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In 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 gperry@okpolicy.org. You can sign up here to receive In The Know by e-mail.
Today you should know that a House panel voted 9-1 with no debate to move forward a bill based on the Laffer plan to abolish the income tax. The OK Policy Blog discussed a new report exposing the highly misleading analysis behind Arthur Laffer’s claims. We previously discussed how Laffer’s work leaves out more than it includes, because his goal is never to provide an accurate economic assessment, but to tell politicians what they want to hear.
Struggling due to low natural gas prices, Chesapeake Energy announced a new financial plan that it hopes will allow it to raise the billions in cash it needs to get through the next year or so without going bankrupt. House Speaker Kris Steele said lawsuits over water rights between two American Indian tribes and the state should not prohibit lawmakers from working on water policy this year. Some lawmakers are questioning funding for the agency tasked with building the American Indian Cultural Center and Museum, which remains half completed.
The $14.6 million spent by Oklahoma last year to remove snow and ice from state roads and highways was the highest it’s ever been. Oklahoma higher education officials say they’re optimistic about an Obama administration proposal designed to put 2 million new workers in job-growth fields by partnering businesses with community colleges. The Oklahoma Insurance Department’s spokesman resigned after sending an official email to hundreds of people containing a sexist comment.
The Number of the Day is how many House and Senate bills were filed for the 2012 session of the 53rd Oklahoma Legislature. In today’s Policy Note, the Thomas B. Fordham Institute gave Oklahoma an ‘F’ for public school science curriculum standards, writing that they “could not have been written—or vetted—by anyone with a working knowledge of the natural world.”
In The News
House panel advances Laffer plan to abolish income tax
A House panel easily approved a bill Monday that would phase out the state’s personal income tax over 10 years, and cut it by more than half next year. The House of Representatives budget subcommittee on revenue and taxation voted 9-1 with no debate to send House Bill 3038, which has 23 Republican co-authors, to the House Appropriations and Budget Committee. Rep. Leslie Osborn, the key author, said the measure would cost the state about $715 million in lost revenue in the 2013 fiscal year, which starts July 1, by cutting the state’s top personal income tax rate from 5.25 percent to 3 percent. Rep. Mike Brown, D-Tahlequah, who voted against the measure, said he was concerned what would happen if other revenue sources couldn’t make up the loss of revenue generated by the personal income tax.
Laffer debunked: States without an income tax do not enjoy stronger economic growth
Do states without an income tax enjoy stronger economic growth? This is one of the central claims made by economist Arthur Laffer in a recent report published by the Oklahoma Council of Public Affairs and echoed repeatedly by proponents of eliminating Oklahoma’s income tax, including by Governor Mary Fallin in her 2012 State of the State address (1). However, a new report from the Institute for Taxation and Economic Policy (ITEP) shows that Laffer’s claim is based on a highly misleading analysis. The ITEP report, titled “Don’t Be Fooled By Junk Economics”, shows that: 1) Laffer cherry-picked metrics that are all tied to population growth; 2) population is growing in the South and West, where most of the no-income tax states happen to be, for reasons of climate, demographics, and the housing market, not state tax rates; 3) when more accurate indicators of economic growth are used, states without an income tax are doing no better than other states, including Oklahoma.
Read more from the OK Policy Blog.
Previously: Why the Laffer proposal is like an ice cream diet from the OK Policy Blog
Chesapeake’s New Plan: Desperate measures for desperate times
This morning Chesapeake Energy announced a new financial plan that it hopes will allow it to raise the billions in cash it needs to get through the next year or so without going bankrupt. The company says it aims to raise $2 billion by spinning off assets from its service company and pipeline division. It expects another $2 billion from upfront sales of future flows from gas fields. And it earmarks another $6 billion or so from the sale of its largely undeveloped acreage in the oil-rich Permian basin. And for good measure, it will raise another $1 billion by issuing more senior debt. The $10-12 billion it hopes to raise is “substantially in excess of the difference between the company’s expected cash flow from operations and its planned capital expenditures.” Gosh I should hope so. Analyst Arun Jayaram at Credit Suisse pegs Chesapeake’s 2012 cash hole at $6 billion. But with natural gas prices already at decade-long lows and set to go even lower in the months ahead, there’s no telling whether even Aubrey McClendon‘s legendary financial finagling will be able to save the day.
Lawmakers should press on to develop water plan despite lawsuit, House speaker says
Lawsuits over water rights in southeastern Oklahoma between two American Indian tribes and the state should not prohibit lawmakers from working on water policy this year, House Speaker Kris Steele said Monday. Steele said water proposals planned by House members include increasing water monitoring, establishing regional water planning groups, improving water infrastructure funding programs and encouraging more water conservation and reuse. The Choctaw and Chickasaw nations filed a federal lawsuit in August claiming the water rights in 22 southeastern Oklahoma counties are provided to them in treaties signed in the 1800s. The tribes also say the state would be violating federal law by adjudicating the waterways; they want to stop the state’s plan to sell water storage rights in Sardis Lake to Oklahoma City.
