In The Know: House gives final approval to income tax cut

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. You can sign up here to receive In The Know by e-mail.

Today you should know that the Oklahoma House gave final approval to a bill that would cut the state’s top income tax rate to 5 percent in 2015 and provide $120 million for improvements to the state Capitol. OK Policy released a statement that the income tax cut ignores economic reality, and the only responsible path forward is to take real action to reign in unnecessary tax breaks. David Blatt’s Journal Record column discusses why the idea that tax cuts pay for themselves is still widely and roundly discredited.

Norman Superintendent Joe Siano connected the dots on the disturbing budget picture facing Oklahoma schools. Oklahoma students taking state tests Tuesday were again stopped cold after the testing company’s computer servers crashed for a second consecutive day. The Tulsa World writes that two developments may advance the Medicaid debate: a Legislative initiative for an Oklahoma plan to use the federal expansion funds, and a poll showing a majority of Oklahomans want the state to accept the federal dollars.

PR Watch reports that the American Legislative Exchange Council has been sending public officials temporary files to dodge public record requests about its meeting this week in Oklahoma City. NewsOK reports that the Oklahoma Department of Corrections underreported the amount held in revolving funds for two years. StateImpact Oklahoma writes that funding to complete the American Indian Museum has become a proxy in a fight over water rights between Oklahoma City and rural areas of the state. The New York Times reports that the rapid expansion of hydraulic fracturing to retrieve once-inaccessible reservoirs of oil and gas could put pressure on already-stressed water resources in Texas, Oklahoma, and Colorado.

The Number of the Day is the growth in the number of women-owned firms in Oklahoma over the last 15 years. In today’s Policy Note, a new study on Medicaid in Oregon shows that extending the program dramatically improves financial security for low-income families.

In The News

Okla. House gives final approval to income tax cut

The Oklahoma House gave final legislative approval Wednesday to a bill that would slash the state’s income tax rate to 5 percent in 2015 and provide $120 million for improvements to the state Capitol, both top priorities of Republican Gov. Mary Fallin. The Republican-controlled House voted 65-35, mostly along party lines, to send the bill to Fallin, who is expected to sign it. It would cut the state’s top income tax rate from 5.25 percent to 5 percent beginning Jan. 1, 2015, with a second cut to 4.85 percent set for 2016 if state revenues continue to rise.

Read more from the Enid News & Eagle.

STATEMENT: Tax cut ignores economic reality

Oklahoma Policy Institute released the following statement on the Legislature’s passage of the tax cut and Capitol renovation bill, HB 2032: The Legislature’s approval of another tax cut ignores economic reality. Because they were under pressure to restore funding to Oklahoma’s schools, mental health system, child welfare system, and other core services that have endured steep cuts in recent years, income tax cuts were delayed until 2015. Yet we have seen no evidence that Oklahoma will be able to afford a tax cut in that year either. Indeed, we are already seeing signs of faltering revenue collections, with revenue falling below last year.

Read more from Oklahoma Policy Institute.

Prosperity Policy: Poppycock

Girls are bad at math. Coffee stunts your growth. It takes seven years to digest gum after you’ve swallowed it. And tax cuts pay for themselves. Like other myths and legends, this last one is still widely asserted. But unlike the others, the idea that by cutting taxes, government revenue will actually increase, appears to be shaping public policy in Oklahoma. Most recently, elected officials defending the proposal to lower the state’s top income tax rate by a quarter percent are claiming that it will spur economic growth sufficiently to boost state tax collections. This belief that tax cuts pay for themselves, attributable to economist Arthur Laffer, has been widely and roundly discredited by economists of all stripes.

Read more from the Journal Record.

Connecting the dots

Young students do connect-the-dot worksheets to learn numbers. Students draw lines from a dot to another dot in numerical order and a true picture is revealed. When they don’t, there is no picture, or it’s distorted. Each year, hundreds of bills and tax-related initiatives are approved that, when viewed independently, may not seem to have a significant impact. Yet by not connecting the dots of various actions when it comes to public schools, the picture of Oklahoma education becomes disturbingly distorted. If citizens don’t start connecting the dots, a true picture may never materialize.

Read more from the Oklahoma Gazette.

Oklahoma student’s state tests again halted after computer problems

Oklahoma students taking state tests Tuesday were again stopped cold after the testing company’s computer servers crashed for a second consecutive day. Parents and educators across the state are becoming increasingly upset as schools continue to experience problems connecting with online state tests while time ticks away on the last week of the testing window. And students have been unnerved by continuous obstacles to completing tests that, in some cases, are mandated for graduation.

Read more from the Tulsa World.

