In The Know: Governor’s budget offsets cuts with taxes on services, gas, tobacco, wind electricity generation

In The KnowIn 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’s budget offsets cuts with taxes on services, gas, tobacco, wind electricity generation: Gov. Mary Fallin waved a big carrot at the Oklahoma Legislature during her State of the State address on Monday — eliminating the state sales tax on groceries. The 4.5 percent tax is a sore point for Oklahomans, especially those who have a hard enough time putting food on the table, and getting rid of it would make lawmakers heroes to a lot of constituents. But with the big carrot comes a big stick and a shot of castor oil — $839 million in taxes on services currently exempt, a 7-cent increase in the gasoline tax, a 10-cent increase in the diesel tax, a $1.50-per-pack tax increase on cigarettes and new gross production taxes on wind electricity generation [Tulsa World]. Read our statement urging lawmakers to heed Governor Fallin’s call to fix the structural deficit [OK Policy]. Here are some more reactions to the budget [NewsOK].

Teachers may win, smokers could lose in Oklahoma budget plan: Gov. Mary Fallin’s nearly $7.8 billion budget proposal would rely on new taxes to diversify Oklahoma’s revenue streams, and overcome a projected $868 million budget hole for the next fiscal year. If approved, Fallin says her plan would bring in $1.5 billion in revenue for the spending year that starts July 1. Her budget also would increase spending by almost $318 million for eight state agencies [Associated Press].

A Deeper Look at Fallin’s State of the State Address: In her seventh “State of the State” address on Monday, Gov. Mary Fallin called for eliminating the corporate income tax and the sales tax on food, while endorsing a teacher pay raise and hiking cigarette and gasoline taxes. She proposed an appropriated 2018 budget of $7.8 billion, representing a 6 percent increase over the current year. All but 11 agencies would see no increase. Among the departments with a proposed bump: Health Care Authority, 11 percent; Mental Health, 9 percent; Transportation, 18 percent; Education, 5 percent; Public Safety, 15 percent, and Corrections, 2 percent [Oklahoma Watch].

GOP lawmakers may not back planned tax increases: Gov. Mary Fallin may have a Legislature controlled by her fellow Republicans, but it’s unlikely those lawmakers will wholeheartedly embrace her plans to raise taxes. Fallin is asking legislators to boost the state tax on gasoline and diesel fuel and to increase the state tax on cigarettes. New House Speaker Rep. Charles McCall said last week that newly elected Republicans spent much of last year campaigning heard from constituents who don’t want higher taxes [Associated Press].

State leaders seek ‘grand bargain’ on revenue: Gov. Mary Fallin’s 2017 State of the State speech featured a proposal of “bold reforms” to Oklahoma’s tax code in an effort to increase revenue. She said her proposed changes would broaden the state’s sales tax base while eliminating state sales tax on groceries. It would also eliminate the corporate income tax. “Oklahoma will continue to struggle if we don’t fix the structural deficits of our budget,” Fallin said in her prepared speech [Non Doc].

A closer look at the budget: Gov. Mary Fallin proposed a complex array of tax increase and tax cut proposals Monday as the 2017 legislative session officially got underway. Among the tax cuts would be the elimination of the state’s 4.5 percent sales tax on groceries. Customers still would be required to pay city and county sales taxes on grocery purchases, but the elimination of the state sales tax on food items would be expected to save a family of four somewhere between $350 and $676 per year, the governor’s office said [NewsOK].

Gov. Mary Fallin proposes tax on Oklahoma wind production: Oklahoma would become the second state to impose a tax on wind power, and its tax would be the nation’s highest, under a proposal announced Monday by Gov. Mary Fallin. In her executive budget, Fallin proposed a 0.5 cent per kilowatt hour tax on electricity from wind generation. She also wants to sunset existing tax incentives for the wind industry earlier than planned [NewsOK].

Start here to be ready for Oklahoma’s 2017 legislative session: Today is the first day of the 2017 legislative session. Governor Mary Fallin will kick things off with her State of the State address in the House chambers beginning at noon. Governor Fallin will also introduce her FY 2018 budget, which will include her proposals for filling the state’s $740 million budget hole. Look for OK Policy’s response to the Governor’s budget later today, and later this week, we’ll share our 2017 legislative priorities and revenue options for balancing the budget. Here are even more resources that we think will be helpful for anyone who wants to be well-informed and effectively engaged over the four months of the legislative session [OK Policy].

