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 from OK Policy
- Smart investments are the key to an equitable economic recovery from the COVID-19 recession (Oklahoma and COVID-19: Two years later): Oklahoma’s legislature has the power to create an equitable and more robust economic recovery in the wake of the COVID-19 pandemic by pursuing investments that simultaneously promote growth and equity. To do this, our elected officials must resist the urge to focus solely on high-level metrics of economic well-being. While macroeconomic indicators such as Gross Domestic Product (the size of an economy) and the unemployment rate (the percentage of people who want work but can’t find it) are useful for measuring the overall health of an economy, they conceal inequalities and long-standing structural challenges that hurt many Oklahomans’ ability to provide for themselves and participate in our economy. [Josie Phillips / OK Policy]
- COVID-19 worsened an existing crisis for child care in Oklahoma (Oklahoma and COVID-19: Two years later): Countless Oklahomans rely on access to high-quality, affordable child care in order to work. However, the COVID-19 pandemic has had a devastating effect on our state’s child care industry, impacting parents’ ability to work and businesses’ ability to recruit and retain a reliable workforce. Due to underfunding, Oklahoma’s child care system for providers and families was in crisis long before the first COVID-19 case at a child care center was reported on March 18, 2020. Since then, countless providers across the state have closed their doors, and the ones that remain are spending 47 percent more to provide care. While the state acted swiftly to provide some guidance and support, a larger long-term investment in the child care industry is still desperately needed. [Gabrielle Jacobi / OK Policy]
- Chamber of origin deadline brings heavy workload this week (Capitol Update): Last week was a short week for the legislature. Both the House and Senate adjourned for spring break after session on Tuesday. I don’t recall exactly when legislative spring break became a thing, but it reflects the more family friendly culture found in the work world these days. In fact people who can, seem to be taking more vacations these days. It’s almost downright European! With only two days of legislative action last week, there’s not a lot to report, but this week—deadline week for passage of bills off the floor of the chamber of origin—will produce a heavy workload. [Steve Lewis / Capitol Update]
- Policy Matters: COVID-19 pandemic: Two years and counting: Two years ago, the COVID-19 virus turned our worlds upside down. During that time, the virus’ impacts have been staggering. In Oklahoma alone, more than one million COVID-19 cases were confirmed, which averages about one case for every four Oklahomans. In some rural areas, the ratio of cases to populations climbed to more than one case for every three residents. [Ahniwake Rose / The Journal Record]
Better Tomorrows Panel Discussion: Please plan on joining us at 1 p.m., Monday, March 28, as OK Policy releases its latest report, which focuses on the state’s youth justice system. To celebrate the release of Better Tomorrows: A Landscape Analysis of Oklahoma’s Youth Justice System and Suggested Reforms, OK Policy will be holding an online panel discussion to look more deeply at issues impacting the state’s youth justice system and the issues raised in the report. Streamed live at OKPolicy.org or via OK Policy’s social media channels on Facebook, Twitter, and YouTube. [More Information]
Weekly What’s That
Labor Force Participation Rate
The labor force participation rate measures the percentage of the non-institutionalized, working-age civilian population that is currently in the labor force (meaning they either have a job or are looking for work). Working-age refers to anyone 16 years of age or older, while non-institutionalized civilians refer to anyone who is not incarcerated, in a mental facility, or actively serving in the armed forces. Essentially, the labor force participation rate measures, out of all of the people who are currently able to work, the percentage of people who are either working or looking for work.
Labor force participation rate is an important indicator of an economy’s health, with a higher participation rate usually being a sign of a healthier economy. More people participating in the labor force generally means more people supporting those who are unable to work, whether because of age or disability status. Labor force participation also has fiscal implications for governments at every level. As more people are engaged in the labor force, this means more people to pay taxes—referred to as broadening the tax base. Conversely, fewer people in the labor force means fewer people paying taxes, which requires governments to either raise taxes to maintain spending levels or make funding cuts, hurting many of the core services upon which we all rely.
Labor force participation has been declining in both Oklahoma and the country as a whole since the turn of the century. Much of this decline has been due to our aging population, while other recent contributing factors are child care responsibilities and COVID-related disabilities. Workforce investments like expanding access to child care, increasing the value of the Earned Income Tax Credit, and creating a paid family and medical leave program can strengthen labor participation rates and reverse declining state trends.