Lawmakers question financing for American Indian Cultural Center and Museum
Some Oklahoma lawmakers are questioning the capabilities and finances of a state agency that has worked since 1994 to build the American Indian Cultural Center and Museum, which remains half completed. “There is way too much money being spent on salaries by an entity that hasn’t completed the reason it exists,” said Sen. Patrick Anderson, R-Enid. “The fact that we haven’t been able to finish the project raises concerns.” Anderson has two bills dealing with the stalled cultural center at the intersection of Interstates 40 and 35. One bill would eliminate the state agency that was created 18 years ago by lawmakers to build the cultural center and would give the project instead to the Oklahoma Historical Society. The other bill requires annual audits of the agency. In addition to the $67.4 million the state has provided for construction of the cultural center, every year the state appropriates $1.5 million to run the Native American Cultural and Educational Authority.
Record spending on snowy and icy roads in Oklahoma
The State of Oklahoma spent more than $14.6 million last year to remove snow and ice from state roads and highways, Department of Transportation data show. Total spending on equipment, materials and labor in Fiscal Year 2011 was the highest it’s ever been, said DOT spokesman Cole Hackett. About half of the Department of Transportation’s annual snow and ice tab is spent on sand, salt, anti-icing liquid and other “material” costs, data show. Labor and equipment costs make up most of the rest of the department’s snow and ice removal budget. Labor costs include overtime hours for drivers and department personnel; equipment costs include fuel, truck and tractor maintenance, as well as specialized plow, scraper and spreader attachments for trucks, Hackett said. Most of Oklahoma’s disaster spending stems from severe winter storms. From 2007–2010, $27 million of $31 million in state disaster reimbursements came from blizzards and ice storms, Emergency Management data show.
Read more from StateImpact Oklahoma.
Oklahoma higher education optimistic about Obama’s community college plan
Higher education officials say they’re optimistic about an Obama administration proposal designed to put 2 million new workers in job-growth fields. Oklahoma’s community colleges already have a good track record of partnering with business, said Gary Davidson, executive director of the Oklahoma Association of Community Colleges. Davidson said a proposed $8 billion federal fund designed to enhance such partnerships would be a boon to Oklahoma. President Barack Obama outlined the proposed Community College to Career Program on Monday during a speech at Northern Virginia Community College in Annandale. The fund, included in Obama’s budget proposal for 2013, is designed to support community college programs that train students in areas of job growth, eventually connecting highly skilled trainees with well-paying jobs. Officials say the plan would help to train 2 million Americans to work in growth fields such as cyber security and IT.
Oklahoma Insurance Department spokesman resigns over sexist e-mail
The Oklahoma Insurance Department’s spokesman said he resigned on Feb. 10 after sending an official email to hundreds of people containing an off-color term for breasts. Glenn Craven told The Associated Press that he had sent the email and was given the option of resigning or being fired. Insurance Commissioner John Doak had earlier announced the resignation of a state employee but did not name Craven. A spokesman for Doak later said there was nothing to add. Craven apologized repeatedly for the email that said an insurance commissioner’s award to be given at a tornado preparedness meeting would go to “the girl with the biggest” breasts, using a slang term. The agency sent a second “corrected and authorized” email about 20 minutes later saying the award would be given next month to someone who made outstanding contributions to the insurance industry in tornado preparedness.
Read more from Insurance Journal.
Quote of the Day
“I snickered and typed and it should have never been done. Ridiculous things happen for ridiculous reasons.”
–Former Insurance Department spokesman Glenn Craven, who resigned after including a sexist comment in an email about tornado preparedness
Number of the Day
1,934
Number of House and Senate bills filed for the 2012 session of the 53rd Oklahoma Legislature, compared to 2,137 bills filed for the 2011 session.
Source: Oklahoma Policy Institute
See previous Numbers of the Day here.
Policy Note
The State of State Science Standards 2012
The Oklahoma science standards are simply not OK. Woefully little science content appears, and what is present is often flat out wrong, oddly worded, or not up to grade level. It is difficult to see how any curriculum that emerged from these standards (assuming that one could accomplish that task on such a basis) would not be fatally flawed. Oklahoma’s motto is Labor omnia vincit—labor conquers all things—but this document would sorely test that maxim. With rampant mistakes, critical omissions, and below-grade-level expectations, it seems that the content in the Oklahoma science standards could not have been written—or vetted—by anyone with a working knowledge of the natural world.
Read more from the Thomas B. Fordham Institute.
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