Education issues await Oklahoma lawmakers as session begins: Vouchers, classroom funding and school accountability are likely to be topics of discussion during the 2017 state legislative session starting Monday. But Republican leaders said teacher pay will be at the top of the list. “Our caucus has identified their first and foremost priority in education to be the teacher pay raise,” House Speaker Charles McCall said in an interview with The Oklahoman. “I think there will be discussion on classroom funding this year but any policy moving forward to address that would be subordinate to the teacher pay raise.” Many legislators have said the defeat of a statewide ballot question in November seeking a sales tax-funded teacher pay raise translated to the voters kicking the issue back to the Legislature [NewsOK].

Members of Oklahoma’s blind community speaking out against several House bills: Members of Oklahoma’s blind community are speaking out against several House bills that could eliminate job opportunities for blind individuals. Mike Spencer operates the Tulsa County Jail commissary. Spencer, a blind man himself, employs many other blind Oklahomans. “Inmates get locked up. They get three meals a day, and what commissaries do is gives them a little taste of outside things. For instance, I sell soap. I sell thermal shirts in the winter when it gets really cold,” Spencer said [KFOR].

Tulsa leaders announce plans for African-American commission: Tulsa leaders proposed an ordinance Monday that would create the Greater Tulsa Area African-American Affairs Commission. At a news conference at the Greenwood Chamber of Commerce, Mayor G.T. Bynum and Councilor Vanessa Hall-Harper proposed the ordinance, which Bynum said had been years in the making. “Today marks a pinnacle of time for African-Americans throughout the greater Tulsa area,” Hall-Harper said. “As we celebrate Black History Month, it is exhilarating to announce the submission and creation, to the City Council, of an ordinance that will create the African-American Affairs Commission.” [Tulsa World]

Quote of the Day

“Oklahoma will continue to struggle if we don’t fix the structural deficits of our budget. Let’s focus on the reality of our state budget deficit. To start, for decades, we have attempted to balance our budget for too long with the use of one-time resources. We cannot afford to pass another budget using a large amount of non-recurring revenue.”

-Governor Mary Fallin, calling for the Legislature to pass new recurring revenues in her State of the State address (Source). Read our statement on the Governor’s speech here.

Number of the Day

14 percent

How much less Oklahoma spends per Medicaid enrollee below the average for our six border states.

Source: Oklahoma State Treasurer

See previous Numbers of the Day here.

Policy Note

Medicaid could struggle to cover breakthrough treatments under GOP’s plans: Under the GOP’s vision for overhauling Medicaid, the program could struggle to afford expensive breakthrough treatments, cutting off its recipients from the latest medical innovations, warn policy experts and patient advocates. Republican plans to institute some kind of Medicaid spending cap would mark a fundamental change in the nature of the program. Right now, the federal government (with mandatory matching funds from the states, which actually administer Medicaid) pays whatever costs recipients incur for care that is covered by the program [STAT].

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


Ryan Gentzler worked at OK Policy from January 2016 until November 2022. He last served as the organization's Reserach Director and oversaw Open Justice Oklahoma. He began at OK Policy as an analyst focusing on criminal justice issues, including sentencing, incarceration, court fines and fees, and pretrial detention. Open Justice Oklahoma grew out of Ryan’s groundbreaking analysis of court records, which was used to inform critical policy debates. A native Nebraskan, he holds a Master of Public Administration degree from the University of Oklahoma and a BA in Institutions and Policy from William Jewell College. He served as an OK Policy Research Fellow in 2014-2015.

One thought on “In The Know: Governor’s budget offsets cuts with taxes on services, gas, tobacco, wind electricity generation

  1. perhaps missed in the budget proposal news–Corrections is recommended for a 2% increase, faaaarrrrr below what the DOC director has requested. Oh, how will he be able to deal with the drastic DOC needs that he spewed over the media in recent weeks???!!! Well, maybe those kindly private prison corporations over there that helped the governor so nicely with her first inauguration could make some contributions . . . .

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.