In The Know: House mulling tax increases amid record $1.3B shortfall

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

House mulling tax increases amid record $1.3B shortfall: With just three weeks left in the legislative session, Republican House leaders this week acknowledged they will consider increased taxes on fuel, services, alcohol and cigarettes as potential options for closing a $1.3 billion hole in the state budget. House Speaker Jeff Hickman said those tax proposals, along with the elimination of tens of millions of dollars’ worth of tax credits and exemptions, all are being brought forward by different working groups of House members who have been studying various options for increasing state revenues [NewsOK].

Mazzei says he will introduce bills to tighten tax credits, incentives: State Sen. Mike Mazzei says he intends to introduce legislation this week he expects will add $250 million to the bottom line of the fiscal year 2017 budget. “My members and colleagues are ready to put these out there,” Mazzei, R-Tulsa, said Friday. “We just have to get the green light from our leaders.” No changes are planned for three programs — Quality Jobs, historic rehabilitation and aerospace [Tulsa World]. Some of Sen. Mazzei’s bills could target three broad-based tax credits that go to hundreds of thousands of working families and seniors [OK Policy].

Prospects brighten for cigarette tax increase in Oklahoma: In the 24 years since Oklahoma voters restricted lawmakers’ ability to raise taxes, the state Legislature has not been able to muster the three-fourths majority needed to pass a tax increase. That’s why there were major doubts in February when Gov. Mary Fallin first proposed a $1.50-per-pack cigarette tax hike. Since then, the state’s budget hole has grown to a record $1.3 billion, there have been two revenue failures requiring across-the-board spending cuts and health leaders say the state’s Medicaid system is in danger of collapse [NewsOK].

Rural Hospitals Feel Oklahoma Budget Crunch: Thousands of rural hospital patients will soon be forced to drive a farther distance for health care. State budget cuts will force the closing of several rural hospitals. Oklahoma healthcare is just one more area facing state budget cuts. In response to the funding crisis, the state health departments proposed cutting Medicaid by 25 percent. Five rural hospitals are expected to close in the next three months [NewsOn6].

Oklahoma oil and gas tax collections lowest in 17 years, as post-recession economic gains are erased: April Gross Receipts to the Treasury marked one year of contraction as taxes on the production of oil and natural gas reached a low not seen in 17 years, State Treasurer Ken Miller announced this week. At $20.8 million, monthly collections from oil and natural gas production are the lowest since May 1999. Gross production collections continue a 16-month trend of being less than the same month of the prior year [CapitolBeatOK].

State Takes Harder Look at Tax Break for Investors Costing $115M a Year: A big investment tax break with a tangled legal history is under scrutiny as state officials search for ways to address Oklahoma’s budget crisis. The Oklahoma capital gains deduction allows individual investors and businesses to avoid paying state income taxes on all profits from sales of ownership interests in Oklahoma-based firms or real estate. It encompasses a wide range of transactions, from selling a few shares of common stock to selling an entire business or property [Oklahoma Watch].

It’s the revenue, stupid!: Some politicians are reticent to admit by word or deed the state has a revenue problem, instead defaulting to inaction and the tried and true spending problem rhetoric. For those who conveniently posture that our current crisis is rooted in spending, I have breaking news: It’s the revenue, stupid! This is a common sense conclusion evidenced by years of general appropriation bills that included hundreds of millions in nonrecurring revenue, in good times and bad, that falsely propped up budgets and exacerbated the current problem [State Treasurer Ken Miller / OK Policy].

State in dire distress: Today is May 8. Our elected leaders have three weeks to implement a budget. We have promises to fill the $1.3 billion hole in the state’s budget. The governor has offered ideas. The House Speaker has defensively discussed the math involved with running a state. So far, though, nothing has happened. Last Thursday, the House adjourned for the weekend before noon [okeducationtruths].

This isn’t a fun picnic: For the first time in State history, the Oklahoma legislature has implemented a tax cut in the midst of a budget shortfall. And not just any shortfall, it is the biggest in State history. The best analogy that I have heard, explaining this tax cut, comes from David Blatt of the Oklahoma Policy Institute. Here is my paraphrasing of his analogy: It is a beautiful spring Monday afternoon in Oklahoma. We decide that we will go on a picnic this coming Sunday. Well, as you know, the weather can sometimes be a little unpredictable this time of year, so we decide we will make our final decision about the picnic on Thursday afternoon at 5:00 [The Miami News-Record].

Oklahoma Highway Patrol fears trooper shortage: More than one-fourth of Oklahoma Highway Patrol troopers could retire immediately, the agency said Wednesday. The number is a problem, said Trooper Keith Barenberg, because the OHP can’t recruit enough people to replace them. “That would be devastating if that happened,” said Barenberg, who is president of the Oklahoma State Troopers Association. “It’s been that way for three or four years now. The reason we’ve kept some is because they gave us a much-needed raise a couple of years ago.” Barenberg said he worries because the second half of that raise has not been funded [Journal Record].