Medicaid debate advances with two new developments

Two significant developments that came to light in just the last few days strongly suggest Oklahoma could be on its way to an acceptable solution to the Medicaid expansion controversy. Let’s hope so, anyway. Two well-respected lawmakers with strong backgrounds in health-care issues – Sen. Brian Crain, R-Tulsa, and Rep. Doug Cox, R-Grove, who also is a physician – are crafting legislation that would build on the existing Insure Oklahoma program, a state-federal-private insurance product, to provide health insurance to more low-income Oklahomans. The Cox-Crain proposal could be the way out of a political conundrum for Gov. Mary Fallin, who has steadfastly opposed Medicaid expansion but still must try to find a way to bolster insurance coverage for Oklahomans. Maybe the way out of the political controversy isn’t as hard as one first might have expected. A new poll suggests that Oklahomans on the whole are not opposed to accepting Medicaid expansion funding.

Read more from the Tulsa World.

ALEC covering tracks in advance of Oklahoma meeting

What’s on the agenda for this week’s meeting of the American Legislative Exchange Council (ALEC) in Oklahoma City? Hard to say. Despite ALEC trying to spin itself as a “transparent” organization, ALEC records have miraculously been disappearing from legislative offices and the organization is engaged in a box drop dodge to avoid disclosure. But while ALEC legislators are meeting behind closed doors with corporate lobbyists, citizens will be rallying in the streets raising awareness about how ALEC’s agenda favors large corporations at the expense of average Americans.

Read more from PR Watch.

Oklahoma corrections officials misreported fund balances to governor

Oklahoma Department of Corrections officials grossly underreported the amount of cash held in two key agency funds to Gov. Mary Fallin as she was preparing her state budget recommendations for each of the past two years, documents obtained by The Oklahoman reveal. Corrections officials reported to the governor that the agency had a balance of $7,452,758 in its main revolving fund and $615,250 in its Inmate and Employee Welfare Fund as of Dec. 28, 2011, records reveal. However, financial records maintained by the state Office of Management and Enterprise Services show the agency had more than $12.3 million and $3.1 million, respectively, in those two accounts at the end of December 2011. Asked about the discrepancies, Greg Sawyer, the corrections department’s chief of business operations, said he was told by the agency’s chief financial officer that the department had provided the governor with an “estimate of income to the fund” rather than providing cash balances.

Read more from NewsOK.

American Indian Museum a proxy in political fight over OKC Water Policy

Balancing the state’s water needs isn’t just about permits and pipelines. It’s political. And Oklahoma City is a case study in how local water policy can have unintended consequences at the state capitol. The city, state and tribes are wrestling over the $80 million needed to complete the American Indian Cultural Center and Museum, a $150 million project that has been derailed by cost overruns and funding issues. OKC has offered to put up $9 million, but more is needed from the state legislature. Support for additional funding is on “razor-thin” margins at the Capitol, the Journal Record’s M. Scott Carter reports. And the vote could come down to a few rural lawmakers who aren’t happy with OKC’s “heavy-handed” water policy — “specifically in southeastern and western Oklahoma.”

Read more from StateImpact Oklahoma.

Spread of hydrofracking could strain water resources in West, study finds

The rapid expansion of hydraulic fracturing to retrieve once-inaccessible reservoirs of oil and gas could put pressure on already-stressed water resources from the suburbs of Fort Worth to western Colorado, according to a new report from a nonprofit group that advises investors about companies’ environmental risks. “Given projected sharp increases” in the production of oil and gas by the technique commonly known as fracking, the report from the group Ceres said, “and the intense nature of local water demands, competition and conflicts over water should be a growing concern for companies, policy makers and investors.”

Read more from the New York Times.

Quote of the Day

They are not going to just give up that money? What are they cutting? I’d like some extra spending money but not if it’s going to cost something valuable in return.

Oklahoma City resident Cody Mooreland, on the income tax cut approved by the Legislature

Number of the Day


Growth in the number of women-owned firms in Oklahoma over the last 15 years, slower than 41 other states during the same period and compared to 54.1% nationally

Source: American Express, 2012

See previous Numbers of the Day here.

Policy Note

The New Study that Republicans Who Reject Medicaid Must Read

A major new study on Medicaid just became public. I know—nothing excites readers more than the phrase “major new study on Medicaid.” Bear with me. This study is already getting a lot of attention: Conservatives and libertarians are citing it as evidence that expanding Medicaid is wrong. That has me wondering: Did they read read the same study that I did? The big news is that Medicaid virtually wiped out crippling medical expenses among the poor: The percentage of people who faced catastrophic out-of-pocket medical expenditures (that is, greater than 30 percent of annual income) declined from 5.5 percent to about 1 percent. In addition, the people on Medicaid were about half as likely to experience other forms of financial strain—like borrowing money or delaying payments on other bills because of medical expenses. That may sound obvious—of course people with insurance are less likely to struggle with medical bills. But it’s also the most under-appreciated accomplishment of health insurance: Whatever its effects on health, it promotes economic security.

Read more from The New Republic.

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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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