In The Know: State GOP more cautious, still committed to tax cuts

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. You can sign up here to receive In The Know by e-mail.

Today you should know that Gov. Fallin and legislative leadership say they remain committed to income tax cuts, but appear to be supporting a more cautious approach.  In response to a recent NewsOK editorial, which took issue with Oklahoma Policy Institute’s work on tax breaks for horizontal drilling, the OK Policy Blog clarified our position and pointed out some important facts that they got wrong.

Gov. Fallin’s office released examples of ways state agencies are providing information to the public, apparently in response to public criticism of her office for claiming ‘executive privilege’ to withhold other records requested by the press.  Rev. Stan Basler wrote in NewsOK about the practical and moral implications of Oklahoma’s private prisons and the state’s system of mass incarceration.

The state Department of Education will soon change the way it accepts donations.  The Environmental Protection Agency handed over responsibility for a key component of Clean Water Act enforcement to the Oklahoma Department of Agriculture.

The Number of the Day is the number of Oklahoma children in households claiming the Earned Income Tax Credit (EITC).  In today’s Policy Note, Earth Track completed a detailed inventory of fossil fuel subsidies in Colorado, Kentucky, Louisiana, Oklahoma, and Wyoming; they found that the industry made pervasive use of a wide-range of energy-specific subsidies, but had also captured a significant share of more general state incentive programs as well.   

In The News

Fallin, GOP leaders temper talk of deep tax cut
Gov. Mary Fallin and leaders of Oklahoma’s Republican-controlled Legislature say they remain committed to reducing the state’s income tax, but all appear to be supporting a more cautious approach to tinkering with the source of about one-third of the money lawmakers appropriate each year. Fallin last session proposed a bold initiative to slash Oklahoma’s top income tax rate from 5.25 percent to 3.5 percent, reduce the number of income tax brackets from seven to three, and offset much of the lost revenue by eliminating various deductions and exemptions. But that proposal fell apart in the waning days of the session after lawmakers balked at getting rid of popular deductions and couldn’t agree on how the cut would be implemented.

Read more from the Associated Press at

Revenue drop merits end of drilling tax credit? That’s a leap
IT’S the end of a leap year so we might as well note a leap of logic in the argument that declining gross production taxes make the case for ending a state tax credit for risky drilling ventures. In doing so, we’re perhaps making a leap of our own. But here goes: David Blatt, head of a progressive think tank, says tax breaks for horizontal drilling “have become unaffordable and unnecessary” and that state revenues from the gross production tax have effectively disappeared. This is disingenuous and illustrates a double standard that progressives have regarding energy policy.

Read more from NewsOK at

Unnecessary and Unaffordable: The Case for Curbing Oklahoma’s Oil and Gas Tax Breaks
Oklahoma should eliminate tax breaks for the oil and gas industry that are no longer needed and are squeezing out resources for schools, roads, public safety, and other keys to long-term economic growth. Policymakers created the tax exemptions to encourage what were once novel and risky methods of drilling, but these techniques are now standard practice, making the exemptions not only unnecessary but counterproductive. The state paid out or accrued $645 million in tax rebates and credits to the industry over the latest 3-year period (FY 2010 – FY 2012). Most of the credits – $537 million – went to producers of horizontal wells. As a growing share of Oklahoma production comes from horizontally-drilled wells, the cost of these credits will continue to grow exponentially in coming years and could reach $400 million or more annually without legislative action.

Read more from the OK Policy Blog at

A response to The Oklahoman
A recent Oklahoman editorial takes issue with a report by Oklahoma Policy Institute on why Oklahoma’s tax breaks for horizontal drilling have become unnecessary and unaffordable. The Oklahoman editorial wrongly paints OK Policy with positions it has never taken, and it does not present a single argument to refute OK Policy’s criticism of these credits. First, the Oklahoman argues that the near total collapse of General Fund contributions from gross production taxes is not significant, because the first $150 million of gross production tax revenue is dedicated to other funds. The data disputes the Oklahoman’s view: since 2001 the gross production tax has contributed an average of $194 million to the General Fund through November, and prior to this year it had never brought in less than $94 million. But this fiscal year, gross production taxes have collected only $7 million for the General Fund.

