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In The Know: Lawmakers could wind up in special session on budget

by | May 15th, 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.

Check out OK Policy’s resources for the Legislative session, including Advocacy Alerts, the Legislative Primer, the What’s That? Glossary, and Online Budget Guide.

Today In The News

Lawmakers could wind up in special session on budget: State lawmakers could be headed into a special session with a yawning budget hole still looming. Lawmakers must adjourn by 5 p.m. May 25 and can’t pass revenue-raising measures in the last week of the session. So far, they have not passed enough measures to make a significant dent in the $878 million budget hole. Gov. Mary Fallin has said she will veto any budget that contains significant cuts to state agencies, many of which have already sustained significant reductions due to the downturn in the economy, among other factors. [Tulsa World] See OK Policy’s Online Budget Guide for more information about the budget process.

Deal, or no deal? Revenue raising measures in jeopardy: The week ends with no deal on a state budget and a shaky deal to raise revenue is on even more unstable ground. The state senate approved a measure to cap itemized income tax deductions at $17,000, but added exemptions for donations to nonprofit organizations. However that plan would fill just one hundred million dollars of the nearly billion dollar budget hole. [Fox25] On revenue options, the right choice is “all of the above.” [OK Policy]

Tell the Legislature what you think about gross production tax rates: The Oklahoma Oil and Gas Association recently ran a series of attack ads urging voters to call Rep. Leslie Osborn and others to voice opposition to higher taxes on the petroleum industry. Osborn, R-Mustang, is chairwoman of the powerful House Appropriations and Budget Committee and has advocated for higher gross production taxes in a period when the state faces horrific cuts in state services because of an inadequate tax base. [Editorial Board/Tulsa World] We must end oil and gas tax breaks to save Oklahoma communities [OK Policy]

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The Weekly Wonk: Legislature votes to repeal tax cut trigger, All of the Above on revenue options, Oklahoma should expand OK Promise scholarships, and more

by | May 14th, 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.

Help Ensure Better Information and Better Policy

We know that especially this time of year, thousands of Oklahomans like you count on OK Policy to help make sense of fast-moving developments at the State Capitol. We hope that you recognize the value of the information we provide through the Weekly Wonk and all our other resources. Please choose to support our commitment to better information and better policy by making a tax-deductible contribution today. Click here to donate online or send a check to Oklahoma Policy Institute, 907. S. Detroit, Suite 1005, Tulsa, OK 74120.

This Week from OK Policy

OK Policy issued a statement applauding the Legislature’s final passage of SB 170, a bill to repeal an automatic income tax cut trigger. Executive Director David Blatt argued that it is time for legislators of both parties to say ‘All of the Above’ to revenue options on the table as they work to resolve the state budget crisis – this theme was reinforced in his Journal Record column. Policy Director Gene Perry pointed out that those opposing the cap on itemized deductions overstated their claims that the measure would significantly reduce charitable giving.

Policy Analyst Courtney Cullison contended that expanding eligibility for Oklahoma’s Promise scholarships would benefit all Oklahomans. Intern Preston Brasch argued that reforms are needed to protect Oklahoma renters from unsafe living conditions. Steve Lewis’s Capitol Update suggests that crafting a budget deal that can survive the legislature and earn Governor Fallin’s approval will be a test of leadership for Speaker McCall.

Advocacy Alert

With only a few days left to negotiate a budget agreement, now’s the time legislators need to hear from you. They especially need to hear your support for ending tax breaks for the oil and gas industry and restoring the historical 7 percent tax rate on all gross production so that we can avoid devastating cuts and make critical investments in our workforce, infrastructure, and health.  Call your Senator at 405-524-0126 and your House member at 405-521-2711. You can look up contact info for your legislators here. See our advocacy alert on ending the special subsidy for oil and gas drilling for more information and resources.

OK Policy in the News

OK Policy’s work in opposing HB 1913 was acknowledged in a Tulsa World editorial lauding Governor Fallin’s veto of the bill. The Tulsa World also used OK Policy research for their editorial about the harm that may come if the American Health Care Act becomes federal law. Tulsa Teacher of the Year Elizabeth Steinocher referred to OK Policy data in her editorial calling for an increase in education funding

Perry was quoted in a Bloomberg BNA piece about Oklahoma’s move to decouple our standard deduction from the federal standard deduction. Outreach and Advocacy Coordinator KaraJoy McKee was interviewed by CNHI for their coverage of the Save Our State Coalition’s budget blueprint proposal.

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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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In The Know: House Republicans and Democrats strike revenue-raising deal, House speaker says

by | May 12th, 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.

