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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 the legislature’s Foster Care System Improvement Task Force said reforms need to begin with more funding. The Tulsa World highlights the need for funds to respond to the looming physician shortage. NewsOK discusses several other serious needs that legislators must balance in the coming legislative session. The OK Policy Blog points out that if legislators make the choice to prioritize tax cuts, they cannot pretend to be blameless when funds aren’t available.
A GOP push to reduce or eliminate the income tax is emerging in seven states, but many have doubts. Grover Norquist sent a letter to every member of the Oklahoma Legislature saying that ending any tax expenditures without matching tax cuts would violate an anti-tax pledge. OK Policy previously discussed a similar dispute with Norquist in which Oklahoma lawmakers rejected his interpretation. Supporters of Oklahoma’s infant motion picture industry are fighting to preserve a $5 million incentive program.
The Oklahoma State Chamber announced its legislative priorities for this year, including more workers’ comp changes, ensuring income tax cuts aren’t replaced by shifting taxes onto businesses, and establishing a health insurance exchange with no federal or state funds. OK Policy previously explained why the window for Oklahoma to build its own exchange and avoid a federal takeover may have already closed.
Tulsa Superintendent Keith Ballard asked lawmakers to “fiercely resist” a rumored attempt by the State Department of Education to take over a Tulsa high school. The Oklahoma Attorney General is investigating two tribes’ online payday lending operations. Municipalities are upset that they have little say in what the Grand River Dam Authority does, but are responsible for most of its debt.
The Number of the Day is how many manufacturing jobs were added in Oklahoma from January to December of 2011. In today’s Policy Note, the Economic Policy Institute points out that the massive tax cuts propose by GOP presidential candidates don’t square with professed concerns about public debt.
In The News
Task Force: Foster care reform begins with funding
Adding to the possible reforms of Oklahoma’s child-welfare system, the legislatively created Foster Care System Improvement Task Force has pitched in its suggestions starting with “adequately funding” the recommendations. The task force was created by House Bill 1359 by Rep. Ron Peters, R-Tulsa and Sen. Rick Brinkley, R-Owasso, to examine the foster care system against federal outcomes and identify areas of improvement. Recommendations include upping reimbursement rates for foster parents, expanding trauma training for all professionals involved in child welfare, paying staff based on performance outcomes and ensuring social workers have proper education for the job. Commissioner Richard DeVaughn said the report backs what the agency has been seeking. “I like this report,” DeVaughn said. “These are things we’ve been asking for for years now. Instead of getting it, we’ve gotten cuts. All these boil down to money.”
Read more from The Tulsa World.
Lawmakers must address looming physician shortage
A measure that could help address the looming shortage of physicians in Oklahoma is on its way to the Legislature. We can only hope that lawmakers appreciate the seriousness of this problem and agree to do something about it. Last week, the Oklahoma Regents for Higher Education agreed to ask lawmakers for $4 million to fund the Oklahoma Healthcare Physician Shortage Initiative. Regents want to direct $1 million each to the University of Oklahoma College of Medicine and Oklahoma State University College of Osteopathic Medicine, and a total of $2 million to regional and community colleges. The money would go toward helping to increase the number of medical students in the state’s educational pipeline. Oklahoma is plagued by a host of chronic and in some cases worsening health woes, including such problems as tobacco use, obesity and access to primary health care. The access problem has grown worse in recent years as aging doctors retire and are not replaced by newcomers, especially in remote and rural communities. In fact, one national publication recently found that Oklahoma will have the worst access problem in the country as the ranks of the Medicaid population grow in response to federal health-care reform.
Read more from The Tulsa World.
Balancing needs a tough chore facing legislature
With state revenue on the uptick, the Legislature won’t have to render a flat-out no to every agency that comes through the door asking for more money. Neither can it say yes to every request. Priority-setting is paramount, and it pits not only one agency against another but the present against the future. Take, for example, this year’s budget request from the Oklahoma Center for the Advancement of Science and Technology. The agency is asking for $43.1 million, a whopping increase from this year’s $17.8 million appropriation. OCAST’s argument — and it’s a good one — is that for every state dollar allocated to the agency, $20 more is returned to the state in private and federal investments. Unlike other state agencies, the focus isn’t so much on meeting day-to-day needs and demands as it is building for the future. The state’s pending settlement over child welfare issues will certainly cost the state money. It can no longer ignore the high caseloads of child welfare workers — a problem that will require money to fix. Common education wants back the money it lost last year, including enough to fund the stipends promised to teachers if they achieved national certification. The Department of Corrections has chronic funding issues tied in part to an expensive crime-and-punishment mentality that favors jail time for those who might be better served in alternative courts or community-based programs. The state’s mental health and substance abuse department wants money for such alternatives.
