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Today you should know that a continuing boom in Oklahoma’s oil patch helped boost collections significantly in November, but state officials are still predicting a relatively flat budget for the coming year because of the loss of one-time revenues and a reduction the state’s top income tax fully taking effect. Speaking at the at the 2012 Oklahoma Economic Outlook Conference, OSU economics professor Dan Rickman said the state’s economy should continue to grow, but it is dependent on rising energy prices. OG&E is asking for a $73 million rate increase, which would add about $6.50 a month to the average residential customer’s bill.
The OK Policy Blog explains how a proposal by Oklahoma’s Insurance Department would give profitable insurers a free pass to shift their administrative expenses onto already strained household budgets. Tulsa Public Schools leaders say the Oklahoma State Department of Education is “mischaracterizing” their new teacher-evaluation system and misrepresenting the costs of expanding its use statewide. Rep. Eric Proctor, D-Tulsa, and Rep. David Derby, R-Owasso, are joining to push for a way to get money back from companies that receive tax incentives to hire workers and then outsource the jobs.
The Oklahoma Water Resources Board will file a lawsuit to establish water rights in from the Kiamichi River, Muddy Boggy stream and Clear Boggy stream systems. An Oklahoma agency that studies earthquakes cannot afford to pay for a seismic study of last month’s 5.6 magnitude temblor and must rely on data provided by oil companies. Enid city commissioners tabled a resolution that would call a special election to allow collective bargaining for city workers. Getting on the ballot without commission approval will require an initiative petition.
The Number of the Day is how many filers in the state that claimed the Oklahoma Earned Income Tax Credit on their 2009 returns. In today’s Policy Note, the Institute on Taxation and Economic Policy finds that state governments are losing out on over $10 billion in transportation revenue every year because the average state has not increased its gas tax rate in over a decade. Oklahoma hasn’t increased its gas tax in 24 years, and the tax has lost 45 percent of its value since then due to inflation and increased construction costs.
In The News
Oil boom helps boost Okla. revenue; flat budget still expected
A continuing boom in Oklahoma’s oil patch helped boost collections to the state’s general revenue fund to more than 20 percent over the same period last year, state finance officials reported on Tuesday. Because of increased drilling and relatively high oil prices, the gross production tax on oil and natural gas totaled $59 million in November, which is 194 percent more than collections in November 2010 and more than 200 percent above the estimate. Overall, collections to the state’s general revenue fund through the first five months of the fiscal year totaled $2.15 billion, an increase of nearly 13 percent over the same time last year, and more than 8 percent above this year’s official estimate. But despite continued positive revenue reports, state officials are predicting a relatively flat budget for the coming fiscal year because of the loss of one-time revenues that were used to close this year’s budget gap of about $500 million. Lawmakers also will be without an estimated $70 million in lost revenue from the state’s income tax, which drops for the 2012 tax year from 5.5 percent to 5.25 percent.
Economist says Oklahoma’s economy dependent on rising energy prices
Oklahoma’s relatively robust economy should continue to grow, although expansion of the state’s gross domestic product and employment could be restrained by lower energy prices, an Oklahoma State University economist said Tuesday. Oklahoma’s economic growth should continue, economist says “We’ve had very strong growth coming out of the recent recession, (more) than we’ve seen in other states and we expect that to continue into the next year, possibly moderated a little bit with a moderation in energy prices,” said Dan Rickman, economics professor at OSU’s Spears School of Business. Rickman was the final speaker at the 2012 Oklahoma Economic Outlook Conference, which was hosted by the business school. The size of Oklahoma’s energy sector is the major driver that distinguishes the state’s economy from the rest of the nation, Rickman said.
OG&E asks for $73 million rate increase
Oklahoma Gas and Electric Co. began making its case Tuesday as the state’s largest utility company seeks a $73 million rate increase. OG&E filed its rate hike request in July to recover costs from nearly $500 million in new investments over the past two-plus years. The increase requested by OG&E would add about $6.50 a month to the average residential customer’s bill, but a number of consumer advocates have urged state regulators to lower the company’s rate. “Oklahomans simply should not have to pay higher electric rates when utility companies are making more than enough money to operate,” AARP Oklahoma Executive Council Member Barney Allen said Tuesday.
Rebates for consumers or more profits for insurers?
The Oklahoma Insurance Department (OID) has asked the federal government to waive a key provision of the new federal health care law set to go into effect in 2012. OID wants to exempt insurers in the state from adhering to a ‘medical loss ratio’ (MLR) requirement that they spend at least 80-85 percent of premiums directly on medical care, or else rebate consumers. Oklahoma Policy Institute has recommended to HHS that they deny this request and allow full enforcement of an important and reasonable consumer protection that will put millions of dollars back in the pockets of Oklahoma consumers. This post explains the simple rationale behind our recommendation: Why should profitable insurers get a free pass to cost-shift their administrative expenses onto already strained household budgets?
Read more from the OK Policy Blog.
