Last week, the Oklahoma legislature adjourned one of the more extraordinary legislative sessions in recent memory – one that followed one special session, ran partially concurrently with another, included nine days of protests at the Capitol, saw the Legislature raise revenues for the first time in nearly 30 years, witnessed a first step in criminal justice reform after years of efforts, and resulted in the largest funding bill in state history (although not if adjusted for inflation). But in all of the confusion and breaking news, it was easy to miss other developments. In the posts below, brief summaries by issue area lay out the major victories and defeats of this spring’s legislative session.
Budget & Taxes
The budget was front and center from the first day of regular session this year, as lawmakers continued to meet in a special session trying to fill a budget hole from last year’s cigarette fee being ruled unconstitutional. After the failure of a revenue bill based on the Step Up plan in February, lawmakers addressed the remaining FY 2018 budget shortfall by passing a new General Appropriations bill that imposed mid-year budget cuts of 0.66 percent, for a total cut of $46 million.
The dramatic passage in late March of HB 1010xx – the first major revenue bill ever to clear the 3/4ths supermajority requirement under State Question 640 – paved the way for approval of the FY 2019 budget. HB 1010xx increased the cigarette tax by $1 per pack, the fuel tax on gas by $0.03 per gallon and on diesel by $0.06 per gallon, and the initial gross production tax rate from 2 percent to 5 percent. HB 1010xx, along with a bill to limit itemized deductions (HB 1011xx) and one to expand collections from online retailers (HB 1019xx), raised an additional $507 million for the FY 2019 budget. This was enough to provide an average $6,100 raise for teachers (HB 1023xx), smaller increases for school support staff (HB 1026xx) and state employees (HB 1024xx), and some $77 million for school operations and increased flexible benefit costs. A veto referendum challenge to HB 1010xx has been filed and has until July 2018 to submit signatures.
The total FY 2019 budget is $7.566 billion, an increase of $718.5 million, or 10.5 percent, compared to the initial FY 2018 budget approved last May. Several agencies, including the Department of Human Services and Department of Mental Health and Substance Abuse Services, will receive additional funding in FY 2019, but most agency budgets will remain flat other than increased funds to cover pay raises. The Oklahoma Health Care Authority received an additional $110 million to cover the loss of federal funds for graduate medical education.
Other notable tax policy legislation included passage of HB 3375 that amends the Model Tribal Gaming Compact to allow for house-banked table games involving dice or roulette wheels. Several bill to eliminate the refundability of the zero-emission tax credit for wind producers failed to gain final passage. A bill to end the deduction for capital gains, SB 1086, passed the Senate but was not taken up in the House despite repeated efforts by House Democrats to bring the bill to the floor. A bill to expand reporting requirements for online retailers that do not collect sales tax, SB 337, was vetoed by Governor Fallin.
A major disappointment this session was the failure of several measures that would have given voters the chance to lower the 75 percent supermajority requirement for revenue bills established by SQ 640. Under SJR 35, voters this fall will be asked to approve the creation of a new budget reserve fund, the Oklahoma Vision Fund, which would receive a portion of future gross production taxes. A companion measure, HB 1401, would create the Oklahoma Vision Fund in state statute. Lawmakers also tweaked another reserve fund, the Revenue Stabilization Fund, to push back when the fund will start receiving deposits.
Even as the Legislature was consumed for most of the year with debates over how to fund education, the education policy landscape outside of funding was relatively quiet. School voucher proponents began the year with a push to increase the tax dollars flowing to private schools, but these efforts quickly fell by the wayside. Lawmakers introduced numerous measures to add regulations or increase oversight of public charter schools, but none of these bills were given a hearing in committee.
Legislation to address potentially harmful school discipline practices also fell short this year. After Oklahoma Watch drew attention to the poorly regulated use of “isolation rooms” in some schools to discipline students with disabilities, lawmakers introduced a bill to make sure use of these rooms followed national guidelines and precautions. That proposal made it through the House but was voted down by the Senate. A bill to end lunch shaming — where schools could deny meals to kids or stigmatize kids who are behind on school lunch payments — was approved in committee but unfortunately was never given a hearing in the full House.
One significant proposal that did pass the Legislature and will now go to a vote of the people in November is a state question that will open up school building funds for more uses. While this measure could be welcomed by some schools that will have more flexibility with how they use their funds, we warned that it could force tough choices and push schools to defer building maintenance in ways that create much more expensive problems in the future.