The buck stops anywhere but here
Last week I participated in a StateImpact Oklahoma forum on the state budget with Rep. Earl Sears, the Chair of the House Appropriations and Budget Committee (R-Bartlesville), and Sen. Tom Adelson (D-Tulsa). An audience member asked the legislators what they would do to ensure that more individuals with mental illness were provided treatment in the community rather than in jails and penitentiaries. Rep. Sears responded by saying that he is very supportive of the work being done by Commissioner Terri White and the Department of Mental Health and Substance Abuse Services. In particular, Rep. Sears praised the Department’s ‘Smart on Crime’ initiative‘ that uses evidence-based programs to reduce recidivism and decrease demand for correctional beds. The initiative, however, requires an upfront investment estimated at close to $100 million. And, Rep. Sears stated ruefully, we just don’t have $100 million to invest in Smart on Crime. Rep. Sears is a thoughtful and caring legislator who has done solid work chairing the House appropriations committee. But to say we don’t have money to fund the Smart on Crime initiative is misleading. Yes, we’ve had three straight years of budget cuts and are looking at continued shortfalls or flat funding for next year. But our budget shortfalls are due in part to the policy decisions of our elected officials.
Read more from the OK Policy Blog.
GOP pols take aim at state income taxes
A year after Republicans swept into office across the country, many have trained their sights on what has long been a fiscal conservative’s dream: the steep reduction or even outright elimination of state income taxes. The idea has circulated among academics and think-tank researchers for years. But it’s moving quietly into mainstream political discourse, despite the fact that such sweeping changes would almost certainly mean a total rewiring of tax systems at a time when most states are still struggling in the aftermath of the recession. The GOP has launched income tax efforts in Idaho, Kansas, Maine, Missouri, Ohio, Oklahoma and South Carolina. But it’s not clear how all those states would make up for the lost revenue, and Kim Rueben, an expert on state taxation at the Brookings Urban Tax Policy Center, said she’s not aware of any state in modern history that has eliminated an income tax. Nine states already get by without an income tax, mostly by tapping other sources of revenue. Nevada and Florida rely on sales taxes that target the tourism industry. Alaska has taxes on natural resources, and Texas imposes substantial property taxes. But in the rest of the country, income taxes pay for bedrock government services, including roads and bridges and schools and prison systems.
Read more from the Associated Press.
Anti-tax interest group says “no new taxes” pledge also applies to ending tax breaks
Just days before the start of the 2012 legislative session in Oklahoma City, a pair of conservative leaders have laid down a strict interpretation of the tax pledge signed in recent years by nearly all Republicans (and many Democrats) in the Legislature. Grover Norquist of Americans for Tax Reform and Stuart Jolly of Americans for Prosperity (Oklahoma) sent the letter, addressed to every member of the Oklahoma state House of Representatives and Senate, as discussion of income tax rate reductions intensify. That discussion has paralleled intense scrutiny of business incentives and tax credits, with proposals to strictly limit some of those programs, in part as a means to free up revenues that can be applied to tax reduction or limitation. The letter states: “As the 2012 legislative session begins, it is important to remember that ending a tax credit or deduction without an offsetting tax cut is a tax increase. “When you end a credit or deduction, you take income away from the taxpayer and give it to the government. This is undeniably a tax increase.”
Previously: When lawmakers sign a pledge, who are they working for? from the OK Policy Blog
Filmmakers fight to preserve incentive
Supporters of Oklahoma’s infant motion picture industry are on a mission to preserve a $5 million incentive program at a time when other states are scaling back their film subsidies. In the past four years, state rebates have helped finance 20 feature films with production in Oklahoma, including 2010’s “The Killer Inside Me” featuring Casey Affleck, Kate Hudson and Jessica Alba. Three months into the 2012 fiscal year, the program had already committed its entire $5 million allocation. Rep. David Dank, chairman of the legislative task force, said he wants advocates of the film program to show that the incentive is providing a positive economic return. “We give them up to 37 percent of all of their costs, and there aren’t any full-time jobs from that,” said Dank, R-Oklahoma City. “They say there will be full-time jobs in the future. But I want to know when and where.” Simpson said this year’s $5 million state subsidy is expected to stimulate $15 million in direct spending by filmmakers for crew labor, lodging, food, supplies and other production expenses in Oklahoma. Although most of the work is temporary, she said the goal is to generate enough activity over time to support permanent employment for crew personnel and support firms.
Read more from Oklahoma Watch.
Oklahoma State Chamber announces legislative priorities
Allowing Oklahoma employers to obtain alternative workers’ compensation coverage and gradually reducing the state’s personal income tax rate are among priorities of The State Chamber for the upcoming session. Restructuring the state’s tax system to allow for the gradual reduction of the state’s personal income tax should be done with assurance the tax burden to make up for the lost personal income tax revenue will not be shifted onto businesses, such as new taxes on services, said Fred Morgan, president of The State Chamber. The business organization with about 2,100 members also supports developing a health insurance marketplace, or exchange, without using federal or state funds. The federal health care law requires states to submit plans for health insurance exchanges if states don’t want to use a federal system; the federal government will impose its version of an insurance exchange on states that don’t set up their own. The deadline is Jan. 1.
