In The Know: Gov. Fallin releases plan to abolish income tax

In The KnowIn The Know is a daily synopsis of Oklahoma policy-related news and blogs. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. E-mail your suggestions for In The Know items to You can sign up here to receive In The Know by e-mail.

Today you should know that Gov. Fallin outlined a budget plan to deeply reduce Oklahoma’s personal income tax rate by eliminating dozens of tax exemptions, including many claimed by poor and working-class Oklahomans. It would also significantly reduce state revenues and include a trigger that cuts the rate further any time the budget begins to recover. OK Policy released a statement in response to the plan. Find more on the tax debate here, including a new action alert on why it’s important to save the income tax and what you can do today.

An overcrowded prison system, an outdated state water plan, and a child welfare system failing to properly care for vulnerable Oklahoma children are a few of the problems facing lawmakers in the 2012 legislative session, which began yesterday. OK Policy released an updated 2012 Legislative Primer explaining how state government and the legislative process works. Gov. Fallin announced that she has signed an executive order banning tobacco use on state property.

The Tulsa World summarizes a new report outlining how DHS failed to protect three young Oklahoma children. See the full report from the Oklahoma Commission on Children and Youth. The Oklahoma Supreme Court declined to hear a challenge to the DHS settlement of a lawsuit over foster care abuses. A Senate committee approved a “personhood bill” the defines life as beginning at conception. The OU Daily writes that this bill would bring dangerous and extreme consequences.

Rep. Jason Murphey said he believes it is only a matter of time before open records and open meetings laws are applied to the Oklahoma Legislature. NewsOK writes that cutting funding for OETA would be a disservice to the state. The Number of the Day is the average savings on Rx drugs per Oklahoma Medicare beneficiary in 2011 because of changes made by the new health care law. In today’s Policy Note, Governing Magazine discusses the crucial choice states face over essential health benefits as the Affordable Care Act is implemented.

In The News

Fallin plans to cut income tax by eliminating exemptions claimed by many residents

Gov. Mary Fallin outlined a budget plan Monday to deeply reduce Oklahoma’s personal income tax rate by eliminating dozens of tax exemptions, including many claimed by poor and working-class Oklahomans. Her plan would impose a revenue-growth trigger that would further reduce the income tax by one-quarter of 1 percent each time state revenues grow by at least 5 percent. Her budget officials said the plan calls for making up the estimated $1 billion in lost revenue by eliminating nearly 40 different tax credits, including the child care and sales tax relief credits for low-income Oklahomans. It would also end personal exemptions claimed by about 1.5 million Oklahoma tax filers each year. “Low-income families with children and low-income seniors will pay more in income tax. That’s a concern,” said David Blatt, director of the Oklahoma Policy Institute, a Tulsa-based think-tank. “It’s cut taxes first and then ask questions later.” Democrats also blasted the plan, saying it makes little sense for Fallin to call for increased funding for transportation, education and performance audits for state agencies while endorsing a plan to slash a funding source that accounts for more than one-third of state revenue.

Read more from the Associated Press.

See also: Governor Fallin’s plan to end income tax would bust huge hole in the state budget from Oklahoma Policy Institute

Prison crowding, proposed reforms to child services among issue awaiting Okla. lawmakers

An overcrowded prison system, an outdated state water plan and a child welfare system that has drawn criticism for failing to properly care for vulnerable Oklahoma children are just a few of the problems facing lawmakers when they return to the state Capitol on Monday for the start of the 2012 legislative session. When the final budget figures are certified later this month, lawmakers are expected to have about $100 million to $150 million less to spend this year because of the loss of one-time revenue that was used to plug holes in the current budget. Revenue collections have improved, but lawmakers used nearly $357 million in special cash appropriations on the current state budget, including $101 million from a transportation fund, $100 million from the state’s constitutional reserve fund, and $156 million in transfers from various state revolving funds, according to the Office of State Finance. And while state leaders are projecting a flat budget with no increase in funding for state agencies, there is no shortage of ambitious ideas being proposed for the upcoming session.

Read more from the Associated Press.

Gov. Fallin signs order to ban tobacco use on state property

Tobacco products at all state-owned and leased properties and in state-owned and leased buildings and vehicles will be banned effective July 1 under an executive order signed Monday by Gov. Mary Fallin. The announcement drew applause, but groans were heard seconds later in the House of Representatives chamber when she announced the ban would mean the closing of a smoking room in the state Capitol for lawmakers and employees. “You’re going to like this one, too,” she joked as she announced the smoking room, in the Capitol’s basement, would be remodeled — at no expense to the state — into a small fitness center. The state is seeking a grant from the Tobacco Settlement Endowment Trust and the Oklahoma Hospital Association has agreed to match it, Fallin said.

