes, he shared a focus on youth with Chef Ann; by the time we, as employers, hire someone, their eating and wellness habits are largely set. This means that bad eating or exercising or smoking habits learned at an early age need to be broken in order to bring down the cost of health insurance. So saving money now on school lunch or physical education programs may cost us all more in the future. You can see more about his work on his website.

The disturbing piece related to Dr. Rozien’s presentation was this interactive map. There is no way to get the changes over time to show up in the blog post, so please click the link to see it on the CDC’s website. It is sobering. The policy implications of the increase in obesity rates across the U.S. since 1990 are multifaceted. One point that Dr. Rozien emphasized, aside from the staggering amount of money spent on obesity and other lifestyle related illnesses in the U.S., was that the real medical costs associated with obesity are not immediately felt. In fact, he estimates that the costs lag by 15-20 years. That information, combined with the timeline established by the CDC of an obesity epidemic starting in the early 1990’s, means that we may have a balloon payment coming due in health care in this country.

2008 State Obesity Rates

State

%

State

%

State

%

State

%

Alabama 31.4 Illinois 26.4 Montana 23.9 Rhode Island 21.5
Alaska 26.1 Indiana 26.3 Nebraska 26.6 South Carolina 30.1
Arizona 24.8 Iowa 26.0 Nevada 25.0 South Dakota 27.5
Arkansas 28.7 Kansas 27.4 New Hampshire 24.0 Tennessee 30.6
California 23.7 Kentucky 29.8 New Jersey 22.9 Texas 28.3
Colorado 18.5 Louisiana 28.3 New Mexico 25.2 Utah 22.5
Connecticut 21.0 Maine 25.2 New York 24.4 Vermont 22.7
Delaware 27.0 Maryland 26.0 North Carolina 29.0 Virginia 25.0
Washington DC 21.8 Massachusetts 20.9 North Dakota 27.1 Washington 25.4
Florida 24.4 Michigan 28.9 Ohio 28.7 West Virginia 31.2
Georgia 27.3 Minnesota 24.3 Oklahoma 30.3 Wisconsin 25.4
Hawaii 22.6 Mississippi 32.8 Oregon 24.2 Wyoming 24.6
Idaho 24.5 Missouri 28.5 Pennsylvania 27.7

Surprisingly, the policy implications related to obesity carried on to my Leadership OK visit to Fort Sill the following day. I was not expecting public health and childhood obesity to be such a strong part of the Ft. Sill experience, but it was a recurring theme. In conversations with officers from Major General Halverson to Colonel Rave (Commander, MEDDAC), it was stressed that only 3 in 10 (actually a little over 27%) of eligible age people in the U.S. qualify to be in the armed forces. This percentage is down over the last decade, primarily due to health issues related to obesity. Officer after officer expressed the concern that the continuation of the trend toward an increasingly obese population is a matter of national security.

When we think about the staggering 30.3% of Oklahomans who are considered obese, it is not only clear that the causes for that are multifaceted, but that the implications of that extend beyond what we may even be realizing at this point. The decisions we make, even at the local level, regarding how we fund government programs and services reflect our priorities and shape our future as a state and a nation. Is minimizing the cost for school lunch really a savings to the tax payers in the long run?

The real take away here is bigger than just school lunch. It is on the interconnectedness of the different aspects of our society and the way policy decisions shape outcomes. We all need to keep the long-term costs and consequences of our short term policy decisions in mind.

Individuals and the community share responsibility for health outcomes. We expect people to take care of themselves, but policy decisions play a role in health and wellness also. If Oklahoma is to prosper within any national health framework, we must encourage healthier lifestyles and support healthy outcomes. Public policy should encourage community and individual choices that make Oklahomans healthier.

Losing our voice – a true champion for children bids farewell

by | October 9th, 2009 | Posted in Blog, Children and Families | Comments (0)

Next Tuesday and Wednesday, several hundred Oklahomans from diverse walks of life will get together on the University of Central Oklahoma campus in Edmond for an event, organized by the Oklahoma Institute for Child Advocacy,  known as the Fall Forum.  Over the course of two days, participants will listen to elected officials and policy experts, get energized and depressed and energized again by the challenges facing the state, fight for their priorities through long workshops and breakout sessions – and emerge at the end with a legislative agenda for the upcoming 2010 session that will try to make improvements in the lives of  Oklahoma’s children.