Previously: Clock ticks down on state-run health insurance exchange from the OK Policy Blog
TPS fears partial state seizure of schools
The possibility of a state takeover of Tulsa school sites was among a list of hot topics that came up during a special meeting Friday that the Tulsa school board hosted for legislators. The Oklahoma State Department of Education’s application for a federal No Child Left Behind Act waiver includes a “state turnaround” model that could affect as many as 18 low-performing Tulsa Public Schools if approved.State Rep. Jeannie McDaniel, D-Tulsa, told local officials that she has heard State Superintendent Janet Barresi is “targeting” a school in her district – Hale High School, 6960 E. 21st St. – for a state takeover. “What will be Tulsa Public Schools’ response?” McDaniel asked. Superintendent Keith Ballard, responded: “We will vigorously oppose any takeover in this school system. We are doing everything we can to reform. I think it would be an abomination if the state came in now, at this point.” He went on to say that he had received multiple reports of Barresi discussing the idea with lawmakers at the Capitol. He asked the 10 or so state representatives and senators in attendance to “fiercely resist” it.
Read more from The Tulsa World.
Tribe-owned PayDay lenders under investigation by Oklahoma Attorney General
The state attorney general’s office is watching the activities of two eastern Oklahoma tribes involved in the high-interest, online lending industry. Diane Clay, spokeswoman for the attorney general’s office, told The Oklahoman the Miami and Modoc tribes of Oklahoma are the focus of the scrutiny. In 2010, payday lenders in the state generated fees of $51.6 million on nearly $400 million in loans, according to an annual report on the Oklahoma Department of Consumer Credit’s website. Nearly a million payday loans were taken out in Oklahoma that year, which is the latest year available for comparison, and by the end of 2010 more than 150,000 people had turned to the high-interest loans to get cash before their next paycheck. Payday loans are regulated by state law and cannot exceed $500. But the payday-like lending operations being run by companies affiliated by the Miami and Modoc tribes often get around these state laws.
Municipalities want more influence on GRDA board
Municipalities shoulder 87 percent of the debt of the Grand River Dam Authority because they buy that percentage of GRDA‘s generated power, yet they have only one voice on its seven-member board of directors, Mannford town administrator Mike Nunneley said Monday. “Anything that happens at GRDA is funded by my ratepayers,” Nunneley told the Joint Legislative Task Force on the GRDA. As most board members have no ties with GRDA customers, he said, municipalities have little say in what the northeastern Oklahoma power authority does, such as approving a $250 million bond issue. Nunneley said his town’s rates for wholesale electricity have been increased by 12 percent. Rural electric cooperatives also have a seat on the board. The co-op and municipal power representatives serve as ex officio voting members. Nunneley said that means the entities that pay the majority of GRDA’s hundreds of millions of dollars in debt have two seats out of seven on the board. He said at least two more are needed.
Read more from 23rd and Lincoln.
Quote of the Day
If you look at our state’s economy, it’s doing very well versus virtually any other state, whether they have a state income tax or not.
–Scott Meacham, former State Treasurer who is now a member of the board of directors for the State Chamber
Number of the Day
8,100
Number of manufacturing jobs added in Oklahoma from January to December of 2011, up 8.4 percent for the year.
Source: Bureau of Labor Statistics
See previous Numbers of the Day here.
Policy Note
Massive tax cuts don’t square with professed concerns about public debt
The Washington Post editorial board astutely notes that the budget busting tax plans of the GOP presidential candidates contradict purported concerns about the budget deficit and national debt. Relative to the inadequate revenue levels collected by current tax policies, the tax plans would lose between $180 billion and $900 billion in 2015 alone—or between 1.0 percent and 4.9 percent of GDP. Former Massachusetts Gov. Mitt Romney’s tax plan and former Pennsylvania Sen. Rick Santorum’s tax plans, respectively, represent the low and high end of this range, but former Speaker of the House Newt Gingrich gives Santorum a run for his money with a tax plan that would lose $850 billion, or 4.6 percent of GDP, in 2015. Under an extension of current policies, the budget deficit is projected to average around 4.3 percent of GDP over the next decade, which is unsustainable in the sense that debt as a share of the economy will continue to rise instead of stabilizing in the second half of the decade. Despite all the fear mongering rhetoric about Washington’s fiscal malfeasance heard from the GOP campaign trail, some of the candidates’ tax plans would more than double the budget deficit over the next decade.
Read more from the Economic Policy Institute.
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