In The Know is a daily synopsis of Oklahoma policy-related news and blogs. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. You can sign up here to receive In The Know by e-mail.
Today you should know that the Chesapeake Energy Corp. directors said they will enact many of the stockholder proposals a former board opposed last year, and they will cut compensation and perks for CEO Aubrey McClendon and other executives. The extension of a federal tax credit for compressed natural gas has caused CNG prices to drop below $1 at stations around Oklahoma. Historically low natural gas prices are forcing cutbacks by Oklahoma drillers.
In mid-term adjustments to the state’s education funding formula, an online charter school went from receiving no state funding to more than $10 million. The Associated Press reports that the exuberance to cut taxes in many states is becoming chilled by worry about the potential consequences. The OETA director said the public television network may cease to exist in 2014 if a sunset bill passes the state Legislature this year and state funding is withdrawn. Lawmakers continue to search for a way to fund the state Medical Examiner’s Office.
On January 30th, Oklahoma Policy Institute will celebrate its fifth anniversary with a dinner at Cain’s Ballroom in Tulsa. You can purchase tickets here. The Number of the Day is the percentage of fire departments in Oklahoma that are all-volunteer. In today’s Policy Note, Bruce Bartlett shows that sharp increases in the stock market have often followed big tax increases.
In The News
Compensation and perks cut for Chesapeake executives
Chesapeake Energy Corp. directors on Monday said they will enact many of the stockholder proposals a former board opposed at last year’s annual meeting, and that they will cut compensation and perks for CEO Aubrey McClendon and other executives. Chesapeake Chairman Archie Dunham in June said he expected the internal investigation into McClendon’s personal finances to be completed within 90 days. The board said it accepted McClendon’s recommendation that he not receive a bonus for 2012. Also on Monday, Chesapeake said it is changing its executive compensation program to tie pay to the company’s performance, while reducing perks such as personal use of company aircraft.
Federal tax credit cuts price of compressed natural gas in Oklahoma
Compressed natural gas has dipped below $1 a gallon at a handful of stations around Oklahoma, thanks to a tax credit revived in last week’s “fiscal cliff” settlement. The American Taxpayer Relief Act included a package of tax credit extensions that had been recommended by the Senate Finance Committee. One of them was a 50-cents-a-gallon credit on compressed natural gas (CNG). “As soon as we could verify it, we immediately dropped our price,” said Jim Griffith, CEO of Stillwater-based fuel retailer OnCue Express. He said he hopes the new lower price will encourage more drivers to convert to CNG.
Drilling boom comes with its own challenges
The answers to questions about Tulsa energy prospects for 2013 go like this – good, bad and who knows what else. The current boom is focused on oil drilling like producers haven’t seen in a decade or more. Tulsa companies like Eagle Energy and Laredo are racheting up that pace, as are outside firms such as PetroQuest with strong local presences. The darling of Oklahoma drilling right now is the Mississippi Lime trend in the northern part of the state and southern Kansas. The year ahead should see ample investment in horizontal drilling within the long-running limestone. The bummer to this oil party, however, is that other production component: natural gas. In fact, most Tulsa-based producers are traditionally natural gas heavy in their production mixes, and the historically low prices are hitting everyone harder.
Mid-term adjustments: Virtually unbelievable
During the week between Christmas and New Year’s, the State Department of Education released the mid-term adjustments to state allocations. You’ll recall that when districts received their initial state aid notices in July, the SDE had withheld an unprecedented 3.52 percent out of the formula. Her predecessor always capped the reserve at 1.5 percent. With the release of money at mid-term, the reserve should be down to zero. It isn’t. … The biggest winner in mid-term adjustments was Choctaw-Nicoma Park Charter, which went from no state aid to $10,479,233. That’s right, one charter school serving virtual students absorbed more than a quarter of the entire amount let out for mid-term adjustments.
