In The Know: Governor Fallin defends tax cut amid budget shortfall

In The Know is your daily briefing on Oklahoma policy-related news. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. Click here to subscribe to In The Know and see past editions.

Today In The News

Governor Fallin defends tax cut amid budget shortfall: In a statement, Governor Fallin said the income tax cut’s budgetary impact in the upcoming 2017 fiscal year is only a little more than 10 percent of the projected budget hole. Oklahoma would still have over an $800 million budget hole even if that tax cut hadn’t taken effect [The Okie]. Repeated income tax cuts since the mid-2000s have reduced state revenues by more than $1 billion annually [OK Policy].

December state general revenue far short of expectations: Deposits to the state’s general revenue fund fell 13 percent below expectations in December, and 15 percent below the same month a year ago, according to figures from the Office of Management and Enterprise Services. Preston Doerflinger, the state’s chief financial officer, attributed to the large shortfall to continued declines in energy prices coupled with weak holiday retail sales. “Bad Black Friday weather sent a lot of shoppers online instead of to brick-and-mortar stores where sales taxes are paid,” Doerflinger said [Tulsa World]. Several states, not yet including Oklahoma, have made reforms to require more online retailers to collect sales tax [OK Policy].

Oklahoma schools face more students, less money — again: Last week, the state Board of Education cut nearly $47 million from state funding to public schools through July 30. This week, came the other half of the story: State Department of Education figures show those same school districts are having to deal with 4,370 more students than they did last year. More students, less money — more crushing blows to public schools, although it seems to be a consistent one from the state Capitol in recent years [Tulsa World].

Big Powerball sales boosts Oklahoma education: The boom in Powerball ticket sales has shone a little ray of sunshine onto Oklahoma education’s otherwise gloomy financial outlook. Thirty-five percent of all Oklahoma Lottery revenue, including Powerball receipts, goes to education. And those receipts have skyrocketed along with a jackpot that had reached a maximum payout of $1.5 billion by midday Wednesday [Tulsa World]. However, the lottery’s contribution to education does not come close to making up for what has been cut from school funding in recent years [OK Policy].

Teacher shortage a growing problem: Evidence of Oklahoma’s teacher shortage crisis has become overwhelming. This year the state has issued close to 1,000 emergency teaching certificates to fill vacant positions, up from only 32 in 2011. An important new study by University of Tulsa economist Matthew Hendricks spells out disturbing consequences of the teacher shortage for Oklahoma students. More hopefully, it also shows that raising teacher pay would reduce the shortage and improve the quality of education in Oklahoma’s schools [Journal Record].

State auditor plans to go forward with audit of Attorney General’s Office: “He has the right to hire his own auditor, but it doesn’t preclude us from doing our own audit,” Jones told the Republican Women’s Club of Tulsa County. “We plan on doing the audit. … Our job is to audit for the citizens of Oklahoma, and we’re going to do it.” Pruitt’s office informed Jones two weeks ago that it planned to hire its own auditor for a periodic audit mandated by state law [Tulsa World].

Corporation Commission delays decision on 25-year-old bribed vote case: An attempt to resurrect the controversial 25-year old bribed decision granting a rate hike to ATT by the Oklahoma Corporation Commission took another step Wednesday, but no final decision was made as one of the three commissioners was absent for the hearing. The case concerns the bribery of Commissioner Bob Hopkins in a 1989 decision granting a rate hike to Southwestern Bell, which later came under ownership of ATT. Billions of dollars in refund are at stake in the challenge and Attorney General Pruitt has sided with ATT in fighting efforts to hold another vote [OK Energy Today].

Corporation Commission directs changes at 27 disposal wells near Fairview: The Oklahoma Corporation Commission directed eight companies Wednesday to change operations at 27 oil and gas wastewater disposal wells near Fairview. Agency staff members are examining possible correlations between earthquakes and sudden changes in disposal well volumes after power outages affected producing and disposal wells, said OCC spokesman Matt Skinner. The request from the agency to operators is the second in 2016 in response to an ongoing swarm of stronger temblors [Journal Record].

Major cuts coming to Sandridge Energy subsidiary: Due to the low oil and gas prices, SandRidge Energy is closing a substantial portion of its wholly-owned oil field services subsidiary, Lariat Services. The move will push 226 employees out of the door. That’s about 87 percent of the current 260 members of the Lariat Services staff [OK Energy Today]. Oklahoma officials and SandRidge Energy Inc. are working on a possible settlement that could resolve a monthlong dispute over whether the energy company should voluntarily shut down saltwater disposal wells in an area of recent earthquake activity [NewsOK].

In annual address, Oklahoma City mayor praises efforts of nonprofits: Mayor Mick Cornett pitched the virtues of service in Wednesday’s State of the City address, highlighting accomplishments of nonprofits that fill gaps in Oklahoma City’s social services safety net. Cornett spent seven minutes of his 29-minute speech on 2015’s successes in housing those who are homeless, feeding those who are hungry and protecting those threatened by domestic violence [NewsOK].

Quote of the Day

“The quarter-cent tax cut did not cause the financial problem we’re in. Changing the severance tax on oil and gas from 7 percent to 2 percent did not cause the problem. The lack of dealing with the tax credits and making sure the citizens of Oklahoma are getting their money’s worth … didn’t cause the problems. But I tell you what, they sure have made the problem a lot worse.”

-State Auditor Gary Jones, endorsing Tulsa Chamber of Commerce President Jeff Dunn’s criticism of Oklahoma’s tax cuts amid a massive budget shortfall (Source).

Number of the Day

50.0%

Percentage of Oklahoma preK-12 students who are non-Hispanic whites.

Source: Oklahoma State Department of Education

See previous Numbers of the Day here.

Policy Note

GOP Poverty Forum – Its High Notes and Low Notes: It’s encouraging that six Republican presidential candidates appeared in South Carolina to discuss poverty, and they advanced some positive proposals. Jeb Bush called for expanding the Earned Income Tax Credit (EITC) for low-income workers not raising children, essentially endorsing a proposal from both President Obama and House Speaker Paul Ryan, while Chris Christie and others spoke of adopting or expanding state Earned Income Tax Credits. Unfortunately, the candidates sometimes misrepresented basic facts and research about poverty and anti-poverty programs [Center on Budget and Policy Priorities].

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