Check out OK Policy’s resources for the Legislative session, including Advocacy Alerts, the Legislative Primer, the What’s That? Glossary, and Online Budget Guide.

Today In The News

House Republicans and Democrats strike revenue-raising deal, House speaker says: Republicans and Democrats in the state House have agreed on a plan to raise about $400 million in revenue, Speaker Charles McCall said Thursday. The plan includes increasing the cigarette tax by $1.50 per pack, said McCall, R-Atoka. The current tax is $1.03 per pack. It also includes reducing some incentives given to the oil and gas industry but does not include an increase in the gross production tax or raising taxes on gasoline and diesel, McCall said [Tulsa World].

Lawmakers redo deduction bill to exclude charities: Legislation that would cap itemized deductions on state tax returns now excludes charitable giving from the limit. The latest version of the bill came about after concerns were expressed by nonprofits to carve out donations. The new bill, House Bill 2403, still caps the amount of deductions that can be claimed to $17,000 per year for the next three tax seasons [NewsOK]. The earlier itemized deduction proposal had its flaws, but opponents’ claims were overstated [OK Policy].

Oklahoma officials still pondering oil, gas tax rate hike: Republican leaders in the Oklahoma House and Senate are seriously negotiating a gross production tax rate increase, House Democratic Leader Scott Inman said at a Thursday news conference. Lawmakers, particularly those in the Senate, have been wary of calls to raise the tax rate on oil and gas production, said Inman, D-Del City. Industry officials have said a rate increase would hurt drilling in Oklahoma at a time when activity is rebounding [NewsOK]. To prevent catastrophic cuts and put our finances back on a sustainable course, lawmakers must raise new recurring revenues. Part of the solution needs to include ending tax breaks for the oil and gas industry and restoring the gross production tax to its historical level of 7 percent [OK Policy].

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OCPA’s attack on OK Policy and ITEP doesn’t hold up

by | May 11th, 2017 | Posted in Press Releases & Statements, Taxes | Comments (1)

Last night, the Oklahoma Council on Public Affairs released a statement attacking the credibility and integrity of Oklahoma Policy Institute and the Institute on Taxation and Economic Policy (ITEP). They claim that a “Number of the Day” we cited from a report by ITEP regarding Devon Energy’s effective state corporate income tax rates from 2008 to 2015 is “not based on facts.” However, OCPA apparently did not look at or understand the methodology of the ITEP report, which fully explains where the numbers came from and how they were analyzed to make the best possible estimate of effective state corporate income tax rates.

In essence, the ITEP report reversed “impairment charges” that companies claim based on long-term projected values of oil and gas. These charges are an accounting fiction that have no effect on current income taxes or a company’s cash flow. Impairment charges are widely recognized by investors as separate from earnings and actual expenses when evaluating a company’s profitability and overall health. When calculated correctly, Devon Energy paid $71 million in state corporate income taxes over an eight-year period in which they recorded more than $21 billion in profits, for an effective tax rate of 0.3 percent.

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Itemized deduction proposal has flaws, but opponents’ claims are overstated

by | May 11th, 2017 | Posted in Taxes | Comments (2)

With only a couple of week lefts in the Legislative session, lawmakers are scrambling to put together a budget that avoids devastating cuts to Oklahoma communities. The latest revenue idea to emerge is to limit itemized deductions to $17,000 per tax return, which would increase revenues by $107 million or $166 million, according to different estimates. This idea has been introduced as HB 2347 and approved by the House Joint Committee on Appropriations and Budget (JCAB), though it has recently been pulled from further consideration as lawmakers discuss revising it.

Itemized deduction reform is a promising state budget solution because it would not require the difficult-to-reach 3/4ths supermajority support for a tax rate increase under SQ 640. It also would not harm the large majority of low- and middle-income taxpayers who take the standard deduction instead of itemizing. Under HB 2347, even families and individuals who do itemize would not be affected unless they take more than $17,000 in deductions. A bill to freeze the standard deduction that would affect lower income taxpayers (HB 2348) has already been passed by the Legislature and sent to Governor Fallin, so HB 2347 would help ensure the cost of fixing Oklahoma’s budget shortfall is dispersed across both lower and higher-income households.

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In The Know: Oklahoma schools now shorted $93 million this year in state aid as revenue misses expectations again

by | May 11th, 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.

Check out OK Policy’s resources for the Legislative session, including Advocacy Alerts, the Legislative Primer, the What’s That? Glossary, and Online Budget Guide.

