‘The fat is in the fire’ (Capitol Updates)

Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol. You can sign up on his website to receive the Capitol Updates newsletter by email.

Photo by Patrick McFall / CC BY-SA 2.0
Photo by Patrick McFall / CC BY-SA 2.0

“The fat is in the fire.” I was greeted by this comment from a state agency director as I walked into the Capitol on Thursday morning. I asked him what he was talking about, and his response was “everything.” And it’s true. Some legislators are learning for the first time how large cuts in agency budgets — following years of cuts for most agencies — are going to affect services and programs for people in their own districts. At the same time the leadership is finally trotting out revenue increasing proposals to try to soften, but not eliminate the blow. Some of these revenue raisers will require difficult votes either way. Thus the agency director’s comment about the roiling that will continue for the next few weeks.

The bills introduced last week give us a hint of the budget blueprint. SB 1577 eliminates certain tax credits on economically at risk oil and gas leases. The bill would produce $132.9 million in revenue for various funds. SB 1578 sunsets the tax credit on energy efficient homes. The revenue impact has yet to be determined. SB 1579 directs the tax commission to enhance collection efforts on sales, income tax and gross production tax. The effort, costing $4.4 million, is expected to produce $26.8 million in additional sales, $6.6 million in additional income, and $20 million in additional gross production tax revenue. SB 1580 lowers the cumulative cap on affordable housing tax credits for the next 3 years to produce $900,000 in additional revenue. SB 1581 temporarily reduces the cumulative cap on tax credits for equipment to convert vehicles to compressed natural gas to produce $5.8 million in revenue.

HB 3204 reduces the tax credit on railroad rehabilitation expenditures by 25 percent, and HB 3205 shortens the time from 3 years to 2 years to file for a sales tax refund which has been overpaid. Revenue estimates are yet to be determined. HB 3206 requires the Tax Commission to certify to the Board of Equalization on the first Monday of December each year the amount of cash that will be available but unneeded for the current fiscal year. That will make the money available for certification for appropriation when the Equalization Board meets later in the month. It is anticipated that this week other measures will be introduced to further narrow the $1.3 billion gap between this year and next year.

There is no doubt a lot of time and work has gone into these and future proposals by the Legislative leadership. It looks as though the plan includes structural changes in budgeting as well as a willingness to lower or eliminate tax breaks that either don’t accomplish their purpose or have been stretched to cost more than the state can afford. It didn’t take long for some to respond. The State Chamber of Commerce under the mantra “not on the backs of business” has urged its members to call legislators and tell them to find “real solutions” to the budget that don’t “balance the budget on the backs of business.”

The one thing that really concerns me about their process is that it appears legislators have decided to start revenue measures in the Senate. This seems to be in direct conflict with Article V, Section 33A of the Oklahoma Constitution that provides, “All bills for raising revenue shall originate in the House of Representatives. The Senate may propose amendments to revenue bills.” Apparently there are some who feel this provision does not apply to removal of tax credits or exemptions, but only increases in tax rates. To me, the provision is not that narrow. “All bills for raising revenue,” in my mind would include bills that take away tax credits and exemptions for the purpose of raising revenue. If nothing else these bills will invite litigation from those who don’t like them. When it takes no more effort at this point to pass these bills the safe and sure way, I cannot imagine why legislators would want to take such a risk.

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Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.

4 thoughts on “‘The fat is in the fire’ (Capitol Updates)

  1. Again I state, budget cuts will not help the state. do 1 thing and 1 thing only. Legalize marijuana. 1)you reduce the need for new prison ( making more budget money by eleminating that expense) 2)you reduce the number of incarcerated ( reducing the need for the new prison as well, as well as reducing cost to tax payers. 3)you increase tax revenue from taxes on marijuana. 4) you increase sales tax from grocery and convenient stores as the pot smokers raid the fridge. 5)you reduce overall crime rate ( again further reducing the need for the new prison, further reducing the prison populace, and further reducing the strain on tax payers to pay for the feeding and housing of inmates) 6) you eliminate the need to spend tax money suing states that were smart enough to see the gains to be had from legalizing marijuana. Colorado saw almost 1 billion in sales tax for 2015 from marijuana sales along. If we are smart and do the same as other states we will eliminate the need for tax hikes, cutting taxes benefits for poor working families ( since we seem incapable of increasing taxes on the rich and powerful for some reason ) and the need to keep imprisoning people for smoking a plant THAT GOD PUT HERE.

  2. Good idea legalizing pot, but before we do this we should really study the experiences of states that have done so. There may be hidden costs. A hidden cost in Colorado has included increased emergency room visits due to marijuana intoxication.Also Marijuana hasn’t been legalized federally. It is still a dea schedule 1 medication. Raising taxes revenue needs to be carefully reasoned.

  3. while i see your point on the hidden cost of increased emergency visits, that has also declined. I am pretty sure if the prohibition was still in effect and alcohol just got legalized it would be the same. people dont know their limits, and consume more pot than they can handle. at this point I think the inumerable gains to be had drastically outweigh the cost of medical care.

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