OKPOLICY.ORG
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 House Speaker Kris Steele said a budget agreement and tax cut plan should be worked out within two weeks. The Oklahoma Capital Investment Board is being phased out but the state still has to deal with the agency’s $20 million of debt. Five companies or individuals are responsible for nearly half of the $264 million in state income tax credits claimed for tax year 2008.
Deteriorating, underfunded weigh stations are preventing Oklahoma from ensuring that overloaded trucks do not tear up state roads. Local officials says Oklahoma needs to do more to fund recovery from natural disasters. The Tulsa World examines the need for more education and skill-training programs for the working poor.
NewsOK pointed out that tax cuts are not as important to business as supporters believe. OK Policy previously compiled quotes from business leaders and many other tax cut skeptics. The Tulsa World looks at states that are increasing taxes to protect core services in tough times.
A U.N. investigator visited Tulsa to hear concerns from Native Americans. NewsOn6 reported on a bill that could eliminate all minimum coverage requirements for health insurance plans. OK Policy previously explained what this bill would do. The Tulsa World examines the role of group homes in Oklahoma’s child welfare system.
The Number of the Day is the percentage of college students in Oklahoma who graduate with outstanding student loan debt. In today’s Policy Note, economist Nancy Folbre discusses why we need economic incentives that discourage not just sloth and fear, but also cruelty and greed.
In The News
Legislative leader says work on Oklahoma budget should be done in two weeks
With only three weeks left in this year’s session, a budget agreement between legislative leaders and the governor should be worked out within two weeks, House Speaker Kris Steele says. The package will include a cut in the state’s personal income tax rate, said Steele, R-Shawnee. “In addition to the income tax reduction proposal that we’re working on, we’re also considering not just this next year but several years,” Steele said. “We’re not trying to determine an income tax reduction based on one year.” But any cut for next year won’t be as deep as some had proposed, and the idea of economic triggers that would lower the rate further in subsequent years still is being debated, he said. House Democrats say any cut in the personal income tax is too deep. Personal income tax collections produce nearly one-third of the budget appropriated by lawmakers, the Democrats say, and funding should be restored to many state agencies that have had to undergo budget cuts the past three years.
Oklahoma Venture Capital Board headed out, must make good on $20 million debt
A quasi-state agency tasked with investing millions of taxpayer dollars in high-growth, high-risk startup companies has run its course and is headed out of business. But first, lawmakers wanting to do away with the venture capital investment board say they must unravel a dicey situation that could leave taxpayers with a hefty bill. The Oklahoma Capital Investment Board was created by legislation roughly 20 years ago in an effort to stimulate the state’s economy following the energy bust. The state gave the board $100 million in tax credits. The board used those tax credits as collateral to acquire loans from banks, and then in turn invested that cash in venture capital opportunities. To date, the board has had to sell a little more than $30 million in tax credits to make good on loans where the investment didn’t pan out. Sauzek said that was because of the economic downturn in 2008. He said the board has an additional $20 million in debt.
Five companies or individuals claimed $100 million in Oklahoma tax credits for 2008
Five companies or individuals are responsible for nearly half of the $264 million in state income tax credits claimed for tax year 2008, according to an analysis of the latest data available compiled by the Oklahoma Tax Commission. The Tax Commission first began releasing details about who was claiming which income tax credits in 2006 after a law specifically made the information public record. Other tax incentives such as exemptions from sales tax or gross production tax still are not public record. In the 2008 tax year, five income tax returns claimed nearly $104.6 million in tax credits, an analysis of data published by the Office of State Finance shows. Weyerhaeuser Co., a national lumber company, claimed $54.6 million; Terra International Inc., a fertilizer producer, claimed $19.3 million; Howard Hawks with Tenaska, a power company, claimed $10.3 million; Koch Industries Inc., a corporation based in Wichita, Kan., claimed $9.2 million; and George Kaiser, with BOK Financial, claimed $11.1 million.