Read more from NewsOK.

The 2012 Legislative Primer: Your program for Opening Day of the legislative session

How many bills are filed each year? Who is the Cabinet Secretary of Science and Technology? How much money is there in the Rainy Day Fund? Why does it take so long for a bill to be passed? As the 2012 Oklahoma Legislative session gets underway, a new, fully-updated publication from Oklahoma Policy Institute will answer these questions and more. Whether you are a veteran legislator, a complete novice to Oklahoma politics, or anyone in between, the 2012 OKLAHOMA LEGISLATIVE PRIMER will provide you invaluable information in a concise, user-friendly format.

Read more from the OK Policy Blog.

DHS missed opportunities to help these three youngsters

A 1-year-old Tulsa County girl who nearly drowned in July was born with narcotics in her system and had been left alone in a car by her mother, according to a report released by the Oklahoma Commission on Children and Youth. The commission also released two other reports Thursday detailing events leading up to the deaths last year of a 3-month-old girl in Pittsburg County and a 3-year-old girl in Oklahoma City. The Oklahoma Department of Human Services had received two child neglect reports about Olivia McDonald, who now is in foster care, before she nearly drowned July 14 at a Tulsa home. Her mother, Allie Leanna Frazier, 27, is charged in Tulsa County with felony child neglect with a trial date set for June 4, court records show.

Read more from The Tulsa World.

See also: Full report from the Oklahoma Commission on Children and Youth

Oklahoma Supreme Court declines to hear DHS lawsuit settlement challenge

The state Supreme Court without comment Monday denied hearing a lawsuit that challenged whether a three-member board acted properly in approving a modified settlement of a federal class-action lawsuit that accused the state Department of Human Services of harming children in its foster homes and state shelters. The decision was unanimous. The agreement by the board since has been approved by both the DHS commissioners and Children’s Rights, a New-York based group that filed the federal lawsuit in 2008. A federal judge gave preliminary approval to the agreement last month; a hearing on the settlement is set for Feb. 29 in Tulsa federal court.

Read more from NewsOK.

Oklahoma Senate Panel approves personhood bill

A bill that would declare that personhood starts at conception is headed to the Senate floor. Senate Bill 1433, by Sen. Brian Crain, R-Tulsa, passed the Senate Committee on Health and Human Services on Monday, the first day of the legislative session. The measure says life begins at conception. “Unborn children have protectable interest in life, health and well-being,” the bill says. “The laws of this state shall be interpreted and construed to acknowledge on behalf of the unborn child at every stage of development all rights, privileges, and immunities available to other persons, citizens and residents of this state,” it says. In response to that bill, Sen. Jim Wilson, D-Tahlequah, who is strongly pro-choice, offered an amendment that would make the father of an unborn child financially responsible for its mother’s health care, housing, transportation and nourishment while she is pregnant. Wilson’s amendment failed.

Read more from The Tulsa World.

See also: ‘Personhood Act’ brings dangerous and extreme consequences from the OU Daily

Open Records bill for Legislature picks up momentum

Last Thursday, Speaker of the House Kris Steele publicly announced his support of the proposal to apply open records and meetings laws to the Oklahoma Legislature. In Oklahoma, with the exception of the Legislature, government entities must follow a set of laws designed to ensure public access to the proceedings of government. This is one of our most important statutes because it helps to ensure your right to know how your taxpayer dollars are being spent. These laws dictate that no governing board can take action without taking a vote in public and with certain exemptions, the documents held by the board may be accessed by the taxpayers. I firmly believe it is only a matter of time before this law is applied to the Legislature as well.

Read more from The Edmond Sun.

NewsOK: Cutting all state funding to OETA would be a disservice

WHEN public television’s “Antiques Roadshow” visited Tulsa last summer, Chinese carved bowls brought in by a guest were appraised at a price of up to $1.5 million, the highest valuation in the show’s 16-year history. Even at $1 million, the low end of the bowls’ appraisal, the antiques would cover about three months of state appropriations for the PBS network in Oklahoma. Some lawmakers would like to reduce that amount to zero. The Oklahoma Educational Television Authority has learned to get by with less support from the Legislature. State funding has shrunk by 27 percent in the past three years. In recent years, several locally produced programs have been dropped and “Oklahoma News Report” was scaled back from five nights a week to an hour on Fridays. The number of full-time employees has fallen from 71 to 51. Bills by two legislators to end all state appropriations would have a major impact on the 59-year-old network. OETA most likely would have to reduce its statewide coverage and local programming. These cutbacks would indirectly hinder state goals of improving education and increasing the number of college graduates.