TPS: New teacher evaluation system cost-estimates misrepresented
Tulsa Public Schools leaders say the Oklahoma State Department of Education is “mischaracterizing” their new teacher-evaluation system and misrepresenting the costs of expanding its use statewide in advance of consideration by the state Board of Education. After meeting for six months, a group of education, government and business leaders who served on the Oklahoma Teacher and Leader Effectiveness Commission voted 13-5 on Dec. 5 to make Tulsa’s system the primary new model for evaluating public school educators. But before moving forward, the plan needs the final approval of the state Board of Education, which is set to consider it Thursday morning. State Superintendent Janet Barresi cast one of the five dissenting votes on the Tulsa model, and TPS leaders are questioning the accuracy of documents that Barresi’s department has sent to state board members during the past week.
Read more from The Tulsa World.
Lawmakers push for way to recover abused incentives
A Tulsa lawmaker said Tuesday that he will pursue legislation that would create a recovery provision aimed at companies that receive taxpayer subsidies for hiring workers and then outsource the jobs. Rep. Eric Proctor, D-Tulsa, said the measure would help cities and the state seek refunds of taxpayer subsidies if companies do not fulfill promises for job creation. He will be joined by Rep. David Derby, R-Owasso. Since 2000, more than $110 million in subsidies have been granted to companies that moved jobs out of the state, Proctor said. In the Legislature’s last session, Proctor’s effort to amend a bill to create the claw-back provision failed.
Read more from The Tulsa World.
Oklahoma Water Resources Board OKs lawsuit to determine water rights
The Oklahoma Water Resources Board has given its legal counsel the green light to sue in order to establish water rights in the state’s wettest region. J.D. Strong, the water board’s executive director, said the move is in response to the legal action the Chickasaw Nation and the Choctaw Nation have taken against the state, governor, members of the water board, Oklahoma City and the Oklahoma City Water Utility Trust. Strong said the focus of the potential lawsuits will be to adjudicate rights to water from the Kiamichi River, Muddy Boggy stream and Clear Boggy stream systems. Strong said stream adjudication is “a commonly accepted process administered by the court. It’s like you’re subjecting this administration of water rights to the court to decide who has rights to what.” According to documents provided by the state attorney general’s office, stream adjudication is the process of determining the water rights of an entire river system.
Agency lacks budget for studying earthquakes, must rely on oil company data
An Oklahoma agency that studies earthquakes cannot afford to pay for a seismic study of last month’s 5.6 magnitude temblor about 45 miles east of the state Capitol. Monday morning, Oklahoma Corporation Commissioners Bob Anthony, Dana Murphy, of Edmond, and Patrice Douglas, of Edmond, heard from representatives from SouthStar Exploration. The company is working toward a roughly $5 million seismic study in the Prague area. About 17 miles of the Wilzetta fault line will be imaged and the epicenter of the 5.6 magnitude quake is within the study boundary, said SouthStar’s Spence Carson. Carson said SouthStar will share its data with the Oklahoma Geological Survey. Austin Holland, a research seismologist with the Oklahoma Geological Survey, said the fact that the company is willing to share data is crucial. The agency does not have a budget for doing this type of seismic survey. It relies on existing published literature and what oil companies are willing to provide, Holland said.
Read more from The Edmond Sun.
Enid City Commission tables proposal for vote on city collective bargaining
Enid city commissioners on Tuesday tabled a resolution and proclamation to call a Feb. 14, 2012, special election to allow collective bargaining for city workers. City employees had that right from 2004 until earlier this year, when a state law requiring cities with populations of at least 35,000 to bargain in good faith with employees was repealed by the Oklahoma Legislature. The resolution would recognize the bargaining unit and recognize only the employees as the bargaining unit. It would not allow strikes or work stoppages, and would require both sides to negotiate in good faith. Ward 6 Commissioner Todd Ging said the agreement would keep both sides honest, but he had a hard time putting such a restriction on future commissions. He said an initiative petition would be a better way to call an election. An initiative petition would require signatures of 20 percent of the number of registered voters who voted in the last citywide election.
Read more from the Enid News and Eagle.
Quote of the Day
A rate increase would particularly hurt older Oklahomans, many of who already struggle to pay their utility bills.
–AARP Oklahoma Executive Council Member Barney Allen, speaking at hearings on a $74 million rate increase request by OG&E.
Number of the Day
307,253
Number of filers in the state that claimed the Oklahoma Earned Income Tax Credit on their 2009 returns
Source: Oklahoma Policy Institute
See previous Numbers of the Day here.
Policy Note
A first of its kind, 50-state report reveals that state governments are losing out on over $10 billion in transportation revenue every year, contributing to an estimated $130 billion drain on the economy resulting from higher vehicle repair costs and travel time delays. The report, Building a Better Gas Tax: How to Fix One of State Government’s Least Sustainable Revenue Sources shows that the average state has not increased its gas tax rate in over a decade, and fourteen states have gone twenty years or longer without an increase. As the cost of paving roads and building bridges rises, the tax that’s designed to pay for them keeps shrinking. Adjusting for construction cost growth, the average state’s gasoline tax rate has effectively fallen by 20 percent, or 6.8 cents per gallon, since the last time it was raised. Oklahoma hasn’t increased its gas tax in 24 years, and the report finds that the tax has lost 45 percent of its value since then.
Read more from the Institute on Taxation and Economic Policy.
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