Bill Watch: End of legislative session is in sight

Yesterday Governor Stitt announced that he expects to have a budget deal by early next week — an event which typically signals that the legislative session is coming to an end. Lawmakers must adjourn by May 31st, but they can adjourn sooner. We expect the 24th, two weeks from today, to be a likely last day for this year’s Legislature.

Still, a few key issues remain unresolved. We have yet to see what next year’s budget will do for teacher and state worker pay, along with how much Oklahoma can make progress on reversing the deep cuts made to nearly every state agency over the past decade. Criminal justice reform remains unresolved as key bills are still being worked on in conference committee. And a big question remains of whether lawmakers will come up with a plan this year to expand health coverage to head off a state ballot initiative in 2020.

Here are the latest developments in key bills we’re following in these areas and others:

Economic Opportunity

The unemployment rate for people that have been justice-involved is five times higher than the general population, but legislation to make occupational licenses more accessible for those with a criminal record could be law soon. HB 1373 (Rep. Taylor and Sen. Daniels) has been passed by the Legislature and awaits the Governor’s signature. The bill would prohibit licensing boards and agencies from using blanket bans and vague standards like “good moral character” to disqualify anyone with a prior offense from an occupational license. Instead, licensing authorities would be required to develop a list of specific offenses directly related to the occupation that would prevent someone from getting a particular license. This legislation is a positive step forward and would help a population that faces significant barriers to employment to build economic security.

Health Care

Just a few weeks ago, hundreds of Oklahomans rallied at the Capitol to ask legislators to pass a plan to expand health coverage. But now, legislators are running out of time to produce and pass a plan — especially given plans to adjourn one week early. The House has suggested putting together a summer working group to develop a plan to be introduced in the 2020 legislative session, potentially setting up a collision with a Medicaid expansion ballot initiative.

However, another showdown is closer on the horizon. After Gov. Stitt vetoed SB 841 (Sen. McCortney and Rep. McEntire), which would have set new requirements for the third-party companies that administer prescription drug programs for health insurance companies, House legislators made a few alterations to a similar bill, HB 2632 (Rep. Echols and Sen. McCortney) and advanced it. Under these bills, pharmacy benefit managers, or PBMs, would have to open their networks to any pharmacy that wanted to participate in the plans. The State Chamber of Commerce, which opposes the legislation, claims that forcing broader pharmacy networks would result in higher costs, but pharmacists say that PBMs’ narrow networks limit competition. The newly amended HB 2632 passed the House unanimously and proceeds next to the Senate.

Justice System

The next two weeks will determine the ultimate outcome of many of the criminal justice priorities that we’ve been following this session. Budget negotiations over funding our courts and ending Oklahoma’s reliance on fines and fees to pay for core government services are still central to this debate. Legislative leaders have also expressed a desire to include a pay raise for correctional officers in this year’s budget. Meaningful investments in mental health, substance abuse treatment, and diversion services will also be critical to reversing Oklahoma’s costly incarceration crisis. Here are a few of the key bills we’re following this week.

SB 186 (Sen. Shaw and Rep. Worthen), which increases a fee charged to certain criminal defendants, was signed into law by the Governor last night. This bill increases Oklahoma’s reliance on fees from mostly low-income defendants to fund our courts. Now that SB 186 has become law, the cycle of court debt which traps Oklahomans in prison simply because they can’t afford to pay for their freedom could grow larger.

In more positive news, SB 252 (Sen. Thompson and Rep. Kannady), the most significant Oklahoma bail reform measure in decades, and HB 1269 (Rep. Dunnington and Sen. Bice), which makes the impact of State Question 780  retroactive, both continue in conference negotiations. The language of both measures is still likely to be amended before the deadline to pass out of conference next week.

SB 694 (Sen. Thompson and Rep. Kannady), which reforms court funding, passed out of conference this week and is headed to be signed by the Governor.

Taxes

As we’ve discussed previously, this has been a notably low-key session for tax policy, with no proposals for either tax increases or tax cuts gaining serious consideration. Nonetheless, a significant number of bills to expand existing tax breaks or create new ones have made their way through the legislative process and have either reached the Governor’s desk or are now headed to a conference committee.

Gov. Stitt has now signed about a dozen tax-related bills. Of these, only SB 200 (Sen. Thompson and Rep. Dunnington), which expands the annual cap on the Film Enhancement Rebate Program from $4 million to $8 million and makes certain large-scale projects eligible for additional payments, came attached with a fiscal impact of over $1 million. Other tax bills signed by the Governor, including SB 893 (Sen. Scott and Rep. Worthen), which reinstates an income tax exemption for a taxpayer who contracts with a child-placing agency, and HB 1003 (Rep. Sanders and Sen. Thompson), which provides a sales tax exemption to American Legion organizations, have smaller costs. HB 2095 (Rep. O’Donnell and Sen. Bice), which amends an income tax credit for investments in clean-burning motor vehicles, caps the credit at $20 million annually as of FY 2020; however, the Tax Commission does not expect any significant increase in the credit’s costs under the new law.

The two outstanding bills with the greatest potential fiscal impact are now in conference committee. HB 2355 (Rep. Chad Caldwell and Sen. David) allows for a trade-in to reduce the sales tax liability on motor vehicles and exempts trucks and other heavy vehicles from the 1.25 percent motor vehicle sales tax. It has an annual fiscal impact of $53.5 million. HB 2667 (Rep. Wallace and Sen. Paxton), which exempts gambling losses from the $17,000 cap on itemized deductions, has a $17.8 million fiscal impact. The other bills with a fiscal impact greater than $1 million are SB 746 (Sen. Smalley and Rep. Pfeiffer), which creates an income tax credit for qualified software or cybersecurity experts, and HB 2303 (Rep. Tadlock and Sen. Bullard), which exempts commercial forestry equipment from the sales tax. Other tax bills being considered either have a more modest or undetermined fiscal impact.

ABOUT THE AUTHOR

Oklahoma Policy Institute (OK Policy) is a non-partisan independent policy think-tank. OK Policy promotes adequate, fair, and fiscally responsible funding of public services and expanded opportunity for all Oklahomans by providing timely and credible information, analysis, and ideas.

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