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The new Online Budget Guide shows where we are and asks where we should be

by | October 8th, 2009 | Posted in Blog, Budget | Comments (0)

Today we released our long-awaited Online Budget Guide, a comprehensive resource exploring how Oklahoma’s state and local government collect and spend money to provide public services. While the Guide is packed full of facts and figures and works as both an introduction for citizens and students and a quick-reference for legislators, public managers, advocates, and reporters, it is about more than basic information. It’s also about some basic concerns we want to share with our fellow Oklahomans. Matt Guillory, OK Policy’s Executive Director, said:

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How much budget cutting is too much?–SQ 744 and this year's revenue shortfall

by | October 6th, 2009 | Posted in Blog, Budget | Comments (0)

The House of Representatives Appropriation and Budget Committee recently held hearings on an interim study of State Question 744. State Question 744, also known as the HOPE petition, is an initiative sponsored by the Oklahoma Education Association (OEA) that would require the state to fund education at the regional average of per-pupil spending. Reps. Leslie Osborn and Randy McDaniel asked for the interim study to explore the impact of the initiative on the state’s finances.

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Something on your mind? Share your thoughts on our blog

by | October 5th, 2009 | Posted in Blog, OK Policy | Comments (0)

Last week we posted a guest blog on a legislative proposal to change the treatment of military retirement income, which set off a small firestorm of controversy in our comments section. In the six months or so that we’ve been running this blog, this was the third time people have accepted our open invitation to submit guest contributions – the other two posts addressed protecting our natural resources and last session’s proposal to repeal education mandates in SB 834.

We look forward to running guest contributions more often. We believe this blog can serve as a forum for honest and lively debate. We encourage you to submit guest blog posts on subjects that are important to you or in response to points of view that others have expressed in this space. We just ask that everyone treat the OK Policy blog more like a front porch conversation than like a heated argument. This is a discussion of issues with the intent of making Oklahoma better for all of us. The first step to coming to agreement is to have a free exchange of ideas in a respectful way.

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The racial wealth gap

by | October 1st, 2009 | Posted in Blog, Financial Security | Comments (0)

It is widely known that minorities in the United States earn considerably less than Whites – according to the most recent Census Bureau data, the median income for a White household in 2008 was 34.5 percent greater than for a Black household and 28 percent higher than for a Hispanic household. Poverty rates for Blacks and Hispanics are also more than double than for Whites.

What is less frequently noted is that the racial wealth gap in America is even greater than the income gap. The 2009-10 Assets and Opportunity Scorecard that was recently released by CFED reports that for the nation as a whole,  the median White household possesses net worth (the sum of all assets less liabilities) six times greater than the median minority household: $122,505 compared to $20,132. In Oklahoma, the racial wealth gap was found to be even larger: the median white household enjoys net worth of $66,468 compared to just $6,620 for the median minority household, a gap of  10:1. Additionally, the report found that 37.2 percent of minority households nationally and 43.7 percent in Oklahoma live in “asset poverty”, meaning that they lacked sufficient net worth to subsist at the poverty level for three months in the absence of income. (By comparison, 16.4 percent of White households nationally and 15.9  in Oklahoma were determined to be “asset poor”).

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OICA Fall Forum offers an opportunity to shape policy for children

by | September 30th, 2009 | Posted in Blog, Capitol Matters | Comments (0)

The Oklahoma Institute for Child Advocacy (OICA) hosts its annual Fall Forum in Edmond on October 13 and 14. This unique event brings together hundreds of opinion leaders and advocates to identify issues affecting children. Participants work together to help shape OICA’s legislative priorities for the coming session. Topics that will be discussed this year include early childhood care and education, children of incarcerated persons, and many other important issues. Attendees will also have the opportunity to participate in advocacy workshops, hear from four candidates for governor, and see OK Policy’s David Blatt discuss Oklahoma’s changing budget picture.

Early bird registration ends this Friday, October 2 and all registration ends next Tuesday, October 6. For directions, an agenda, and online registration, see OICA’s web site.