What’s up this week at Oklahoma Policy Institute? The Weekly Wonk shares our most recent publications and other resources to help you stay informed about Oklahoma. Numbers of the Day and Policy Notes are from our daily news briefing, In The Know. Click here to subscribe to In The Know.
This week’s edition of The Weekly Wonk was published with contributions from Communications Intern Lilly Strom.
This Week from OK Policy
Statement, Re: FY 2022 Budget Agreement: More than 100 days into this current legislative session, Oklahoma lawmakers emerged from weeks of closed door discussions to release details for the coming year’s state budget. Based on the information presented during a Thursday afternoon media conference, we’re pleased to hear lawmakers are funding Medicaid expansion, are planning additional investments in public education and broadband infrastructure, and are including a 7 percent aggregate increase for state agency budgets. However, we remained deeply concerned that lawmakers are moving forward with cuts to corporate and individual income taxes. While the tax cuts appear to be lower than were initially proposed this session, any revenue cut comes with real economic impact to our communities. [OK Policy]
Budget, managed care remain major items as session winds down (Capitol Update): Time is closing in on legislators. The constitutional deadline for sine die adjournment is the last Friday in May, which this year May 28. But in the past few years the Legislature has recessed before the deadline to give itself the opportunity to return and override gubernatorial vetoes. [Steve Lewis / Capitol Update]
Policy Matters: Nickel and diming our justice system: Our state’s courts and justice systems have a funding problem, one that is placing an outsized burden on the backs of rural Oklahomans. Due to systematic underinvesting by the state, our courts and public safety services have become increasingly dependent on a vast array of fines and fees that pay for even the most basic operational costs. [Ahniwake Rose / Journal Record]
May 25 online event will help provide resources to help individuals, organizations connect Oklahomans to health care: As Oklahoma prepares to expand Medicaid coverage starting July 1, Oklahomans who are newly eligible for health care coverage need to know both that they are eligible to apply and how to apply for coverage. To fill this information gap, the Oklahoma Policy Institute and the Cover OK Health Care Coalition are co-hosting a May 25 online event to provide information and resources for organizations and individuals to help them connect fellow community members to health care coverage under Medicaid expansion. [OK Policy]
Weekly What’s That
Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a tax credit that subsidizes work for low-income families. The EITC is the nation’s largest cash or near cash assistance program after the Supplemental Nutritional Assistance Program (SNAP). In 2018, the EITC lifted about 5.6 million people out of poverty, including about 3 million children, according to the Center for Budget and Policy Priorities.
The amount of EITC depends on a family’s earnings and number of children; the maximum credit in 2019 was roughly $5,800 for a family with two children. The EITC is refundable, which means the full amount can be claimed even if it exceeds a taxpayer’s tax liability. Refundability is critical to the success of the EITC because it allows the credit to still reward work and support families even if workers pay little income tax.
Oklahoma is one of 26 states with a state EITC, set at 5 percent of the federal credit. In 2016, the Oklahoma Legislature made the credit non-refundable. The state EITC was claimed on 303.403 returns for $16.1 million in FY 2020, according to Oklahoma Tax Commission records.
Quote of the Week
“No matter how poorly written, the intention of the bill clearly aims to limit teaching the racial implications of America’s history. The bill serves no purpose than to fuel the racism and denial that afflicts our communities and our nation. It is a sad day and a stain on Oklahoma.”
-Statement from the Tulsa Race Massacre Centennial Commission regarding signing of HB 1775, which limits teaching about race-related issues. The commission noted the signing as the 100th anniversary of the Tulsa Race Massacre will be recognized later this month. [The Oklahoman]
Editorial of the Week
Proposed tax cuts deflate decent budget proposal
There are some things to crow about in the budget agreement unveiled this week by state lawmakers, but proposed cuts to corporate and personal income rates aren’t among them.
If there is anything Oklahoma’s legislative leaders should have learned during the past year it is how woefully unprepared state government was to respond to a public health crisis. The novel coronavirus exposed a public health system so crippled it practically had to learn how to walk before it could respond.
Obsolete technology left tens of thousands of unemployed Oklahomans financially crippled for weeks. Calls to underfunded, understaffed and often empty state offices went unanswered for months — even after the governor declared Oklahoma “open for business!”
Granted, progress was made on some fronts during the intervening months. But the $8.3 billion budget being proposed will be among the smallest this century after adjusting for inflation and population growth.
State leaders champion tax cuts like the singularly best business recruiting tool — that approach is too simplistic. Research shows a highly educated and skilled workforce and good quality of life often outweigh a state’s overall tax burden.
While Oklahoma’s overall tax burden is ranked among the lowest tax in the nation — the online financial services provider WalletHub ranked the state 46th in United States — it has room to improve on other fronts. The proposed corporate tax cut from 6% to 4% would cost $48.5 million this fiscal year and $110 million annually thereafter, and a 0.25% reduction in the top personal income tax bracket would cut $170 million a year from state agencies after subtracting $66 million this fiscal year.
Policy analysts at Oklahoma Policy Institute report tax cuts instituted during the past two decades contributed to a 25% reduction in the state budget. During the decade following the 2008 collapse of financial markets, appropriations for higher education fell more than $3,550 per student while tuition increased 44%.
While oversight of spending always should remain a priority to guard against waste, fraud or abuse, lawmakers must invest what is necessary to ensure state government delivers quality services Oklahomans deserve.
Numbers of the Day
- 4 – The number of states, including Oklahoma, where the legislature has not yet introduced a budget [Source: OK Policy. Note: North Carolina has introduced a budget since the original source was first published.]
- 10 – The number of committee hearings held on Oregon’s education budget so far this year. Oklahoma committees do not accept public testimony. [Source: Oregon Legislative Information System]
- 949 – The number of firms and individuals who lobbied on Florida’s state budget. Like most states, Oklahoma does not report lobbyist influence on the budget or other legislation. [Source: Florida House of Representatives]
- $4,011,281 – The difference between Georgia House and Senate (higher) versions of the state budget for school support. Oklahoma’s Legislature does not require the two houses to publicly state their budget positions. [Source: Georgia General Assembly]
- 175 – The number of floor amendments to the state budget considered in the Texas House of Representatives. Oklahoma does not normally consider amendments to the budget. [Source: Texas Legislature Online]
What We’re Reading
- Budget Transparency Toolkit [OECD]
- State budget actions tell us how well our democracy is working [OK Policy]
- Priorities for Spending the American Rescue Plan’s State and Local Fiscal Recovery Funds [Center on Budget and Policy Priorities]
- Building State Budgets: Effective Process and Practice [Tax Policy Center]
- A Guide to Better State Budgeting Practices [National Conference of State Legislatures]