In The Know: Governor and Legislature reach tax cut agreement

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. Mary Fallin and Republican legislators have reached agreement on cuts to the top personal income tax rate beginning in 2013. Norman Schools Superintendent Joe Siano wrote that it’s troubling for lawmakers to be adding a state income tax cut on top of our current school funding challenges. The Center on Budget and Policy Priorities debunked false claims made in a recent Wall Street Journal editorial about Oklahoma’s tax debate.

Two Senators said they have enough votes to defeat a bond issue for completing the American Indian Cultural Center. The OK Policy Blog discussed how a bill on drug testing of welfare recipients has been much improved from its original version. A DHS spokesperson explained to News9 how the new drug screening law would work.

One of Chesapeake Energy’s larger shareholders is urging others to oust two board members, including OSU President Burns Hargis. Students rallied in Oklahoma City and Tulsa in support of the DREAM Act, which would provide a path to citizenship for illegal immigrant youths who graduate from a U.S. high school and attend college or serve in the military. A nationwide network named OU as one of few Oklahoma colleges and universities to promote LGBT equality.

Union officials said anger with American Airlines over nine years of wage and benefit cuts of 25 percent doomed a contract offer to its mechanics. The Humane Society has accused G.W. Exotic Animal Park in Wynnewood of unsafe handling of deadly animals, questionable breeding practices and other violations of state and federal law.

The Number of the Day is the percentage of the population of Oklahoma that lives in a rural area. In today’s Policy Note, The Century Foundation discusses how exploding use of the filibuster in the Senate is contributing to political dysfunction.


In The News

Governor, Legislature reach agreement to cut income tax rate

Gov. Mary Fallin and members of Oklahoma’s Republican-controlled Legislature reached an agreement Thursday on a nearly one-half of 1 percent cut to the top personal income tax rate beginning in 2013. The plan would reduce Oklahoma’s top personal income tax rate from 5.25 percent to 4.8 percent next year. The proposal would also modify certain personal income tax deductions, eliminate more than 30 business tax credits and reduce the number of income tax brackets from seven to three. The proposal is expected to cost the state $32.7 million in the upcoming fiscal year that begins July 1, and $102 million in fiscal year 2014 after the cut is implemented for an entire fiscal year. The plan also includes a one-time trigger for tax year 2015 to further reduce the income tax by another .3 percent if certain state revenues grow by at least 5 percent. That additional cut, if it takes place, is projected to cost the state an estimated $171 million.

Read more from The Associated Press.

Now is not the time to lower taxes

State lawmakers soon will vote on whether to lower state income taxes. Because of state law, it will be very difficult to ever again raise the state income tax if it’s cut, and state income tax is the main source of schools’ funding. There may be a proper time for cutting this already-low tax, but is that time now? The recession has affected every household in Norman, and the idea of lowering any tax at first blush is appealing. Yet citizens have consistently indicated they wish for lawmakers to make schools a greater priority, and they are opposed to tax cuts that negatively impact their schools. Oklahoma is 49th in the nation in student funding. Schools are receiving $253 million less from the state than they were before the recession and, to make matters worse, significant cuts to Oklahoma schools’ federal funding is to occur next school year if Washington gridlock persists, resulting in $600,000 less for Norman Public Schools alone. State leaders adding a state income tax cut on top of our current school challenges is troubling.

Read more from The Norman Transcript.

Claims for Oklahoma tax cut not OK

Yesterday’s Wall Street Journal editorial supporting a proposal by Oklahoma governor Mary Fallin to phase out the state’s income tax contains a slew of incorrect or misleading statements. For instance: The editorial wrongly asserts that states without income taxes have had stronger economic growth than other states, echoing a claim from a recent report from economist Arthur Laffer and the American Legislative Exchange Council. As we have explained: A key flaw in the Laffer analysis is that all of its measures of “economic growth” are really just measures of population growth. A study from the Institute on Taxation and Economic Policy shows that residents of states with relatively high income tax rates are doing as well, if not better, than residents of states lacking a personal income tax in terms of per-capita economic output and household income. The editorial claims that states with relatively high income tax rates have faced the biggest budget shortfalls. That’s simply not true. Also, the editorial’s boast that no-income-tax states “manage to balance their budget nearly every year” makes little sense, since all states except Vermont are required to balance their budgets.