Read more from the OK Policy Blog at

Gov. releases documents to show gov’t openness
Gov. Mary Fallin’s office released 130 pages of documents to the Tulsa World this week that include dozens of ways state agencies are providing more information to the public.  Fallin solicited the examples of government transparency from her cabinet members following public criticism by FOI Oklahoma Inc. and others over her claim of “executive privilege” to withhold certain records. Her general counsel, Steve Mullins, has said Fallin has the privilege under state and federal law to withhold documents revealing “internal deliberations” between the governor and her top advisers.

Read more from the Associated Press at

Mass incarceration is a social, economic concern
The United States has 5 percent of the world’s population and 25 percent of the world’s prisoners. Oklahoma, the global leader in female per capita incarceration, ranks third or fourth in overall incarceration. As a culture, we fail to realize that labels such as “felony” and punishments are human constructs. They didn’t come down from Sinai. Other nations approach crime differently and use incarceration much less. We should analyze what’s gained and what’s lost depending on where we draw the felony line and the severity of the response. Included in the analysis should be a discussion of the undesirability of mass incarceration.

Read more from NewsOK at

Oklahoma Education Department to change donation, bidding practices
The state Department of Education is working to change the way it accepts donations after a state audit revealed that the agency was slipping funds through a nebulous nonprofit organization. The times of sole-source contracts and questionable fundraising practices are over, said Joel Robison, chief of staff for the department. The image of a quid pro quo hopefully will die off with those old ways, he said. “That’s part of what we’re trying to do – stop that perception,” Robison said. “We understand that. What we’re trying to accomplish with the new process is that there is that transparency out there so people will know who’s sponsoring what.”

Read more from the Tulsa World at

EPA Approves Clean Water Program to Oklahoma Department of Agriculture
The Environmental Protection Agency announced today that it is approving Oklahoma’s request for issuing agriculture-based Clean Water Act discharge permits to the Oklahoma Department of Agriculture, Food and Forestry (ODAFF). Oklahoma will take over responsibility to implement the Agriculture Pollutant Discharge Elimination System (AgPDES) program covering discharges associated with concentrated animal feeding operations, the application of biological or chemical pesticides, discharges from forestry activities, and discharges of storm water from agricultural activities. “Oklahoma has shown it’s prepared to take on this important Clean Water Act program,” said Regional Administrator Ron Curry. “We look forward to working with our co-regulators in Oklahoma as we ensure a smooth transition for the benefit of the both the business community and the people of Oklahoma.”

Read more from the Environmental Protection Agency at 

Quote of the Day

“It’s just not prudent to talk about cutting revenue while you’re increasing expenses. Oklahoma families don’t run their households that way, and we shouldn’t run the state that way,”

State Sen. Sean Burrage, on talk of state income tax cuts in the face of mounting and unmet state responsibilities 

Number of the Day


Number of Oklahoma children in households claiming the Earned Income Tax Credit, 2010

Source: Brookings Institution via Tax Credits for Working Families

See previous Numbers of the Day here.

Policy Note

A Review of Fossil Fuel Subsidies in Colorado, Kentucky, Louisiana, Oklahoma, and Wyoming
Although data on fossil fuel subsidies around the world have been growing, most of this information focuses on national level policies. The thousands of subsidies at the state, provincial or local levels are largely untracked — with little visibility either in the United States or in most other countries of the world. Such a large information gap is unfortunate: in the aggregate, sub-national subsidies transfer billions of dollars per year to fossil fuel industries just like their federal counter-parts. They are additive to federal supports, further distorting the economics of specific projects and investment incentives across energy options.

Read more from Earth Track at

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