The 2016 session began with some high hopes and grave concerns given the state’s massive budget shortfall. Prior to session, OK Policy laid out our top priorities in the areas of budget and taxes, health care, education, criminal justice, economic opportunity, and voting and elections. A few of our priorities met with success, many did not, and there were more than a few surprises along the way. Here’s our staff’s recap of the major highs and lows of the 2016 session in the issue areas in which we were most deeply engaged.
Budget and Taxes
The top highlight was the repeal of the double deduction for state income taxes, a nonsensical tax break that mostly benefits the wealthiest households. Doing so brought in an additional $87 million for the FY 2017 budget to help limit funding cuts to common education, health care, and public safety. Lawmakers also passed bills that could lead to better budget practices, including ones to require longer-term forecasts and to create a new Revenue Stabilization Fund.
Yet there were many major disappointments on budget and tax policy. Chief among these was the failure to halt an ill-timed tax cut that was never supposed to take effect in the midst of a massive budget shortfall. A sensible bill to delay the next scheduled income tax cut died on the final day of session. While most corporate tax breaks were left untouched, the Legislature slashed the Earned Income Tax Credit, a key income support for low-wage workers. More broadly, despite months of talk about the need for structural reforms that would put our budget on more sound long-term footing, the budget was balanced with over $600 million in one-time funds that deepen the structural budget deficit and ensure a huge hole for FY 2018, even if oil prices recover.
Two important bills that passed this year with overwhelming bipartisan support offer a course-correction away from some of the “education reform” initiatives enacted earlier this decade. HB 3218 took an important step towards reducing over-reliance on standardized testing. The bill ends the requirement that high school students pass at least 4 out of 7 high-stakes end of instruction exams before they are allowed to graduate. It also gives educators more of a voice in developing plans for testing, graduation requirements, and accountability. HB 2957 gave schools more flexibility in deciding whether and how to implement “value-added measures” for evaluating teachers based on test scores. While districts will still be allowed to use quantitative measures to evaluate teachers, the bill returns decisions on how to do that back to local educators.
Another positive development was that bills to create Education Savings Accounts to pay for students to attend private schools failed once again in 2016, despite a huge push for them from influential legislators, Governor Fallin, and conservative activists. Parents and educators protested that Education Savings Accounts could drain support from public education and damage Oklahoma’s responsibility to provide a quality education to all students, not just those who can afford to pay for it.
Legislators can be faulted for having spent months promising teacher pay raises that most knew were never going to happen without a willingness to halt tax cuts or approve new recurring revenue. In addition, the secrecy and last-minute release of the budget forced schools to make damaging decisions about teacher layoffs and other cuts for the next school year without knowing what their funding levels would be. While the budget managed to hold school aid funding at its revised FY 2016 level, the program and activities budget, which supports alternative education, reading programs, early childhood centers, teacher retirement contributions and much more, was cut by 30 percent. Meanwhile, higher education saw its budget slashed by close to 16 percent, which will lead to fewer classes, less financial assistance, and higher tuition for Oklahoma college students in the coming year.
One clear victory came when legislators finally responded to long-standing efforts of health care advocates by passing HB 2962, which requires insurance providers to cover services for children diagnosed with autism. A more symbolic victory is that for the first time in years, accepting federal funds to expand health insurance coverage was seriously considered and endorsed by Governor Fallin. Although the proposed plan was ultimately rejected, the fact that expanding coverage under the Affordable Care Act became a normal part of the discussion means that it’s a little closer to being a reality.
Meanwhile, an alarming proposal to eliminate Medicaid coverage for tens of thousands of the lowest-income working-age adults passed the House before being defeated in a Senate committee. Although the proposal was unlikely to have passed muster with the federal government, it represented a mean-spirited and counterproductive attitude toward Oklahomans in poverty.
Health care providers, clients, and advocates who had been fearing massive Medicaid rate cuts breathed a sigh of relief at the end of session on news that the FY 2017 budget provides a slight increase to the Oklahoma Health Care Authority. At the same time, the Department of Human Services and Department of Mental Health and Substance Abuse Services face continued shortfalls that will force deeper cuts to services for our most vulnerable populations.
The movement to address Oklahoma’s crisis of over-incarceration took some important steps forward this session. The Legislature passed bills that lower mandatory minimums (HB 2479), raise the property theft felony threshold (HB 2751), expand District Attorney discretion to file felonies as misdemeanors (HB 2472), and expand availability of alternatives to incarceration (HB 2753 and HB 2902). These laws reduce penalties for low-level offenses and give judges and prosecutors more options to avoid harsh prison sentences. In time, this should help to reduce or at least slow down the growth of the prison population.
The session began with high hopes for addressing the growth of fines and fees in the criminal justice system. Unfortunately, at the end of session, two bills that would significantly increase fees for both criminal and civil cases (HB3220 and SB1610) were rushed through the Legislature to provide funding for the court system.
One bright spot this session was that a bill to create “flex loans”, a brand new form of short-term credit akin to payday loans with a 20 percent monthly interest rate, was introduced but was abandoned by its author, Sen. David Holt, in the face of intense public opposition. Several promising bills to expand economic opportunity were introduced but failed to make it through the legislative process. A bill to prevent gender-based pay discrimination that had strong bipartisan support was on the Senate agenda for final passage on the last day of session but was not heard. A bill to provide greater protections for pregnant workers was refused a hearing in committee, while legislation to remove barriers for ex-felons to get state-issued occupational licenses died when it was denied a Senate hearing. Gov. Fallin did, however, take an important step towards expanding economic opportunity for those with prior felony convictions when she signed an Executive Order to “ban the box” to prevent state agencies from inquiring about a job applicant’s past convictions in the initial stage of the hiring process.
Overall, perhaps the best that can be said about the 2016 session is “it could’ve been worse.” There will be much more work to do when a newly-elected Legislature convenes on February 6, 2017.