Read more from the Center on Budget and Policy Priorities.

Bond issue for American Indian Cultural Center won’t pass Senate

Enough votes are in hand to kill a measure that authorizes a $40 million bond issue to help pay for the completion of the American Indian Cultural Center and Museum in Oklahoma City, two Republican senators said Thursday. Sens. Patrick Anderson and Cliff Aldridge said enough state money has been spent on the project, which has been planned for nearly 20 years. They said they don’t oppose the project, but Oklahoma taxpayers shouldn’t have to pay for it. Anderson and Aldridge said they have signatures of 12 other Republican senators who have agreed to vote against a bill that would authorize a bond issue for the project. The measure is expected to come up on the Senate floor next week, they said. The 16 Democrats in the Senate have earlier said they oppose any bond issue if there is a cut in the personal income tax rate. Republican legislative leaders and the governor announced Thursday evening they have reached an agreement to cut the state’s top personal income tax rate of 5.25 percent down to 4.8 percent next year. The 14 Republicans and 16 Democrats add up to 30 no votes for the bond issue in the 48-member Senate, Aldridge said.

Read more from NewsOK.

A step sideways: Bill to drug test welfare applicants gets a makeover

A bill to clarify drug-screening procedures for TANF applicants has passed both chambers of the legislature and been signed by Governor Fallin. TANF, or ‘Temporary Assistance for Needy Families,’ is a temporary public benefit that provides cash assistance and other support to very low-income parents with children. We’ve expressed grave concern about previous incarnations of this bill, and we still believe that targeting a tiny public benefit program reflects misplaced priorities and perpetuates inaccurate stereotypes about the poor. However, the much-improved final version of HB 2388 corrects key flaws from the original bill and its authors, Sen. David Hold and Rep. Guy Leibmann, should be commended for making common-sense changes.

Read more from the OK Policy Blog.

See also: DHS spokesperson explains new drug screening law from News9.

NYC pension group urges defeat of Chesapeake board members

One of Chesapeake Energy’s larger shareholders is urging others with a stake in the company to oust two board members, one of whom is OSU President Burns Hargis. According to regulatory filings Thursday afternoon, the City of New York Office of the Comptroller, which represents pension funds that own 1.9 million shares of Chesapeake stock, is actively opposing the re-election of Hargis and Richard Davidson, former chief executive of Union Pacific Corp. They are only two directors up for election at next month’s shareholder meeting, and both are on the Board’s audit committee. The Board and Chesapeake CEO Aubrey McClendon have been the subject of intense criticism in recent weeks, following the revelation that McClendon borrowed more than $1 billion from companies that do business with Chesapeake. McClendon reportedly used the loans to fund his participation in a unique company perk that allows him to claim a small stake in every well that Chesapeake drills. New York City Comptroller John Lui wrote, “We are particularly disturbed by the audit committee’s failure to review, approve or disclose Mr. McClendon’s personal loans secured by company wells.”

Read more from News9.

Supporters rally for DREAM Act in Tulsa, Oklahoma City

More than a dozen people — mostly college students — gathered Thursday afternoon in downtown Tulsa in support of the DREAM Act as part of the national Right to Dream campaign. The DREAM Act — Development, Relief and Education for Alien Minors — is a bill that would open the path to U.S. residency to illegal immigrant youths who graduate from a U.S. high school and attend college or serve in the military. Members of DREAM Act Oklahoma organized rallies in Tulsa at the H.A. Chapman Centennial Green, at Sixth Street and Boston Avenue, and in Oklahoma City in Woodson Park. They were part of the national campaign organized by the United We Dream Network. Holding up signs reading “Right to live with our loved ones” and chanting “Education not deportation,” some at the downtown Tulsa rally were the children of illegal immigrants. Others were friends and supporters. Kasey Hughart, a sociology senior at the University of Tulsa, was one of the rally’s organizers. “We just want undocumented youth to know we support them,” said Hughart, a fourth-generation Mexican-American. Part of the immigration problem is a 15- to 20-year backlog to gain legal status, Hughart said. “Some are living in extreme poverty, being religiously persecuted or living in violence,” she said. “You can’t wait that long with your life at risk.”

Read more from The Tulsa World.

See also: Oklahoma City group rallies for immigrant youths from NewsOK.