Today In The News 

Oklahoma schools now shorted $93 million this year in state aid as revenue misses expectations again: Public schools learned Wednesday that their monthly payment from the state of Oklahoma would be shorted by an additional $6.8 million, bringing the total reductions since January to $93.4 million. The Oklahoma State Department of Education sent out a memo Wednesday ahead of Thursday payments to local schools notifying them that state revenue collections continue to fall short of expectations in both the 1017 Fund and the Common Education Technology Revolving Fund [Tulsa World]. A proposal to consolidate five schools in southwest Tulsa is part of the budget reduction recommendations Superintendent Deborah Gist plans to present to the school board at a special meeting Thursday evening [Tulsa World]. Oklahoma continues to rank worst in the nation for cuts to general school funding [OK Policy].

Oklahoma Legislature Departs From Trump Plan on Tax Deduction: A bill putting Oklahoma among the first states to decouple from the federal tax code in the wake of President Donald Trump’s tax reform proposal is on the governor’s desk following Senate passage. The legislation separates the state’s standard tax deduction from the federal standard tax deduction. It was sent May 8 to Gov. Mary Fallin (R) following Senate passage May 4 by a 39-6 tally [Bloomberg BNA].

Charitable giving concerns halt plan expected to generate $166M: Lawmakers listened to concerns raised by nonprofits, former Sen. Tom Coburn and the business community Wednesday, after they all spoke out against a bill that would cap Oklahoma’s itemized tax deduction. House leadership confirmed that the bill was pulled primarily because of worries that it would affect charitable giving. House Bill 2347 would be a two-year, $17,000 cap on itemized deductions [NewsOK]. Itemized deduction reform is a promising state budget solution [OK Policy].

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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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In The Know: Proposed bill to raise gross production taxes pulled from budget talks

by | May 10th, 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.

Check out OK Policy’s resources for the Legislative session, including Advocacy Alerts, the Legislative Primer, the What’s That? Glossary, and Online Budget Guide.

Today In The News

Proposed bill to raise gross production taxes pulled from budget talks: One significant revenue-raising measure was pulled just minutes before Tuesday’s Joint Committee on Appropriations and Budget meeting as the gross production tax issue seems to remain the bargaining chip. Senate Bill 867 was pulled, and it would have allowed long-lateral drilling. The bill was expected to generate a nearly $500 million impact in its first year. Rep. Leslie Osborn, the head of the JCAB, said she got a call from House Speaker Charles McCall directing her to stop the bill [KOCO].

State revenue misses estimate by 13 percent: State legislators said that April revenues would likely offset midyear borrowing from the state’s Rainy Day Fund, but the numbers are in, and receipts were 13 percent below projections. The Office of Management and Enterprise Services announced the report Tuesday afternoon. The release said the shortcoming only adds to uncertainty, as agencies fear further cuts and the Legislature struggles to reach a budget agreement. April receipts totaled about $612 million, about $90 million under projection. Fiscal 2017 collections so far are down about $190 million [Journal Record].

Bill to cap itemized deductions passes House committee: House Republicans pitched a revenue measure that could raise about $166 million, and it would do so largely by collecting more taxes from wealthy families. Unlike earlier revenue measures that were criticized for targeting the poor, a handful of the bills pitched during a House committee on Monday would affect higher earners and corporations. One of them, House Bill 2347, has gotten blowback since it passed 23-2 [Journal Record].

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Common sense reforms needed to protect Oklahoma tenants

by | May 9th, 2017 | Posted in Consumer Protection | Comments (1)

Preston Brasch was an OK Policy Spring intern. He is studying law at the University of Tulsa School of Law.

Oklahoma faces a significant affordable housing shortage (see e.g. the 2016 Oklahoma Housing Needs Assessment and A Housing Strategy for Tulsa). Wait lists for programs that provide affordable housing can last anywhere from several months to several years. So what do these low-income families do? They often end up in unsafe and poorly maintained housing — an astounding 75 percent of low-income tenants in Oklahoma live in properties with at least one “housing problem” as defined by the U.S. Department of Housing and Urban Development.

This matters because evidence shows poor housing conditions have tremendous impact on health.  Children are especially vulnerable: one study found that 39 percent of asthma cases in children under six were linked to their homes. In the most extreme cases, tenants experience sewage backing into the home, leaking roofs, and infestations that can cause infectious disease.

It is important to note that most cases are not so extreme, and most landlords try to provide safe homes to their tenants. However, some landlords abuse the flaws in Oklahoma laws to profit off of our state’s most vulnerable citizens. Due to some unintended consequences of Oklahoma laws, local communities face an uphill battle in trying to improve housing that endangers the health of tenants. Fortunately, a few simple fixes could shore up these problems.

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