Highs and lows of Oklahoma’s 2017 legislative session (Part 1)

At the start of session, OK Policy laid out our top priorities in the areas of budget and taxes, health care, education, criminal justice and economic opportunity. As the session developed, we achieved some victories with good bills and helped stop even more harmful bills from becoming law. And there were plenty of disappointments in the form of promising legislation that died along the way.

Here are our staff’s recaps of the major highs and lows of the 2017 session in the issue areas where we were most deeply engaged. In part one, we share recaps of what happened with budget, tax, and education polices. In part two, we discuss what happened with health care, criminal justice, and economic opportunity policies.

Budget and tax outcomes marked by missed opportunities

As we entered the final week of the 2017 legislative session, there was still no budget, no consensus on how to raise revenues to avoid catastrophic budget cuts, and a strong sense that legislators were headed into special session. Yet by Friday afternoon, a budget was headed to the Governor’s desk and legislators were headed home for the summer. At the last possible moment, Republican leaders came up with over $800 million in new revenue that they could pass without the 3/4ths supermajority that the constitution requires for revenue bills. These revenues allowed for a budget that still leaves state government severely underfunded but avoids the doomsday scenarios many feared.

Whether lawmakers get to enjoy their summer will depend on when and how the Courts rule on challenges to the constitutionality of the new $1.50-per-pack “smoking cessation fee” and other measures that rest on thin legal foundations. Also, by turning to a cigarette “fee” increase and a tax on motor vehicle sales, most of the burden of filling the budget hole was again pushed onto low- and middle-income families while sparing the wealthiest households and powerful industries. One glaring example is that the Legislature froze the standard deduction, claimed by most households earning under $50,000, while opting not to cap the itemized deductions that mostly benefit high-income households. In addition, several bills that would have helped moderate- and low-income working families by restoring the state Earned Income Tax Credit or increasing the Sales Tax Relief Credit failed to gain traction.

The session was marked by many missed opportunities to put our budget on a more sustainable course and create a fairer tax system. OK Policy laid out a broad menu of sensible revenue options for closing the state’s budget hole, including restoring a higher top income tax rate on the highest-income households, ending the exemption for capital gains, adopting combined corporate reporting, and ending tax breaks for oil and gas production. Although some of these ideas were floated as bills that were introduced in the final weeks of session, none advanced from committee or were part of the final budget.

One major achievement this session was passage of SB 170, a bill that repealed a future cut to the top income tax rate from 5.0 to 4.85 percent. This cut would have been triggered as soon as state revenues were projected to rise by as little as $100 million. An overwhelming majority of legislators recognized that the state cannot afford more tax cuts anytime soon and that tax policy should not be put on auto-pilot. Another good bill that passed was HB 2209, by freshman Rep. Marcus McEntire, which will help ensure that legislators and the public know more about who pays taxes and who would stand to gain or lose from proposed tax policy changes.

Our policy agenda also called for improving budget transparency by requiring a week between when the main budget bill (the General Appropriations bill) is introduced and voted on. Instead, the transparency of this year’s budget process sank to an all-time low, with a GA bill that no one had seen or read being rushed from the printers and passed out of committee after 11 pm on the final week of session.

Education policy ambitions petered out by end of session

From the beginning of session, lawmakers talked extensively about providing a teacher raise, but they ultimately failed to deliver. Numerous bills were presented that would have mandated increases to the teacher salary schedule, but while House leaders continued to insist that teacher raises were a priority this year, Senate leadership would only talk about establishing a “framework” for teacher raises in some future year.

In the final week of session, two budget bills were presented in committee — one from the House which included funding for a $1,000 teacher raise and one from the Senate without that funding. A House committee passed both versions of the budget, but the Senate committee passed only their version, which eventually became law. The Senate also refused to hear a bill to cap itemized deductions, which could have provided enough funding for the $1,000 raise.

Other attempts to tackle big education issues this year similarly petered out by the end of session. In its initial version, SB 514 would have required school districts with enrollment of less than 500 students to consolidate with a nearby district. By the end of session, this bill merely created a task force to study relative school district size and administrative costs.

Notably, lawmakers may have finally settled one of most hotly disputed education issues of the past few years. With HB 1760, lawmakers made permanent a provision that allows third graders who haven’t passed a reading test to move on to the fourth grade if the students’ parent, teacher, principal, and certified reading specialist unanimously believe they should be promoted. This exemption from mandatory third-grade retention was controversial when first created in 2014 and only passed after the Legislature overrode Governor Fallin’s veto. But this year, HB 1760 passed the House and Senate unanimously and was signed by the Governor.

Another issue that has been discussed for years but did not pass until this session was removing a requirement that 35 percent of lottery sales be dedicated to education. Lottery officials say this change would mean an overall increase in what they contribute to education, since they’ll be able to offer more games with larger prizes. House staff estimates this change will add $110 million for education over the next five years, although lottery revenue will continue to be a very small part of education’s overall funding needs.

A piece of good news this session is that House lawmakers did not pass SB 81, a bill that would have lowered the age at which students could receive automatic school suspensions and that we warned would break Oklahoma’s obligation to educate all kids. In the years ahead, we hope to see the successful efforts to reduce school suspensions in Oklahoma continue and expand, since suspensions have been shown to significantly harm children’s chances at success while failing to curb violent or disruptive behavior.

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Gene Perry worked for OK Policy from 2011 to 2019. He is a native Oklahoman and a citizen of the Cherokee Nation. He graduated from the University of Oklahoma with a B.A. in history and an M.A. in journalism.

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