Oklahoma County’s move needed, but will strain Department of Corrections: The Oklahoma County jail is a microcosm of the mess the state is dealing with in its criminal justice system. County commissioners have decided, to their credit, that it’s time for a change. The state sends so many men and women to prison that the Department of Corrections doesn’t have enough space to hold them all within its buildings. Consequently, the DOC has long contracted with the Oklahoma County jail to hold some state inmates, and pays the county $32 per day for its trouble [Editorial Board / NewsOK].

Oklahoma in need of more foster families: Officials with the Oklahoma Department of Human Services said there is a growing need for foster families in our state. Zach and Carrie Tanner are two loving parents who took in five foster children. All five of the children are siblings whom they felt the need to keep together. “The only thing you need to be a foster parent is space in your home and in your heart,” said Zach Tanner. However, not all foster children in Oklahoma are able to find a home like the one the Tanners have provided [KOCO].

Teenagers age out of foster care without being adopted: Almost 300 teenagers age out of the Oklahoma Department of Human Services each year without being adopted or reunited with their biological families, according to the agency. While many of the 16,000 children who spent some time in DHS care last year eventually found a permanent family, others exit the system on their own. DHS said studies indicate that youth aging out of foster care face difficulties finding housing or a landlord willing to rent to them, a lack of health insurance and few options for employment or job training [Muskogee Phoenix].

Oklahoma legislative candidates raised more than $3 million so far: Led by a celebrity from a TV reality show, state legislative candidates already have raised more than $3 million from donors for this year’s upcoming elections. The campaign reports — filed with the state Ethics Commission — indicate the 2016 races could be expensive, particularly in districts with open seats. Raising the most so far in contributions is Jet McCoy, R-Ada, the professional bull rider who competed along with his brother, Cord McCoy, on “The Amazing Race” [NewsOK].

Former Oklahoma state House member is charged with 44 counts over travel: A former leader of the state House of Representatives was charged Friday with 44 criminal counts and sued by the Oklahoma Ethics Commission after his travel expenses came under investigation. Gus Blackwell, R-Laverne, is accused in the criminal case of embezzling $23,741 in campaign funds. He also is accused of making four false per diem claims against the state for overnight stays that didn’t happen and committing perjury on eight campaign reports [NewsOK].

Former Oklahoma Gov. David Hall dies after stroke: Former Oklahoma Gov. David Hall, who was indicted shortly after leaving office but maintained a love for the state and its people, died Friday in California. His daughter, Julie Martin, confirmed that he died in a San Diego area hospital at 8:39 a.m. after suffering a stroke. He served as governor from 1971 to 1975 [NewsOK].

Liquor store owners launch new initiative petition effort on wine in grocery stores: Liquor store owners have launched a second effort to get a state question on alcohol laws on the ballot in November after the Oklahoma Supreme Court invalidated its first attempt. The Oklahoma Retail Liquor Association filed its new initiative petition Friday with the secretary of state. The group also filed a legal challenge on Friday to a Walmart-backed initiative petition that would allow grocers to sell wine and strong beer in all stores in the state [NewsOK].

Federal Scientists Worried Oklahomans Were Getting Wrong Message on Earthquakes, Records Show: The earthquake on Dec. 7, 2013, happened on a Saturday, shortly after noon, during one of the biggest Oklahoma sport events of the year: The University of Oklahoma vs. Oklahoma State University “Bedlam” college football game, hosted that year at Boone Pickens Stadium in Stillwater. Oklahoma Geological Survey responded by issuing a statement that pointed to natural causes, minimized the severity of the seismic surge and downplayed what a growing number of scientists had been saying for months: Wastewater disposal wells operated by the oil industry were probably causing many of the earthquakes [StateImpact Oklahoma].

Quote of the Day

“If you have to raise taxes to avoid being known as the Legislature that put senior citizens out on the streets, so be it. If you have to cut corporate incentives to avoid being the Legislature that decimated public schools, then do it. This isn’t a year to shake out the couch cushions and see what you can find. You did that last year. It hasn’t worked out too well.”

-Mid-Del Schools Superintendent Rick Cobb, writing on the okeducationtruths blog (Source)

Number of the Day

24.7 days

How long Oklahoma could run on reserve funds in fiscal year 2015.

Source: Pew Charitable Trusts

See previous Numbers of the Day here.

Policy Note

The Rich Live Longer Everywhere. For the Poor, Geography Matters.: For poor Americans, the place they call home can be a matter of life or death. The poor in some cities — big ones like New York and Los Angeles, and also quite a few smaller ones like Birmingham, Ala. — live nearly as long as their middle-class neighbors or have seen rising life expectancy in the 21st century. But in some other parts of the country, adults with the lowest incomes die on average as young as people in much poorer nations like Rwanda, and their life spans are getting shorter [New York Times].

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Gene Perry worked for OK Policy from 2011 to 2019. He is a native Oklahoman and a citizen of the Cherokee Nation. He graduated from the University of Oklahoma with a B.A. in history and an M.A. in journalism.

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