After getting stopped at the goal line last year, the package of justice reforms offered by the Governor’s task force faced an uncertain future for much of the session. They finally passed in late April, marking the most significant steps the state has taken to curb its prison population growth. Though the bills were weakened after an agreement between legislative leaders and District Attorneys, they will slow prison population by about 5,000 inmates by 2026. The new laws include a streamlined parole process for people convicted of nonviolent crimes; reducing sentences for some drug, burglary, and theft crimes; and implementing evidence-based supervision practices. Other positive legislation included, SB 1021, which will prevent judges from denying a public defender to people who are able to make bail; HB 3393, which prohibits restraints for women who give birth while incarcerated; and SB 1203, which lowers costs for minor speeding tickets.
Unfortunately, the Legislature passed other measures that move our justice system backwards. SB 1221, a bill originally meant to improve the Pardon and Parole Board, turned into a bill that guarantees a path to sentencing children to life in prison without parole. If signed by Gov. Fallin, it would move Oklahoma in the opposite direction of neighboring states who have mostly banned juvenile life without parole. The Legislature also passed SB 1098, which creates a commission made up mostly of District Attorneys and law enforcement representatives to recommend changes to the state’s sentencing laws. Given the opposition of District Attorneys to justice reform measures in recent years, and the commission’s lack of focus on evidence or reducing incarceration, it’s very likely that the commission will come up with recommendations that would undo the progress promised by the justice reforms that were passed this year.
Though medical marijuana was a hot topic this year, nothing came of the measures proposed to amend SQ 788 in the event that it passes. SB 1120 would have drastically narrowed who can get a medical marijuana license and imposed harsh penalties for diverting the drug from its medical use, and HB 3468 would have lengthened the unfeasibly short timeline for implementing the law and established a commission to regulate the drug. Both measures died near the end of session, but lawmakers have signaled they could come back to amend the law if it passes in June.
Economic Opportunity & Financial Security
SB 1581 creates a shared leave bank for state employees to draw on when they need more than a few vacation or sick days to deal with an illness, bond with a new child, or care for a family member. Though this only benefits state employees, it’s a positive step toward better paid leave policies for all Oklahoma workers. Sadly, pay transparency did not fare as well. HB 1530 would have allowed workers to discuss their wages with one another without fear of discipline or termination, but it was voted down by the Senate Business, Commerce, and Tourism Committee. Bills to incentivize work by expanding tax credits for low- and moderate-income Oklahomans were, regrettably, not successful. The Earned Income Tax Credit was not restored to full refundability, and the Sales Tax Relief Credit was not expanded.
In good news for working Oklahomans, there was some positive movement on occupational licensing reform. SB 1475 creates a commission to continue the work of the Occupational Licensing Task Force by reviewing all occupational license requirements and making recommendations for changes, while HB 2933 creates a one-time waiver of occupational licensing fees for low-income applicants. Unfortunately, HB 2894, which would have required licensing boards and agencies to adopt targeted criminal background restrictions rather than blanket bans, did not pass this session.
Finally, an effort to restore transparency in payday lending fell short. SB 1572 would have allowed us to better understand how the payday loan industry operates in Oklahoma by making regular reports on usage trends and costs available to the public again. Though the bill was approved by the Senate, it was not taken up by the House Judiciary Committee.
Health and Human Services
The outcomes of this legislative session for health care are something of a mixed bag. In a victory for Oklahoma families, SB 1030, which would have terminated insurance coverage for 43,000 people by cutting the upper income limit for SoonerCare eligibility for parents, was defeated in a Senate committee. Attempts to revive a dangerous effort to privatize SoonerCare (SB 1285, SB 1331) failed early in the session, as did a last-minute bill (HB 3714) to privatize Medicaid dental services. And state health agencies saw funding boosts, much needed following years of cuts. As a result, providers contracting with the Health Care Authority, the Department of Mental Health and Substance Abuse Services, and the Department of Human Services will see rate increases. The Department of Human Services also received $2 million towards reducing the developmental disabilities services waiting list, and was directed to establish a respite care waiver. The Legislature also instructed DHS to reverse previous cuts to the foster care rates and the adoption subsidy, increase child welfare workers’ salaries, and increase child abuse funding.
However, this legislative session also saw the beginnings of an effort to move health care for low-income Oklahomans even further out of reach. In March, Governor Fallin signed an Executive Order directing the Health Care Authority to produce recommendations for allowing the state to terminate Medicaid coverage for parents who don’t work enough hours, and a bill (HB 2932) directing the Health Care Authority to obtain federal permission to implement this work requirement passed on the final day of session.
Finally, just one of a slew of bills that would have transferred the authority to appoint state health care agency heads from agency boards to the Governor advanced to Governor Fallin’s desk. HB 3036 was signed by Governor Fallin earlier this month.