Oklahoma weigh stations overloaded and underfunded
There are six older weigh stations open in the state. There are also eight portable scales that inspectors can use, but only one of the older weigh stations is at a point of entry, meaning, for example, a truck coming in from western Oklahoma could, “Unload, turn around and go back without ever seeing any scales,” said Representative Guy Liebmann, (R)-Oklahoma City. In fact, some weigh stations are in such bad shape, they’ve been closed down for years and the ones that are open haven’t been maintained well in decades. Poor lighting prevents some from even being open at night, but getting weighed is the law for truckers. If a truck is overweight, “They would wear out the roadway prematurely and so the investment we’ve made would not have the useful life that it should have,” said Oklahoma Department of Transportation Chief Engineer Gary Evans. Four years ago, the Corporation Commission started collecting funds for a fix with a fee that wholesalers pay for gas, charging them a penny per gallon. So far the fund has brought in $22 million, less than a fourth of all the money that’s needed.
Some say Oklahoma should plan financially for next disaster
Oklahoma needs to plan for rainy days – and the tornadic, icy and drought-ravaged ones as well, city and state emergency management leaders say. For years, Oklahoma’s Emergency Fund has built up a mounting pile of unpaid bills, leaving local government agencies holding the bag – sometimes for millions of dollars. The emergency fund is used to pay one-eighth of certain government costs for dealing with disasters that have federal approval for assistance. The federal government picks up 75 percent of the cost. But during recent tough economic years, which coincided with a lot of costly disasters, the Oklahoma Legislature didn’t appropriate enough money to pay off the state’s share. Bixby City Manager Doug Enevoldsen says the Legislature should be doing more. The state should be thinking ahead because another disaster will occur sooner or later.
Read more from The Tulsa World.
‘Working poor’ helped by skill-training programs
Being away a lot from her two children is a big challenge for Ayrahel Ores. But to make a living, the 30-year-old Tulsan juggles three jobs and works up to 100 hours a week taking care of people with minimal physical challenges. She often works all night and on the weekends. It can be hard to pay bills, but she has learned how to budget and juggle. “I know all of my bills, and I know how much I need to pay,” Ores said. While the Tulsa area’s 5.3 unemployment rate for March is the lowest since December 2008 and jobs are plentiful, sometimes it takes more than one job to make a livable wage. In 2010, some 10.5 million individuals were among the “working poor,” according to the U.S. Bureau of Labor Statistics. The working poor are defined as people who spent at least 27 weeks in the labor force, working or looking for work but whose incomes still fell below the official poverty level.
Read more from The Tulsa World.
NewsOK: Tax cut not important to business
The idea of reducing or eliminating Oklahoma’s personal income tax needs more study. It would result in transferring money to the rich from the poor. It isn’t as important to business as supporters believe. The arguments of Democratic lawmakers opposed to the Republican push to cut the income tax? No. Instead, these are the opinions of business and chamber of commerce officials. Oklahoma Policy Institute, no fan of an income tax cut, cobbled together comments made in recent months as the various tax plans made their way through the Legislature. Lawmakers from each side of the aisle urged caution, as did economists. But so too did business leaders.
See also: Tax cut skeptics – notable quotes from Oklahoma Policy Institute
Slashing taxes not for everyone
Maybe it’s a little harsh to compare Oklahoma’s leaders to the emperor Nero who, legend has it, carelessly fiddled while Rome burned. But there’s no denying they haven’t done much to tackle some of the state’s biggest problems in recent years, opting instead to make things worse by whittling away at state revenue year in and year at through income tax cuts. Meanwhile, educators are blue in the face from hollering and parents are pulling their hair out over the crummy state of education in the state. And what, you might ask, have other state leaders been doing in these tough times about these tough times? Oh, things like – gasp! – increasing income tax rates, raising sales tax rates, broadening sales taxes to cover more goods and services, and raising other taxes and fees. After reviewing the just-released report, “Protecting the Safety Net in Tough Times: Lessons from the States,” a casual observer is left to wonder why some state leaders and their constituents will take such bold steps as raising taxes when faced with an economic crisis, while others do exactly the opposite.