OU named a top LGBT-friendly university

A nationwide network named OU as one of few Oklahoma colleges and universities to promote LGBT equality. The TEN Institute released a report Tuesday on the gains of LGBT equality in Oklahoma universities and colleges. Although 73 percent of Oklahoma higher education facilities continue to have no policies that support and protect the LGBT community, there has been a 9-percent gain since 2010, according to the report. OU is listed as a school that has implemented policies to protect its LGBT faculty, staff and students since 2010. OU changed its non-discrimination policy to include sexual orientation in May 2011. This change came in the wake of the City of Norman approving October as LGBT Month. Other schools with similar policies include Oklahoma State University and the University of Tulsa.

Read more from the OU Daily.

American Airlines mechanics ‘no’ vote attributed to anger towards company

Nine years of living with wage and benefit cuts of 25 percent and the prospect of six more years of substandard industry compensation doomed a “final best” contract offer by American Airlines to its Transport Workers Union mechanics, union officials said Tuesday. Although five of seven TWU work groups voted to accept the bankrupt company’s offer, its maintenance & related work group and stores clerks rejected it. “It appears to me they (mechanics) voted out of anger,” said Rick Mullings, spokesman for TWU Local 514 in Tulsa. “We knew it was going to be close. We were hoping for a “yes” vote, but it didn’t surprise me. We’ve gone the last six or seven years trying to negotiate a (new) contract and not getting one. “We also voted to give American $1.6 billion a year in (wage and benefit) concessions” in 2003 to help the company avert a bankruptcy filing.

Read more from The Tulsa World.

Wynnewood exotic animal park accused of unsafe handling of tigers, other abuses

An animal advocacy group has accused G.W. Exotic Animal Park in Wynnewood of unsafe handling of deadly animals, questionable breeding practices and other violations of state and federal law. The Humane Society of the United States has filed formal complaints against the park with the U.S. Department of Agriculture, the U.S. Fish and Wildlife Service and the Oklahoma Department of Wildlife Conservation after one of its employees worked undercover there for several months last year, according to a news release from the organization. The 54-acre animal park is just east of Interstate 35 in Wynnewood, roughly 65 miles south of Oklahoma City. It’s home to 170 big cats and hundreds of other non-native species, many of them abandoned pets at one time. The report alleges that G.W. Exotic Animal Park employees, many of whom weren’t properly trained to handle large predators, were urged to lie about the ages of certain big cats being used to interact with the public since federal law prohibits such practices with animals deemed “too mature” — typically older than 12 weeks.

Read more from NewsOK.

Quote of the Day

Some are living in extreme poverty, being religiously persecuted or living in violence. You can’t wait that long with your life at risk.
-Kasey Hughart, TU student and organizer of a rally for the DREAM Act, who said the current immigration system is outdated with a 15- to 20-year backlog to gain legal status.

Number of the Day

36.8 percent

Percentage of the population of Oklahoma that lives in a rural area, more than twice the national average of 16.9 percent.

Source: Family Caregivers Alliance

See previous Numbers of the Day here.

Policy Note

Political dysfunction and the filibuster

Last year’s debt ceiling debacle may pale in comparison to this year’s dysfunction. Once again, the debt ceiling needs to be raised, and already Republicans are doubling down on their 2011 hostage-taking tactics, threatening a default unless Democrats accept spending cuts greater than the size of the increase. At the same time, Congress also has to confront the expiration of the controversial Bush tax cuts (which would raise taxes on all Americans, especially the rich) and the end of Obama’s payroll tax holiday (which would hurt the working class), not to mention the across-the-board spending cuts that neither party wants to see happen. The intense partisanship surrounding these issues may be already taking a toll on the economic recovery. According to the Washington Post, businesses are slowing hiring and planning for layoffs in anticipation of a “taxmageddon” scenario, in which a deadlocked Congress fails to defuse the fiscal bomb of higher taxes, spending cuts and another market-roiling debt ceiling standoff. Congress hasn’t always been so polarized and dysfunctional. Filibusters, for instance, were rare until the 1960s, when they became a commonly used tactic for delaying civil rights legislation. Today, 60 votes are required for just about everything. As a result, businesses have little certainty as to whether Congress will be able to move forward on legislation to mitigate the automatic tax hikes and spending cuts that will go into effect at the end of the year.

Read more from The Century Foundation.

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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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