In The Know: Jolley income tax elimination bill passes Senate

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 Sen. Clark Jolley’s bill to eliminate the income tax passed the Senate after more than two hours of discussion and debate, with detractors questioning how the state would make up the billions of dollars in lost revenue. Rep. Leslie Osborn said she is restoring tax preferences for retirees and veterans in her income tax elimination bill. She suggested the revenue loss should be covered by reducing health and child care benefits for low-income Oklahomans and clamping down on state employee health insurance policies. The OK Policy Blog discussed claims by the tax cut boosters that are totally unsupported by real economics. See more on the tax debate at OK Policy’s tax reform information page.

Tulsa Public Schools could soon cut another 150 teaching positions and increase class sizes. A nationally recognized school for at-risk youth has secured funding for this year from Tulsa foundations to make for the loss of all state funding, but the one-time money will not keep the school operating next year if state funds are not restored. The director of the Oklahoma Department of Mental Health and Substance Abuse said the agency needs an additional $144 million to meet Oklahoma’s needs and an additional $16.8 million just to maintain current services.

The House passed a bill that would require drug-testing for welfare recipients after amending it to include candidates for state and local office. The OK Policy Blog previously gave 5 reasons not to drug test welfare recipients. A group is launching a referendum petition to change Oklahoma’s liquor laws.

OSU lost a court battle to regain $33M in payments for a failed fundraiser that involved taking life insurance policies out on wealthy donors. Prosecutors said they would not refile 28 charges against former Senate leader Mike Morgan that ended with a deadlocked jury, but they left the option open in case his conviction on one count of bribery was reversed.

The Number of the Day is how many Oklahomans no longer have a lifetime limit in their health insurance plans because of the Affordable Care Act. In today’s Policy Note, a Pew survey shows that for every specific type of regulation, Americans wanting stronger regulations vastly outnumber those wanting reduced regulation.

In The News

Jolley income tax elimination bill passes Senate; critics question revenue loss, offset data

Sen. Clark Jolley’s bill that would eliminating the individual Oklahoma income tax by 2022 passed the Senate Monday after more than two hours of discussion and debate, with some detractors questioning how the state would make up the billions of dollars in revenue that will be lost. The Oklahoma Tax Commission has estimated that through 2016, by which time the top marginal tax rate will have dropped from the current 5.25 percent to 1.75 percent, reducing the tax would have a total negative fiscal impact of more than $4 billion. First brought to the floor by Jolley on Thursday, SB 1571 was pulled off the agenda after Sen. Tom Adelson, D-Tulsa, raised a question about lack of a fiscal impact report on the bill. It takes $2 in sales taxes to make up $1 in lost income tax revenue, he added. Adelson said that means it would require an additional $53 billion in consumption to come up with another $2.2 billion in sales tax revenue. Adelson said that eliminating the income tax could also raise the state’s borrowing costs on bonds, because its bonds currently enjoy a double tax exemption. Balancing the budget without income tax revenue will require dramatic cuts in core services, he said.

Read more from 23rd and Lincoln.

Deductions for Oklahoma retirees, veterans restored in House bill; author wants to cut health and child care for public employees and low income families to partly fill gap

The author of a House bill that would phase out the state’s personal income tax over 10 years said Monday she is restoring exemptions and deductions for retirees and veterans. Rep. Leslie Osborn suggested alternative ways to make up for reducing and gradually eliminating the personal income tax. Those include eliminating several corporate tax credits; clamping down on state employee health insurance policies; increasing the amount paid by low-income families to the state for child care services; using more private prison beds and reducing payments to those on Medicaid, the state’s health care program for poor people. Other suggestions would be to cut funding of the Space Industry Development Authority and the Native American Cultural Education Authority.

Read more from NewsOK.

Economics 102

Arthur Laffer and OCPA have begun responding to a few of the many criticisms of their tax proposal. Their latest argument boils down to this: it’s “Economics 101” that tax cuts are always pro-growth, because when less income goes to taxes, people have more incentives to work. Unfortunately they don’t seem to have made it as far as Economics 102, because they leave out the fact that it’s not just “incentives” that decide how much income a person brings in. The most motivated worker or business is limited by their own skills and by available resources. They need raw materials, technology, access to markets, and a safe environment for commerce. OCPA and Laffer totally ignore the role of taxes in ensuring this prosperous environment.

Read more from the OK Policy Blog.

Tulsa Public Schools may face more teacher job cuts

Tulsa Public Schools could soon cut another 150 teaching positions and increase class sizes because of the end of $7.6 million in federal Jobs Bill funding and a slight decrease in student enrollment predicted for 2012-13. Officials say they are hoping to avoid teacher contract non-renewals and still be able to accommodate 75 new Teach for America core members through routine retirements and resignations over the summer. “We are being told the state Department of Education is going to present a budget that’s flat. If there is no relief in the state budget – and we don’t expect there to be – we will have no way to pay for these 150 teaching positions,” said Trish Williams, chief financial officer at TPS. “Our district is facing this severe challenge after three years of cutting expenses, cutting staff, and closing buildings.” Average class sizes will increase by one to two students each in 2012-13 if the school board approves the new proposed TPS Staffing Plan in the coming weeks.

Read more from The Tulsa World.

For now, Tulsans fill void in Street School’s budget

Street School’s combination of alternative education classes and therapeutic counseling is a national model for helping at-risk youths succeed, but it was shocked to see its $185,000 in state funding slashed out of the Oklahoma State Department of Education’s school activities budget in June. A fundraising campaign for that amount was kicked off in September, and a final donation of $23,875 from the Charles and Lynn Schusterman Family Foundation last week completed the campaign. Each year, Street School serves 140 students ages 14 to 19 who have dropped out or who are at risk of dropping out of school because of homelessness, abuse, family dysfunction or poverty. Now that the school’s obligations have been met for fiscal year 2012, officials must turn their attention to raising money for 2013. It is unclear whether any state funding for the school will be restored. “Those foundations that stepped up to this fiscal challenge have been clear that their donation was one-time funding,” said Lise Blevins-Inman, president of Street School’s board.

