OKPOLICY.ORG
By Barbara Hoberock
OKLAHOMA CITY — Gov. Mary Fallin and legislative leaders are waiting on more information before possibly returning in special session to fix a major budget hole.
“It is not necessary to make the call for a special session until a workable solution has been identified,” said Michael McNutt, a Fallin spokesman. “The governor and her staff are discussing with legislative leaders and legislators options that will bring about a solution. This is not an easy task and will take time to accomplish.”
Fallin met with Republican legislative leaders on Friday.
Lawmakers are poised to return to the Capitol in special session after the Oklahoma Supreme Court ruled invalid a $1.50 tax on cigarettes because lawmakers didn’t follow the law when passing it.
Early on, lawmakers knew they were facing a big problem — a budget hole of about $878 million.
As the session ground toward a close, budget negotiations broke down between Republicans, who control both chambers of the Legislature, and Democrats.
Unable to pass a $1.50 increase on a pack of cigarettes as a tax, which would require a super majority in both chambers, the Legislature passed it as a fee, which required only a simple majority vote, despite numerous predictions that it would be struck down under the Oklahoma Constitution.
A few months later, the Oklahoma Supreme Court did just that, saying the “fee” was essentially a tax and that the Oklahoma Constitution requires that revenue-raising bills have at least a 75 percent majority vote and cannot be passed in the final five days of a legislative session.
“They lost their gamble to avoid special session in June, and now they need to finish their work and get it done in August or September,” said David Blatt, executive director of the Oklahoma Policy Institute.
Two other lawsuits are challenging a 1.25 percent sales tax on the purchase of vehicles, which is expected to generate $123 million for the state in fiscal year 2018.
Affected agencies: The cigarette measure was expected to have generated $215 million for the following agencies: Department of Mental Health and Substance Abuse Services, $75 million; Department of Human Services, $69 million; and Oklahoma Health Care Authority, $70 million. The Health Care Authority is the state’s Medicaid agency.
Jo Stainsby, a spokeswoman for the Oklahoma Health Care Authority, said the loss of the $70 million will also lead to a loss of about $105 million in matching federal dollars.
“We have been trying and will continue to try to avoid provider rate reductions if at all possible,” Stainsby said. “However, there are a minimal number of ways to reduce the agency’s budget due to federal … requirements. When looking to reduce our budget, we have some optional benefits, mainly for adults, that can be eliminated and-or reduced, and we can make provider rate reductions.”
As of July 10, some 813,684 Oklahomans were covered by the SoonerCare program, administered by the Health Care Authority. Of that, 66 percent were children, she said.
At the Department of Human Services, “Director Ed Lake said we can’t absorb a $69 million loss from the budget, but he is not ready to declare the sky is falling just yet,” said Sheree Powell, a DHS spokeswoman. “He is going to be working carefully with the governor and legislative leaders on a possible solution to the revenue shortfall.”
Jeff Dismukes, a spokesman for the Department of Mental Health and Substance Abuse Services, said that if the $75 million designated for that agency is not replaced, it will have a devastating impact for all Oklahomans. Coupled with the loss of federal dollars, the agency stands to lose close to $181 million, he said.
Legislative options: Jonathan Small, president of the Oklahoma Council of Public Affairs, said every effort should be made to solve the challenges before a special session.
McCall has suggested using some $83 million in cash and looking at the “rainy-day” fund.
Small said that if lawmakers are required to return to the Capitol for a special session, increasing taxes should not be considered because other revenue sources, such as the Tobacco Settlement Endowment Trust, are available.
Oklahoma used lawsuit settlement money from the tobacco industry to create an endowment that earns interest. The earnings are spent to improve health, including through smoking cessation.
Any changes to that formula would have to go to a vote of the people, said John Woods, the trust’s executive director.
“If approved, those funds would have no impact in the current budget year and would not be available until at least FY2020,” he said. “If that were to occur, you would have a one-time fix from a diminishing fund source, and funds meant to create long-term health improvements and cost savings would be quickly depleted and preventable deaths would rise, as would the cost to small businesses, the government and every Oklahoman.”
But lawmakers could return in special session and again attempt to pass revenue-raising measures.
Lawmakers could also return and make cuts to other agencies to soften the blow to those that were affected by the court decision. Lawmakers also could wait until returning to regular session to make adjustments.
“We think that just running away from their responsibilities and doing nothing will have devastating consequences for the most vulnerable Oklahomans, and that should not be an option,” Blatt said.
Lawmakers need to return to the Capitol and get it right, he said.
“I am not even sure it requires great courage,” Blatt said. “It requires them to meet their responsibility to constituents and citizens of the state to pass a budget that respects the law and meets people’s needs.”
http://www.tulsaworld.com/news/capitol_report/fallin-legislative-leaders-mull-options-to-deal-with-budget-hole/article_bf3ac023-bd31-5066-94e4-0c3cb49065b1.html
