In The Know: Push building to eliminate Oklahoma's personal income tax

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 NewsOK reports on a continuing push against the state income tax and features a point-counterpoint on eliminating the income tax with OK Policy Director David Blatt and OCPA President Michael Carnuccio. At the final meeting of the tax reform task force, small business representatives recommended against reducing the state income tax. The tax credit task force is recommending a number of measures to improve oversight of tax incentives.

Insurance Commissioner John Doak is proposing a rule that would allow insurance companies to decline to offer individual coverage for children less than 1 year old. Doak said insurance companies would be better off if these children were covered by government-provided insurance in the federal high-risk pool. With three Oklahoma counties facing multi-million dollar settlements over sexual abuse complaints brought by female inmates, many counties still lack the money, technology and manpower to police their jails.

The New York Times reports on how Congressman Dan Boren receives large financial benefits from the natural gas industry while pushing their interests in Congress. The federal government denied a request by Oklahoma for individual assistance of those affected by November’s earthquakes. Superintendent Janet Barresi is hiring Joel Robison, the head lobbyist for the state’s largest teachers’ union, as her chief of staff. The Tulsa World questions whether the state would really be able to find much savings through school consolidation.

Oklahoma tribal leaders say the Obama administration has been much more focused on their concerns than previous administrations. Lawmakers and tribal leaders are discussing how to regroup after Governor Fallin decided not to appoint anyone as the state’s Indian liaison.

The Number of the Day is the percentage of Oklahoma women aged 18-35 years who reported being sexual assaulted in their lifetime. In today’s Policy Note, The Century Foundation questions a proposal by Senate Republicans to pay for extending the payroll tax cut by eliminating jobs.

In The News

Push building to eliminate Oklahoma’s personal income tax

With Republicans firmly in control of state government, reducing and possibly eliminating Oklahoma’s personal income tax is moving toward reality. A gubernatorial task force is proposing a 10-year program to significantly reduce then ultimately eliminate the tax. A legislative task force also is looking at ways to simplify the state’s tax code and lower overall rates. State Treasurer Ken Miller, an economics professor and former state House budget chair, said GOP legislators and the governor need to be cautious. “We have to have a conversation based on facts … real numbers and based on reality, not ideology.” The state treasurer said he doesn’t think the personal income tax can be eliminated without needing a new revenue source. “I don’t think you can take your single largest source of revenue and eliminate it and not replace it,” he said. Miller also would like any tax plan submitted to voters for approval. “About 70 percent of an economy is driven by consumer spending,” he said. “If we increase sales tax to such a degree that it curtails retail activity that could prove problematic for our economy.” David Blatt, director of the Oklahoma Policy Institute, said the personal income tax is a fair tax system because it’s based on the ability to pay, unlike sales tax.

Read more from NewsOK.

See also: Point-counterpoint: Ending personal income tax from NewsOK

Small business representatives question wisdom of eliminating income tax

The state tax reform task force wrapped up 2 1/2 months of hearings Thursday with testimony from three small business experts. As the panel begins considering its final report to Gov. Mary Fallin and legislative leaders, Sen. Mike Mazzei, R-Tulsa, co-chairman of the committee, said several consensus points emerged from the expert testimony. Less consensus existed on what the state should do with any extra revenue that results from those reforms, Mazzei said. One school of thought is that by broadening the tax base, the state could lower the income tax rate or even eliminate it, he said. But two of the three witnesses who testified Thursday recommended against taking drastic actions on the state income tax, suggesting that the state might want to use extra income to improve key government services. Ron Barber, a tax attorney and CPA who has been involved in the founding of more than 1,000 businesses, said Oklahoma’s income tax rate is a low priority to people making decisions about where to create jobs. The quality of life, workforce quality, the school system, the public infrastructure and housing concerns are far more important issues to decision-makers, Barber said.

Read more from The Tulsa World.

State task force approves strict changes for tax credits

A task force on Wednesday approved recommendations for strict controls on tax credits and economic incentives. The Task Force on State Tax Credits and Economic incentives recommended eliminating the transferability of future tax credits. Rep. David Dank, R-Oklahoma City, chairman of the panel, said it was not his intent for the state to go back on promises it has already made to those who currently are involved with transferable tax credits. The panel approved a recommendation that State Auditor and Inspector Gary Jones’ office audit every tax credit annually. Such a move would require additional funds and personnel for Jones’ office. The office currently has 120 employees, down 50 from 2006, Jones said. The task force agreed to recommend that all future tax credits must contain a description of the fiscal impact to the state. The panel agreed that tax credits must create jobs or retain jobs. The task force recommended that those seeking state tax credits must disclose whether they are accessing other tax credits and incentives, such as those available from the federal government or local entities. The panel recommended that future tax credits have caps and expiration dates. Finally, the task force recommended banning the creation of additional tax credits in the final days of the legislative session.