Read more from The Tulsa World.

Oklahoma agency seeks more funding to help addicts

Terri White’s wish list for her agency is contained in an ambitious 10-point budget request that would cost the state an additional $144 million if everything were to be filled. The director of the Oklahoma Department of Mental Health and Substance Abuse Services rattles off the state’s dire statistics and national standings in addiction, health and treatment. That includes being No. 1 in illegal use of prescription painkillers, No. 21 in methamphetamine addiction, and in the top tier regionally in people who need substance abuse treatment and don’t get it. She ties it all to broader community issues such as child neglect, workforce readiness and education performance. The agency’s budget of $289.8 million includes state, federal and all other grants to the department, and the total is down 11 percent since 2009. Funding for substance abuse programs, both state and federal, has fallen by 21 percent. Just to maintain services will require an additional $16.8 million in the next fiscal year.

Read more from The Tulsa World.

Candidates for state, local office would have to take drug test under amended bill

Candidates for state or local offices would have to take a test to determine whether they used illegal drugs or certain prescription drugs in order to file for the post, according to a measure passed Monday by the state House. The measure was the Democrats’ response to a Republican-backed bill that would require adults in the Temporary Assistance for Needy Families program to undergo a drug test. Both the amendment, by Rep. Mike Shelton, D-Oklahoma City, and the bill, House Bill 2388 by Rep. Guy Liebmann, R-Oklahoma City, passed easily. The bill now goes to the Senate. Minority Leader Scott Inman, D-Del City, said candidates who test positive for illegal drugs still could file for the post.

Read more from NewsOK.

Previously: 5 reasons not to drug test welfare recipients from the OK Policy Blog

Two grassroots organizations seek changes to Oklahoma’s liquor laws

When a joint task force considering changes to Oklahoma laws to allow wine and strong beer in grocery stores disbanded last year with no recommendation, the likelihood of seeing a legislative proposal became bleak. And so a group of Oklahomans did what Rep. Ron Peters, R-Tulsa, predicted would happen in the aftermath of the task force’s impasse: They started a petition drive. The resulting Oklahomans for Modern Laws has indicated it soon will submit the petition to the Secretary of State for approval prior to distribution. That petition would be allowed only 90 days of circulation to acquire 138,570 signatures. Even if everything goes well, the task force already learned last year that Oklahomans are nearly split on the issue. The Retail Liquor Association of Oklahoma and liquor distributors would be expected to align with many conservative Christians to fight the measure, making the success of such an initiative questionable.

Read more from the Oklahoma Gazette.

Oklahoma State loses bid to regain $33M in payments for failed life insurance fundraiser

Oklahoma State’s unique fundraiser was expected to bring in hundreds of millions of dollars to fund school sports, based on the idea of purchasing $10 million life insurance policies on about two dozen boosters with the university as a beneficiary. Instead, the so-called “Gift of a Lifetime” program created on the advice of top booster T. Boone Pickens has ended with Oklahoma State having spent $33 million with nothing to show for it. A federal judge has ruled against Oklahoma State’s bid to get back the money it spent on premiums as part of the fundraising idea launched in 2007 with 27 boosters agreeing to have life insurance policies taken out that would pay the school when they died. Oklahoma State claimed in court filings that it was told it could make as much as $350 million through the program. Instead, OSU nixed the program about three years ago and then sued to try and regain premiums it had already paid.

Read more from the Associated Press.

Prosecutor won’t refile charges against Mike Morgan for now

The U.S. attorney in Oklahoma City filed a motion Monday to dismiss the remaining 28 charges against convicted former Oklahoma Senate leader Mike Morgan after a jury deadlocked on a verdict last week. Morgan was convicted March 5 on one count of bribery, but the jury could not agree on verdicts on the remaining one count of extortion and 27 counts of mail fraud, and a mistrial was declared on those counts. Coats said in the motion that he doesn’t believe a conviction on the additional 28 counts would lead to more prison time for Morgan, who faces up to 10 years under federal sentencing guidelines. By dismissing the charges without prejudice, the motion states that prosecutors will have the option to again file the charges “in the unlikely event that the conviction is reversed or vacated.”

Read more from The Tulsa World.

Quote of the Day

We have to start some place.
Rep. Guy Liebmann, R-Oklahoma City, responding to Rep. Emily Virgin, D-Norman, who asked why his bill was singling out poor people for drug testing.

Number of the Day


Number of Oklahomans who no longer have a lifetime limit in their health insurance plans because of the Affordable Care Act

Source:  Center for Medicaid and Medicare Services

See previous Numbers of the Day here.

Policy Note

Americans like regulation

It’s a well-known fact that Americans oppose government spending in the abstract yet favor virtually every government spending program. Most government spending does go to popular programs like Social Security, Medicare, and Medicaid. I suspected, however, that most Americans would want to cut spending on federal regulatory agencies; I thought that they just overestimated the amount of spending on regulation, which is tiny compared to the large mandatory spending programs. It turns out I was wrong. According to a recent study by the Pew Research Center for the People & the Press (hat tip Harold Meyerson), a small majority (52-40) thinks that government regulation does more harm than good. When you look at every actual type of regulation, however, people wanting stronger regulations vastly outnumber people wanting reduced regulation, and there is little noticeable shift since 1995—another year of intense anti-government sentiment.

Read more from The Baseline Scenario.

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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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