State tax cut plans tempered by caution in 2013
Emboldened by big majorities and eager to lure businesses, Republican legislators and governors across the Midwest and South are planning to pursue hundreds of millions of dollars of tax cuts in the new year. Oh yeah, they might raise some taxes, too. In many states, the exuberance to cut taxes during the 2013 legislative session suddenly has been chilled by worry about the potential consequences. Cautious state officials are now talking about the need for “thoughtfulness,” warning that they’ll “have to see how their numbers work out” and suggesting that tax cuts in one area may need to be offset with increases in another.
OETA chief: Network may cease to exist without state funding
Oklahoma Educational Television Authority may cease to exist in 2014 if a sunset bill passes the state Legislature this year and state funding is withdrawn. A sunset proposal in the Legislature threatens authorization for another year, and some legislators wonder whether funding the network is part of core state services. Dan Schiedel, OETA’s executive director, said the network reaches 99.5 percent of Oklahomans. The network — a state agency Schiedel called “Oklahoma’s storyteller” — has a number of functions, including emergency communication and Amber Alert systems. It is a combination of Public Broadcasting System and local content outlet.
Legislators look to fund M.E.’s office, other state assets
The political will for funding the state Office of the Chief Medical Examiner is better than ever, said state Rep. Randy Grau, R-Edmond. No longer is the debate about whether Oklahoma needs a facility to be built in Edmond. Senate Bill 1337 in 2010 agreed to place the Office of the Chief Medical Examiner in close proximity to the UCO Forensic Science Institute and the OSBI crime lab. Grau recently accompanied a group of freshman legislators on a tour of the current facility. Without funds for the move, the ME’s office has remained on the University of Oklahoma Health Sciences Center campus at 901 N. Stonewall in Oklahoma City. “Now we just have to determine the funding mechanism,” Grau said.
OK Policy to hold 5th Anniversary celebration honoring Melvin Moran and Robert LaFortune
On January 30th, Oklahoma Policy Institute will celebrate its fifth anniversary with a dinner at Cain’s Ballroom in Tulsa. Two of Oklahoma’s most venerable statesmen, Robert LaFortune of Tulsa and Melvin Moran of Seminole, will receive the OK Policy Good Cents/Good Sense Award for their lifetimes of civic engagement based on respectful political dialogue, sound fiscal stewardship, and concern for the less fortunate. Individual tickets for the event are $100 apiece and are now available online or by calling 918-794-3944. The event will begin with cocktails at 6:30; the dinner and awards ceremony begin at 7:00 pm.
Quote of the Day
As soon as we could verify it, we immediately dropped our price.
-Jim Griffith, CEO of Stillwater-based fuel retailer OnCue Express, on a 50-cents-a-gallon tax credit for compressed natural gas that was extended in the recent fiscal cliff deal
Number of the Day
Percentage of fire departments in Oklahoma that are all-volunteer, 2010
Tax increases and bull markets
Many years ago, I was talking to Jack Kemp, for whom I worked in the 1970s. He told me that just before George H.W. Bush signed into law the 1990 tax increase, which Kemp strenuously opposed, he made an appointment to see Bush and made a last-ditch effort to get him to reject the legislation. Kemp told me that Bush told him the legislation would stimulate the economy, which was then suffering from a recession that began in July 1990. The expansion of the 1980s, Bush said, didn’t begin until Ronald Reagan signed the Tax Equity and Fiscal Responsibility Act of 1982. Kemp was incredulous. Tefra, as the Reagan tax increase was called, remains the largest peacetime tax increase in American history. I recalled this incident last week when the stock market rose sharply after the passage of the tax deal, which raised the top income tax rate and the rate on capital gains and dividends. This is the opposite of what should have happened according to Republican doctrine, which holds that the tiniest increase in tax rates, especially on the rich, is economically devastating. That got me thinking about the impact of other tax increases in history. A little research showed that sharp increases in the stock market have often followed big tax increases.
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