Quote of the Week
“In Oklahoma, where most of the funding for state courts comes from costs and fees automatically assessed when a criminal case is filed, [a financial trap] is more apt to happen. It is a problem that traps too many Oklahomans in a cycle of poverty, substance abuse and crime.”
– Muskogee Phoenix Editorial Board, in an editorial about House Bill 3205, which lowers court costs and fees that are assessed to children in Oklahoma’s youth justice system [Muskogee Phoenix]
Editorial of the Week
Editorial: Lawmakers forget the lean years as they seek to slash half a billion in tax revenue
Amnesia has gripped the Oklahoma Legislature as lawmakers approved a series of tax-cutting measures without knowing where to make up the lost funding.
A wave of bills passed out the House and Senate on Tuesday that would cut the corporate franchise tax, suspend grocery taxes, reduce personal income tax and give property tax relief to higher-income older residents.
In total, this would take about $557.2 million from revenue for fiscal year 2024. This is on top of last year’s reductions in the personal and corporate income tax, totaling about $347 million for fiscal year 2023.
The House on Wednesday then approved measures to phase out personal and business income taxes ($400 million annual loss), temporarily expand sales tax rebates ($185 million) and mail out $321 million in tax rebates before the November general election.
Oklahoma’s economy is good right now. Oil prices are up, $2 billion is in state savings accounts and federal pandemic emergency aid prevented an economic collapse. The unemployment rate is 2.7%, below the U.S. 3.8%.
The conservative approach would be to go slow in making revenue cuts, especially without a plan to cut services or replace the loss.
Instead, lawmakers are going on the same tax-slashing spree that started during the late-1990s boom. Then came a bust. A decade later, the Legislature faced consistent revenue failures and a deficit of $1.5 billion.
Common education sank to almost last in teacher pay and per-pupil expenditure, leading to a two-week teacher walkout in 2018. State funding now amounts to less than 10% of the budgets for Oklahoma’s major universities Those education effects are still being felt.To not return to those days means to remember those days.
Tax rates and fees need to be regularly evaluated, but public services costs.
This was brought up last week during the debate on Senate Bill 1481, by Sen. John Michael Montgomery, R-Lawton. The proposal would put a moratorium on the corporate franchise tax, estimated to reduce revenue by $57.2 million.
When pressed on how that would be recouped for agencies, Montgomery said, “Budget negotiations are ongoing. We will see how that comes out as we go forward.”
This shows either a lack of an answer or a lack of transparency about budget proposals. It’s no secret a few people behind closed doors work out the budget for release toward the session’s end.Of the tax-cut proposals, House Bill 3349, by Speaker Charles McCall, R-Atoka, takes the most cautious path. It would provide for a two-year trial run to see how the state gets along without an estimated $270 million on the state sales tax on groceries. It doesn’t affect local taxes on groceries. By not making it permanent, it gives time to see if the cut has the desired effect.
For right now, lawmakers are barreling ahead without memory of those lean years, instead banking on a “we’ll see” fiscal approach.
Numbers of the Day
- 1 in 3 – Child care facilities in Oklahoma that closed from 2015-2020. [Source: OK Policy Analysis of Oklahoma Child Care Resource and Referral Association data]
- 268,353 – The number of Oklahomans enrolled in Medicaid expansion, as of March 21, 2022. [Oklahoma Health Care Authority]
- 15% – Percentage of working-age people outside of the labor force who report not looking for work because of home or family obligations. [Federal Reserve Bank of St. Louis]
- 190,000– The estimated number of previously uninsured Oklahomans who now have health care coverage through Medicaid after the expansion was implemented in July 2020. [Oklahoma Policy Institute]
- 12 – This week marked the 12th anniversary of the Affordable Care Act, which offers millions of Americans access to the health care they need. Since its enactment on March 23, 2010, the ACA has led to an historic advancement of health equity in the United States. [U.S. Department of Health & Human Services]
What We’re Reading
- Make Child Care More Stable: Pay by Enrollment [New America]
- Why millions on Medicaid are at risk of losing coverage in the months ahead [NPR]
- Child Care Remains Central to an Equitable Recovery [Federal Reserve Bank of St. Louis]
- Unwinding the Medicaid Continuous Coverage Provision: What States Can Do Now to Keep Eligible People Covered [Center on Budget and Policy Priorities]
- The Affordable Care Act is Crucial to Women’s Health [Community Catalyst]