Read more from NewsOK.

Quote of the Day

Gov. Fallin cannot expect to cut and then eliminate the state income tax, which constitutes one-third of the state’s revenue, and in the same breath, talk about making the Department of Human Services one of the best in the nation, or repairing all our bridges by 2019.
Rep. Mike Brown, D-Tahlequah

Number of the Day


Average savings on Rx drugs per Oklahoma Medicare beneficiary in 2011 because of changes made by the new health care law.

Source: Centers for Medicare & Medicaid Services

See previous Numbers of the Day here.

Policy Note

States face crucial choices over essential health benefits

In December, the U.S. Department of Health and Human Services (HHS) released some initial guidance for states on the essential health benefits (EHB) — 10 areas of care — that must be covered by plans sold within the health insurance exchanges created under the Affordable Care Act (ACA). Last month, HHS outlined three small-group insurance plans in each state that could provide a benchmark. But with less than a year until states must demonstrate to HHS that they can operate an exchange (if they so choose to pursue one), questions about the essential health benefits and the costs that will result from states’ benchmarks linger, a panel assembled by the Alliance for Health Reform and the Commonwealth Fund said Friday. Regardless of whether a state opts to develop its own exchange or allow the federal government to do so, each state still must select a benchmark plan. If a state chooses not to do that either, the largest small-group plan in the state will be the default.

Read more from Governing.

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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.

One thought on “In The Know: Gov. Fallin releases plan to abolish income tax

  1. If you have not read the new legislation contained in HB 1587 and SB 3038, which attempts to do away with the Oklahoma state income tax, you need to look into this immediately and communicate how adverse this legislation is to, not only Federal retirees, but every retiree in the state of Oklahoma as well.

    First this new Oklahoma legislation is based on the “Laffer” plan. The “Laffer” plan is intended to work as follows:

    The first (3%) reduction in the income tax rate is paid for by cuts in nonessential spending, along with the elimination of most personal tax credits, exemptions, deductions and exclusions. Further reductions in the rate are paid for by natural revenue growth and dynamic economic growth that would occur as a result of the initial reduction. It would not be necessary to cut core services or increase any other tax rates, including property and sales tax.

    As written, HB 1587 will eliminate the following deductions and exclusions at the state level:

    1. The deduction for all personal exemptions
    2.The standard/itemized deduction based on the Federal Tax Return
    3.The exclusion for the portion of social security that is taxable at the Federal level
    4.The exclusion for all federal retirement pensions, both CSRS and FERS
    5.The exclusion for all State retirement pensions, including those for state employees, teachers, firefighters, police and other law enforcement and anyone else covered by a state pension
    6.The 75% exclusion for military retirees
    7.The limited exclusion, up to 10,000 for all other retirees regardless of the source of the retirement.

    I have read HB 1587 and after you read it, you will agree, as it is currently written, this is the most significant and serious assault on senior citizen retirement income in the State of Oklahoma ever. If seniors don’t start mobilizing and work with other senior citizen and retirement associations early on it will be too late to get this legislation changed.

    The Oklahoma legislature cannot reduce 1/3 of its budget revenue coming from state income taxes without making some radical changes. The legislation contained in both the house and senate versions of the bill reduces the state income tax rate by 3 %, from 5.25% to 2.25%, starting 1-1-2013 and it decreases the rate of tax a quarter point ( .25%) per year until the state income tax is eliminated in or about 2022. In the interim, and to make up for the revenue lost due to the reduced tax rates, the legislation eliminates all credits, deductions and exclusions. I.E. All Oklahoma retirees, including Federal retirees, will be effectively taxed on the amount of their Federal AGI for a 10 year period. Most state, federal and military retirees now have no state tax liability for retirement benefits and federal taxable social security income. The result of this legislation will cause the immediate taxation of all retirement income including taxable social security starting 1-1-2013 for all retirees, including state, federal and military retirees. This is simply unbelievable and cannot be allowed to pass into law without a fight.

    The planned quarter point reduction in tax rates is to be conditioned on a 5% revenue growth in state revenues. If the 5% trigger is not met there will be no change in the state income rate and will further extend the targeted phase out date of the state.

    I believe this matter is so serious as to warrant immediate attention. The public talking points of state officials, regarding this legislation, are conveniently omitting the legislation will eliminate tax benefits currently extended to state and federal retirees and pensioners who receive taxable pensions, annuities and social security payments and that these benefits will be taxable under the proposed legislation.

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