September 3rd, 2018
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State Question 800 would amend the state constitution to require 5% of the collections from the gross production tax on oil and gas to be deposited in a trust fund known as the Oklahoma Vision Fund.
State Question 800 would amend Oklahoma’s constitution to create a trust fund known as the Oklahoma Vision Fund. SQ 800 was put on the ballot by the Legislature with Senate Joint Resolution 35 in 2018.
Under this state question, beginning July 1, 2020 (FY 2021) five percent of the collections from the gross production tax on oil and gas would be deposited in the Oklahoma Vision Fund.
The percentage of the gross production tax directed to the Vision Fund would increase by two-tenths of a percentage point every year. The fund would also include any investment and income returns and any other appropriations made by the Legislature.
As of July 1, 2020, 4 percent of the average annual principal amount of the Fund over the preceding five years would be deposited to the General Revenue Fund. Up to five percent of the monies in the Fund could also be used to pay for debt obligations of the State of Oklahoma or local government entities.
The State Treasurer would invest monies in the Fund according to the prudent investment standard, which aims to ensure a diversified portfolio and minimize the risk of large losses. The Fund would be exempt from the constitution’s general prohibition on the state owning stock.
SJR 35, authored by Sen. John Sparks and Rep. Charles McCall, passed the House 94-3 and the Senate 42-0 in 2018. A companion measure, HB 1401, that mostly replicated the constitutional language of SJR 35 as a change to state statutes, passed the Legislature but was vetoed by Governor Mary Fallin.
If SQ 800 is approved by the voters, the Oklahoma Vision Fund would become the state’s third budget reserve fund
If SQ 800 is approved by the voters, the Oklahoma Vision Fund would become the state’s third budget reserve fund, along with the Constitutional Reserve Fund (Rainy Day Fund) created in 1985 and the Revenue Stabilization Fund, a statutory (non-constitutional) fund created in 2016.
Whereas deposits to the Vision Fund would be made every year, deposits to the other funds are made only in years when actual revenue collections exceed projections in the case of the Rainy Day Fund or when anticipated collections from certain taxes (gross production taxes and the corporate income tax) exceed recent historical averages in the case of the Revenue Stabilization Fund. A set amount of the Vision Fund would be spent every year, while the other two reserve funds are available to be tapped only when revenues fall short of projections or prior collections.
Oil and gas tax collections can fluctuate dramatically from year to year. The state collected $411 million in gross production taxes in FY 2017, which would have produced a $20.5 million deposit to the Oklahoma Vision Fund. With higher tax rates on oil and gas approved by the Legislature in 2017 and 2018, and depending on energy prices, the Fund could receive $50 to $60 million annually in future years.
This measure would add a provision to the Oklahoma Constitution creating a new trust fund. This fund would consist of (i) legislative appropriations, (ii) deposits from other sources, and (iii) investment income. Beginning July 1, 2020, 5% of revenues from the gross production tax on oil and gas will be deposited into the fund as well. The percentage of gross production tax revenues deposited into the fund will then increase by 0.2 per year.
Monies in the fund will be invested by the State Treasurer. The fund is exempt from constitutional restrictions on the State owning stock. The State Treasurer is required to make prudent investment decisions and diversify the Fund investments to minimize risk.
After July 1, 2020, 4% of the fund’s principal will be deposited each year into the State’s General Revenue Fund. Principal will be calculated by using an average of the fund’s annual principal for the five years before the deposit. No more than 5% of the Fund may be used to pay interest on bonds issued by the State or local governments. This Fund will be called the Oklahoma Vision Fund.
More about State Question 800
- 2018 Fact Sheet: SQ 800 (PDF) [OK Policy]
- SQ 800 documents [Secretary of State]
- State Question 800: Oil and Gas Development Tax Revenue Investment Fund Amendment (2018) [Ballotpedia]
- Gov. Fallin: Veto Message of HB 1401 [Secretary of State]
- State Level Choices for Non-Renewable Resource Revenue Funds (Aimee Franklin & Samuel Moore, Oklahoma Politics)
- Legislators to study oil-less economy options [Journal Record]
Visit our 2018 State Questions and Elections page for more information on Oklahoma ballot measures and elections. Download this fact sheet as a PDF or download all five State Questions as a single PDF.