Read more from The Tulsa World.

Insurance Commissioner proposes to allow health insurance companies to stop offering individual coverage for children below age 1

An emergency rule that quietly worked its way through state government and now awaits the governor’s signature would allow health insurance companies to stop offering individual coverage to children from birth to the age of 1 year. Drafted by state Insurance Commissioner John Doak’s office, the proposal would amend a rule adopted this summer by eliminating birth as a qualifying event for individual insurance coverage. The proposal would also eliminate a provision that states nothing shall alter the ability of an applicant to obtain a child-only policy outside of the open enrollment period upon the occurrence of a qualifying event. The proposed changes were sent to Republican Gov. Mary Fallin’s office on Oct. 28. Fallin has 45 calendar days to decide whether to approve the rule. Should Fallin not sign the rule, it would die. Mike Rhoads, Doak’s deputy commissioner for health insurance, said the change would allow insurance carriers to choose the age limit that they would market their product to. “We’re trying to find a way to have everyone come back into the market and find how we can transfer the risk to another entity, such as the federal high-risk pool,” Rhoads said.

Read more from Insurance News Net.

After large legal payouts for Okla. jailhouse abuse, prevention of wrongdoing is the new focus

After three Oklahoma counties shelled out more than $24 million to settle sexual abuse complaints brought by female inmates, professionals say a better job must be done at the county jail level to stop illicit activities. Since 2004, a series of allegations have surfaced involving sexual assault or rape in jails, court documents show. In Delaware County, where a typical resident could see an 18 percent hike on property taxes because of that county’s $13.5 million settlement over the abuse of female prisoners. Many Oklahoma jails lack the money, technology and manpower to police their jails on a routine basis, even though the state of Oklahoma offers several law enforcement programs designed to assist sheriffs dealing with problematic inmates and avoid pitfalls like the ones in Custer, Latimer and Delaware counties. Some officers are also lobbying for a greater oversight of law enforcement in each of Oklahoma’s 77 counties. They suggest better wages for jailers, beefed-up video surveillance, constant radio communication between jailers and headquarters while transporting female inmates through the prison and more on-site audits to spot weaknesses in the jail’s system.

Read more from The Associated Press.

As gas riches remake plains, Dan Boren shares in bounty

Gas money is transforming vast stretches of Oklahoma. The spreading wealth from gas fields has also benefited Representative Dan Boren, a Democrat who has deep family ties to the industry — and has acted as one of its best friends on Capitol Hill. The congressman’s income has jumped in the last six years, thanks to two family businesses he partly owns that have signed more than 300 mineral leases, worth hundreds of thousands of dollars. Many of those deals are with Chesapeake Energy, a top donor to his campaigns. Mr. Boren is a champion in Washington of an industry that is experiencing a historic boom but also increasing scrutiny. He argues that the drilling can help solve the nation’s energy problems and dismisses concerns about the potential environmental and health perils posed by the process with which shale gas is extracted, known as hydraulic fracturing, or fracking. Serving as co-chairman of the House Natural Gas Caucus, Mr. Boren has worked to block any move by federal regulators to restrain the drilling and efforts by the Obama administration to curtail tax benefits for the gas and oil industries.

Read more from The New York Times.

Federal aid for Oklahoma’s individual earthquake victims denied

A request seeking individual assistance for Oklahomans affected by November’s earthquakes was denied by the federal government, emergency management officials announced late Wednesday. Gov. Mary Fallin requested individual assistance on Nov. 22, according to an Oklahoma Department of Emergency Management press release. Nearly 200 homes and businesses were damaged by the quakes, which began Nov. 5, Fallin said in the release. “After receiving five presidential disaster declarations in one year, including snow storms, tornadoes and flooding events, Oklahomans and the voluntary agencies that are often called upon to assist them have been pushed to the limits. We felt the case for additional assistance had been made,” Fallin said. The state is pursuing other options for individual assistance, including a potential request to the U.S. Small Business Administration, she said.

Read more from The Tulsa World.

Superintendent Janet Barresi to hire OEA leader as top aide

Oklahoma Superintendent of Public Instruction Janet Barresi is hiring Joel Robison, a high-ranking official with the Oklahoma Education Association, as her chief of staff, sources told CapitolBeatOK late Friday. Jennifer Carter, Barresi’s first chief of staff, decided not to return from her recent maternity leave. Robison is the head lobbyist executive for the Sooner State’s largest teachers’ union. His formal title with the OEA is Associate Executive Director, Legislative and Political Organizing. On Friday afternoon (December 2), CapitolBeatOK asked the superintendent’s communications staff to confirm information provided by sources that Barresi was hiring Robison. After not hearing from her staff, but securing several confirmations from knowledgeable sources, this story was posted.