Read more from The Tulsa World.
U.N. investigator visits Tulsa, hears tribal concerns
After six weeks in the first grade, Beverly Patchell’s grandson decides, “‘I don’t want to be Indian anymore; they’re bad.’” Patchell provided this personal testimony as an example of how the inaccurate portrayal of Indigenous people in history books, prejudice and overall education barriers affect Indigenous people. She was one of more than 30 Indigenous leaders who took turns voicing concerns to United Nations Special Rapporteur S. James Anaya on May 3 at the University of Tulsa (TU). Anaya spent 12 days in the U.S. listening to Indigenous leaders in the District of Columbia, Arizona, Alaska, Oregon, Washington State, South Dakota, and Oklahoma. He is beginning an investigation, the first of its kind, which will measure how state and federal laws, policies and programs in the United States mirror the principles of the U.N. Declaration on the Rights of Indigenous Peoples.
Read more from Native American Times.
Oklahoma health bill would end required coverage laws
A debate in the state legislature could affect anyone with health insurance. It would create more competition between insurance companies – and eliminate some requirements on what they’re required to cover. All health insurance plans cover routine checkups and prescriptions – because that’s required by state law. A bill near approval in the legislature could take away minimum requirements for health insurance plans – allowing bare bones policies that would cost less. “If we allow our legislature to take away the existing consumer protections we’re going backwards,” said Kate Richey with Oklahoma Policy.
Previously: Legislature poised to limit access to mammograms, prostate screenings, immunizations, & more from the OK Policy Blog
Group homes pivotal in Oklahoma’s child welfare reform
Jordan recalls the happiest part of her childhood was in a group home in Tipton, living in a cottage with girls and a married couple. At age 4, she landed there when her mother left because of domestic violence and her father’s addictions led to neglecting his three children. An aunt voluntarily placed the children in the group home. … “Anyone who’s been in my life has left us,” said the 18-year-old. “I have bad detachment anxiety. If I get close to someone, I fear they will leave. I don’t know what I’d do without this place. They really do love us.” The role of group homes – also known as “congregate care” – became one of the sticking points in the creation of the Oklahoma Department of Human Services’ child welfare improvement plan, called the Pinnacle Plan.
Read more from The Tulsa World.
Quote of the Day
If they want to offer up a flat budget and everybody’s gong to get essentially what they got last year, that’s another cut to core services of government because nothing got cheaper over the last year.
–House Minority Leader Scott Inman, D-Del City.
Number of the Day
56 percent
Percentage of college students in Oklahoma who graduate with outstanding student loan debt, 2010
Source: Institute for College Access and Success
See previous Numbers of the Day here.
Policy Note
Incentive perversity
It’s all about incentives. The richer the reward, the more willing you are to work hard and take risks, and the faster the economy will grow. By this logic – elaborated by Mitt Romney’s former business partner Edward Conard in a recent New York Times profile – income inequality benefits us all. Sloth and fear are singled out as economic sins that could condemn us to stagnation. Only the desire for more, more, more than anybody else can elicit the bold energy that economic growth requires. Only greed can redeem us. Effort is never misdirected. Risk is never carried to excess. You should thank the Higher Power for rewarding talents at the top. Before doing so, consider the empirical evidence that faith in this particular set of incentives is seriously misplaced. The most recent global financial crisis showed that increasing the reward for risk can create temptations to conceal its dangers or offload it onto others. Managerial efforts to increase short-term profits sometimes come at the expense of long-term profits and environmental sustainability. Big winnings in a competitive game can be spent on efforts to change the rules of that game: lobbying expenditures often offer a higher payoff than investments in new technology.
You can sign up here to receive In The Know by e-mail.
