OKPOLICY.ORG
By Heide Brandes
OKLAHOMA CITY – On Tuesday, the Save Our State (SOS) coalition, a group of more than 21 statewide organizations ranging from education to mental health to basic human needs, unveiled their budget blueprint for Oklahoma’s current fiscal emergency.
The proposed SOS budget blueprint focuses on revenue increasing measures that will fund teachers, public safety officers, and other key state workers; road and neighborhood safety; state parks, libraries, and arts programs; nursing homes and rural hospitals.
This plan, organizers said, is also sustainable and will put an end to the chronic budget shortfalls Oklahoma has been facing year after year.
“This proposed budget plan is drawn from a wide variety of suggestions already on the table – the governor’s budget, the House Democrats budget, current legislation being considered, the business and energy community, and anyone else willing to put a good idea forward,” said David Blatt, executive director of Oklahoma Policy Institute, in a statement.
According to the SOS group, the three-year blueprint would address the overall budget situation, and would avert further budget cuts. It acknowledges that revenue is part of the problem and the plan would modernize the tax system while ending special interest giveaways. It also proposes reforms to budgeting practices that will increase legislative oversight and reduce the potential for future revenue failures.
“When lawmakers release their budget plan, we hope these considerations are included,” said the SOS Coalition.
The SOS budget blueprint suggested revenue options like:
End the capital gains tax break
Stop out-of-state tax shelters with combined corporate reporting
End unnecessary sales tax exemptions for luxury purchases
Modernize a gas tax that has not been adjusted for inflation in three decades
Restore the 7 percent tax rate for oil and gas production
Restore a higher income tax rate on very high incomes
“This budget blueprint not only prevents drastic cuts to important services this year, it would also put our core services back on a sustainable path by getting away from budget gimmicks and stabilizing funding for education, public safety, healthcare, and transportation,” said Oklahoma Education Association President Alicia Priest.
One-time fund options
SOS’s budget blueprint proposes the use of one-time monies to regain solid financial footing. Part of that plan is to use Rainy Day Funds in FY-2018 to address Oklahoma’s budget shortfall by using $90.3 million that is constitutionally available for a revenue shortfall and an additional $60.2 million that could be used if an emergency is declared.
In addition, the blueprint suggests that the Motor Vehicle Taxes be changed to a two-year Motor Vehicle Tag. As Oklahoma motor vehicle tags are renewed, replacement tags would be sold for two years with a 5 percent total reduction in the cost of a tag during the next two years.
“Such a change will reduce costs for the Tax Commission, passing some of those savings on to citizens. If adopted, the proposed change will generate an additional $59 million for FY-2018 and $59 million for FY-2019,” according to the SOS blueprint.
The plan also recommends issuing $250 million in road bonds to pay for improvements to Oklahoma’s roads and highways.
Recurring fund sources
SOS also said it identified several budget efficiencies that would produce more stable revenue for the state and would bring Oklahoma in line with regional and national averages.
The plan proposes to raise the rate of gross production tax on oil and natural gas wells from the current 2 percent rate for the first three years of production to 7 percent, thus raising the effective rate for oil and gas for 2017 from 3.24 percent to 6.68 percent.
Such an increase in the rate, authors said, is projected to bring in an additional $313 million for FY-2018 and an additional $156 million for FY-2019. Even with the proposed increase, Oklahoma’s effective tax rate would remain among the lowest in the nation among states that collect a minimum of $1 million in revenue a year from oil and gas taxes and related property taxes, according to a study completed for the state of Idaho.
The plan also calls for the end of Special Interest Tax Breaks for Wind and Coal Energy Sector. On Monday, Gov. Fallin signed a law that would sunset tax incentives for the zero-emission wind energy industry.
The plan proposes eliminating the tax credit for coal, which SOS says would generate $3.8 million in each of the next three fiscal years.
The budget blueprint also establishes a new income tax bracket at a rate of 6 percent for all taxable income above $200,000 for individuals or $400,000 for those filing jointly.
The 6 percent top rate being proposed is lower than a majority of states and is less than the rate historically levied in Oklahoma in past years. This proposal would generate $94.8 million in revenue for FY-2018 and the same amounts in FY-2019 and FY-2020, according to SOS.
The plan also recommends changes to the income tax structure, the re-establishment of the Earned Income Credit for Oklahoma’s poorest families, corporate income tax reform, sales and use tax reform, limited use of Sales Tax Exemptions allowed for manufacturing and motor vehicle tax reform.
The blueprint also proposes an increase in motor fuel and diesel taxes from the current .17 for gas and .14 for diesel to .23 cents to be earmarked for road construction.
“We came together to address Oklahoma’s most commonly acknowledged problems,” said Oklahoma Public Employees Association executive director, Sterling Zearley. “The goal was to put together a plan that was realistic, ended our reliance on one-time money, filled the current budget hole and began to restore spending levels to something resembling a functional state government. It’s widely accepted there’s a revenue problem, so here’s how we can fix it.”
The full budget blueprint can be found here.
SOS includes members of Stand for Children Oklahoma, Oklahoma Policy Institute, Together Oklahoma, Oklahoma Education Association, Tulsa Classroom Teachers Association, Jenks Parent Legislative Action Committee, Bixby Parent Legislative Action Committee, Let’s Fix This, National Association of Social Workers—Oklahoma Chapter, Oklahoma Public Employees Association, Mental Health Association Oklahoma, Oklahoma Women’s Coalition, Regional Food Bank of Oklahoma, Community Food Bank of Eastern Oklahoma, League of Women Voters, TARC, ACTION Tulsa, Community Service Council, Oklahoma Conference of Churches, VOICE OKC and Oklahoma Developmental Disabilities Council.
http://www.reddirtreport.com/red-dirt-news/save-our-state-proposes-budget-oklahomans-deserve