Read more from CapitolBeatOK.

Is school consolidation all it’s cracked up to be?

School consolidation – joining small local districts together, presumably to improve academic programs and reduce administrative overhead – has been an issue in Oklahoma for at least 40 years. Oklahoma has 527 school districts. That might seem like a lot until you consider that in 1914 there were 10 times more – 5,889. (The policy back then was that there be a school within walking distance of every child.) The fact is, Oklahoma has been consolidating school districts since the early days of statehood, motivated first by the Depression-era mass migration of the population out of the state and the movement of the remaining population from the farms to the cities and towns. It continued after 1990, when lawmakers approved economic incentives to encourage voluntary consolidation. While voluntary consolidations may have slowed to a relative trickle, they are still occurring: 12 districts have merged since 2006. Proponents of consolidation argue that Oklahoma schools are top-heavy with administrators. But according to numbers from the U.S. Department of Education, compiled by the Oklahoma Policy Institute, 3.05 percent of Oklahoma’s common education budget goes for “general administration,” which includes superintendents and their staff. That’s just slightly higher than the 2.27 percent in the surrounding states and 2.33 percent for all the states.

Read more from The Tulsa World.

Oklahoma tribal leaders praise Obama

Oklahoma Indian tribal leaders at the third annual White House Tribal Nations Conference said the Obama administration has been much more engaged with them and has focused more on their concerns than previous administrations. Glenna J. Wallace, chief of the Eastern Shawnee Tribe of Oklahoma, who helped develop the administration’s tribal consultation policy, said every government agency “will have a person designated” for Indian tribes. “It’s just a 180-degree turnaround from what it was under the Bush administration,” she said. And Gregory Pitcher, chairman of Shawnee Development, the economic development arm of the Shawnee Tribe, said, “It’s the most Indian-friendly administration I’ve seen since 1975, in the amount of consultation that’s going on and the easy access.” The Obama administration made Indian Country a significant part of the stimulus and health reform legislation, and it resolved long-running lawsuits involving Indians and the federal government. The administration also helped push major legislation on tribal justice through Congress.

Read more from NewsOK.

Supporters regroup after Fallin fails to name Indian liaison

The author of a bill to create a state native American liaison says the governor’s office didn’t talk to him before announcing that the job wouldn’t be filled by a statutory Thursday deadline. Rep. Earl Sears, R-Bartlesville, said he thinks the original impetus for eliminating the 44-year-old Indian Affairs Commission and replacing it with a liaison in the Governor’s Office came from the Governor’s Office. But after Gov. Mary Fallin signed the bill into law, she decided not to appoint anyone to the job because of concerns with a requirement that the liaison be at least one-quarter Indian and a stipulation that the person holding the post would have a lead role in negotiating future tribal compacts, a spokesman for Fallin announced Thursday. The bill was brought before the Legislature late in the session and was opposed by several lawmakers with ties to tribes. Rep. Chuck Hoskin, D-Vinita, co-chairman of the House Native American Caucus, fought the bill, arguing that a Cabinet-level post was needed to recognize the important role of tribes in the state’s economy. Hoskin, a Cherokee, said he would have no qualms with eliminating the requirement that the person holding the position be at least one-quarter Indian.

Read more from The Tulsa World.

Quote of the Day

Taxes were way down on the list. In fact, they barely made the list. I don’t know if (a lower tax rate) is the panacea that some think it is.
Ron Barber, a tax attorney and CPA who has been involved in the founding of more than 1,000 businesses

Number of the Day

31 percent

Percentage of Oklahoma women aged 18-35 years who reported being sexual assaulted in their lifetime, 2006.

Source: OU POLL via Oklahoma State Department of Health

See previous Numbers of the Day here.

Policy Note

Paying for a jobs bill by cutting jobs?

Earlier this week, Senate Republicans rolled out their proposal for financing an extension of the Social Security payroll tax cut scheduled to expire at the end of December. Disappointingly, the conservative counteroffer is to pay for this job creation measure by cutting federal employees’ jobs and wages. The “pay-for” proposed by Senate Democrats—a 3.25 percent surtax on the 1-in-500 households earning over $1 million—for an expansion of the payroll tax cut is anathema to conservatives; Senate Republicans have already filibustered a litany of job-creation proposals that would be financed by varying millionaire surtaxes. Last night, the Senate Republicans filibustered yet another such jobs package—both the proposed extension and expansion were rejected in the Senate. The Senate Republican proposal would limit federal agencies to hiring only one replacement employee for every three full-time employees leaving the agency until employment has fallen by 10 percent. This would result in roughly 280,000 job losses—ironic, given that the purpose of the payroll tax cut is to create jobs. Someone should remind the GOP that the purpose of a pay-for is to offset the cost of a policy, not its impact.

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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