In The Know: State leaders announce agreement on tax cut, workers comp, and Capitol repairs

by | April 24th, 2013 | Posted in In The Know | Comments (0)
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In The KnowIn 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 Gov. Mary Fallin and Republican legislative leaders announced a plan to cut Oklahoma’s top personal income tax rate starting in January 2015, overhaul the workers’ compensation system and set aside $120 million to repair the state Capitol. OK Policy released a statement that the proposed tax cuts would do little to help average Oklahomans, take $237 million from schools and other core services, and make Oklahoma more vulnerable to an energy bust or economic downturn. Oklahomans can speak out against the tax cut plan using this online form.

State Impact Oklahoma reports that lawmakers are poised to severely diminish state services’ ability to raise fees. The OK Policy Blog reports that while most attention this year has focused on income tax cuts, another proposal that would cut taxes for corporations by some $50 million has been quietly making its way through the Legislature. Governor Fallin criticized the state Department of Corrections for requesting a $6.4 million supplemental appropriation when it has $22 million in three agency revolving accounts.

The Oklahoma Gazette reported on how former House Speaker Kris Steele has traded politics for hands-on work battling poverty. A bill that would force doctors to perform procedures on terminal patients, regardless of quality of life considerations, has passed the House and Senate and is awaiting the Governor’s signature.

The Number of the Day is the amount that a tax cut proposed by state leadership would take from Oklahoma’s schools and other core services. In today’s Policy Note, the Tax Policy Center discusses how state and local government budget cuts are hurting the economic recovery.

In The News

State leaders agree on income tax cut for 2015

Gov. Mary Fallin and Republican legislative leaders announced a plan Tuesday to cut Oklahoma’s top personal income tax rate to 5 percent starting in January 2015, overhaul the workers’ compensation system and set aside $120 million to repair the state Capitol. Fallin, Senate President Pro Tem Brian Bingman and House Speaker T.W. Shannon unveiled the details of a broad agreement that also calls for an eight-year plan to pay for infrastructure improvements to state buildings and other properties. The tax cut, a top priority for Fallin, would drop the top personal income tax rate from 5.25 percent to 5 percent, effective Jan. 1, 2015. A second cut would drop the rate further, to 4.85 percent, whenever state revenues reach $40 million above fiscal year 2015.

Read more from the Muskogee Phoenix.

See also: STATEMENT: Tax cut plan follows a bad example from Oklahoma Policy Institute

Fees attacked by Legislature, but is it smart to cut off another revenue source?

It’s already nearly impossible to raise taxes in Oklahoma. Now, the legislature is poised to ban raising fees for drivers’ licenses, state parks and other state services, too. A bill placing a moratorium on fee increases through 2016 has passed both houses of the state legislature. If it becomes law, Oklahoma’s options for raising new revenues to pay for government services will be severely diminished. House Speaker T.W. Shannon, R-Lawton, says the moratorium is necessary because Oklahoma has raised fees by more than $100 million since 2007.

Read more from State Impact Oklahoma.

Betting the franchise

While most attention this year has focused on competing proposals to lower the top income tax rate and curtail tax breaks, another proposal that would cut taxes for corporations by some $50 million has been quietly making its way through the Legislature. Lawmakers are seeking to repeal the franchise tax, which is assessed on all corporations that do business in Oklahoma. If lawmakers repeal this tax, they should also take steps to protect state revenues and make business taxes fairer.

Read more from the OK Policy Blog.

Governor criticizes Department of Corrections for keeping money in revolving funds

Oklahoma Corrections Director Justin Jones is in trouble with the governor. The governor is demanding an explanation as to why Jones’ agency had been urgently requesting a $6.4 million supplemental appropriation at a time when it had about $22 million stashed in three agency revolving accounts. Clark Jolley, chairman of the state Senate Appropriations Committee, also is demanding an explanation. Jones abruptly withdrew the agency’s supplemental appropriation request April 15 after Steve Burrage, chairman of the Department of Corrections’ budget committee, questioned why the agency was asking for more funds when it had such a large amount in the three accounts.

Read more from NewsOK.

Former House Speaker trades in politics for hands-on work battling poverty

It’s not every day that someone goes from Oklahoma legislative leader to the nonprofit world. But that’s exactly what former state House Speaker Kris Steele has done. Founded in 1987, the Oklahoma City-based nonprofit began as a support center for men battling substance abuse, but now focuses on providing free education and job placement services to men and women working to turn their lives around. Steele, a Shawnee Republican who served as House speaker from 2010 to 2012, said TEEM gives him an opportunity to work on tackling poverty, homelessness and unemployment in a more hands-on manner.

Read more from the Oklahoma Gazette.

Divisions arise that over bill that would force doctors to perform procedures on terminal patients

A bill aimed at preventing health-care providers from denying possibly life-extending treatments to dying patients based on the patient’s potential quality of life is sharply dividing opinions. House Bill 1403 has passed the state House and Senate and is currently awaiting Gov. Mary Fallin’s decision. Preventing discrimination against the elderly, disabled and terminally ill may sound like the compassionate thing to do, but it could mean doctors are forced to provide therapies that will result in more pain and, in some case, shorter lives, said Dr. Jennifer Clark, the director of palliative medicine at Hillcrest Medical Center. “You have to weigh the risks and benefits of those options with regard with what’s going on in (a) patient,” Clark said. “If you make a carte blanche law that compels physicians to do something that violates their primary oath – first, do no harm – you’re going to put patients in direct (risk) of receiving inappropriate and harmful medical treatment.”

Read more from the Tulsa World.

Quote of the Day

It’s difficult for any legislative leader to predict what the economy in Oklahoma will look like in two months, let alone in a year and a half. But the governor and her leading Republicans have determined that the economy will be well enough to afford a more than $230 million tax cut.

-House Democratic Leader Scott Inman, D-Del City

Number of the Day

$237 million

Amount that a tax cut proposed by state leadership would take from Oklahoma’s schools and other core services

Source: Oklahoma Policy Institute

See previous Numbers of the Day here.

Policy Note

Why state and local governments are hurting the recovery

Until the Great Recession, state and local governments played a remarkably constant role through down business cycles. For four decades, when the economy turned sour, state and local governments boosted their spending—mitigating the depths of recessions and adding to growth when the economy revived. (Of course, this growth was partially offset by the negative effect of taxes collected to pay for that extra government spending.) It was different this time. State and local governments addressed looming budget gaps by cutting expenditures. Instead of contributing to growth, their budget cuts dragged down the recession even further. And when the economy turned a corner in mid-2009, state and local government consumption (i.e., current spending on government programs like police and fire departments, education, and health) and investment remained depressed—a big reason why the recovery has been so weak.

Read more from the Tax Policy Center.

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