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
- 2022 State Budget Summit – Video & Resources: If you missed OK Policy’s 2022 State Budget Summit, we have made a recording available on our website along with resources that were referenced during the event. You can also find a recording on our YouTube channel. Learn about the state’s current fiscal circumstances, what we might expect during this year’s legislative session, and where we can improve OK’s budget and tax system. [2022 State Budget Summit Recording and Materials]
- Oklahoma among least transparent states for state budget process, new OK Policy report shows: A new report from the Oklahoma Policy Institute shows that Oklahoma is among the nation’s least transparent states when engaging its residents during the development of the annual state budget. [OK Policy]
- Policy Matters: Budget process should be inclusive, deliberative: When it comes to crafting the annual state budget in Oklahoma, the process seems to come down to, “What do we have left?” rather than, “What could we accomplish if we had the resources?” Or at least that’s how the budget process seems to play out, because in reality very few people – even most lawmakers – aren’t involved in drafting the state budget. But as is the case with many of Oklahoma’s foibles, it doesn’t have to be this way. [Ahniwake Rose / Journal Record]
- SB 1548 would prioritize treatment, stability over punishment in Oklahoma’s drug courts (Capitol Update): Of the 2,297 bills filed for the upcoming session, one of the best is Senate Bill 1548 by Sen. Roger Thompson, R-Okemah. The bill reorganizes drug courts in Oklahoma, giving the upper hand in decision making to mental health professionals and drug court judges. [Steve Lewis / OK Policy]
Join the team: OK Policy is currently hiring for three positions:
- Digital Communications Associate / Storybanker
- Manager of Organizational Advancement
- Staff Accountant
Applications for these three positions close on Friday, February 25 at 5:00 PM (CST). [Learn more and apply]
Weekly What’s That
Sales Tax Relief Credit
The Sales Tax Relief Credit, sometimes known as the “grocery tax credit,” is an income tax credit that provides a rebate of $40 per household member to households with incomes at or below the following levels:
- $50,000 per year for filers who are elderly, have a physical disability, or claim a dependent; or
- $20,000 per year for everyone else.
The credit was first enacted in 1990 as part of the legislative compromise that led to the passage of House Bill 1017 and was intended to offset the sales tax on groceries for low-income households. Eligibility for the credit was expanded in 1998 but the amount has never been increased. The credit is refundable, meaning that it can be claimed in an amount that exceeds a taxpayer’s income tax liability.
The credit was claimed by 385,362 households in Tax Year 2018 for a total of $31.2 million, according to the Oklahoma Tax Commission’s 2019-2020 Tax Expenditure Report. Some 780,000 Oklahomans received the credit in 2018, or roughly one-fifth of the state’s population. However, over time, as incomes have risen while eligibility for the credit has remained flat, the number of recipients of the sales tax relief credit has been declining. In FY 2010, 520,746 households claimed the credit for a total of $43.2 million, according to the 2009-10 Tax Expenditure Report.
Quote of the Week
“We ought to step back and say, Tribes are winning most of these legal cases, they’re not losing them. (So) shouldn’t we have a dialogue here? Because again, at the end of the day, you have to remember that when you’re negotiating with a tribe in Oklahoma, they’re citizens of the state, too.”
– Congressman Tom Cole, R-Moore, speaking about the state of Oklahoma’s decision to fight the McGirt decision [The Norman Transcript]
Editorial of the Week
Some at statehouse again trying to kill public ed?
Same song, different verse – and once again, Oklahoma’s public schools are in the cross-hairs.
Every year, someone at the statehouse succumbs to pressure from well-heeled constituents who want taxpayers to help foot the bill for their children’s private education. So far, legislators who represent rural areas have been able to beat back the measures, which despite their propaganda are aimed at appeasing wealthier folks, not lower-income Oklahomans who want to home-school their children or enroll them in prep schools.
But 2022’s Senate Bill 1647 may have more traction than House Bill 2078, filed in 2021. That’s because Senate Pro Tempore Greg Treat submitted it. And not surprisingly, Treat represents a district in Oklahoma City. S.B. 1647 – ironically called the Oklahoma Empowerment Act – would allow parents to use state tax dollars for their children’s education. Treat insists it would give all parents and all students in Oklahoma the same “opportunity for success” that folks who own mansions in Nichols Hills have. But the opposite is true.
It’s not a matter of liberal vs. conservative; otherwise, Cherokee County’s legislators might favor this move. But Sen. Dewayne Pemberton and State Rep. Bob Ed Culver have repeated what they said last year – that it will harm rural schools and the communities surrounding them. And Cherokee County has eight of these institutions: Briggs, Grand View, Lowrey, Norwood, Peggs, Shady Grove, Tenkiller, and Woodall. Further, it could devastate public education as a whole.
Before returning to his roots in Cherokee County, Culver was a county commissioner in Texas, and he said the legislature in that state tried to pass a similar bill when he lived there. He’s not a fan: “I consider us somewhat of a rural school district. Basically, it’s going to kill your rural schools. And if you do that, are you going to hire 10,000 auditors to go out and check every parent and look at receipts?” Pemberton, a former educator from Muskogee who represents much of Cherokee County, said the bill would send public tax dollars to private schools – something he’ll always oppose.
School choice has long been championed by those who would prefer to home-school or send their children to private institutions, which is their prerogative. In recent years, suggestions have been floated that would give these parents state money to do with as they see fit. But there’s a fly in the ointment: Oklahoma’s constitution guarantees every child a free education. What happens when the money is siphoned off from public school coffers – or at least, out of rural districts – and most parents can’t afford to transport their kids to bigger schools, or pay the difference for a private education? And not every parent is cut out to home-school.
There’s also another problem. Despite promises of audits to prevent it, a few parents would take the money, with no intention of using it for its intended purposes. Their children might languish in front of the television, playing video games or watching movies while the parents use the windfall to powder their noses or make other purchases unrelated to education. When people the law enforcement community recognizes as “problems” spoil for handouts from the state, it’s not hard to predict what will happen to their children.
Pemberton pointed out this is an election year, which could be a factor: “They’re going to have to go to the doorsteps and explain to their patrons why they took their local tax dollars and sent them to private schools in Oklahoma City and Tulsa.” Cherokee County residents, and those in other non-metropolitan areas, should take a proactive approach and send the strong message that stripping schools of money, status, and good educators won’t be tolerated now, or ever.
Numbers of the Day
- 4% to 14% – Range of the gross production tax on petroleum as a portion of state revenue during the past decade. The gross production tax is the most volatile of Oklahoma’s major tax sources. [OK Policy]
- $4.4 billion – Amount of targeted tax expenditures for select individuals and businesses the state of Oklahoma handed out in 2018. That amount was just $500 million in 2010. Tax expenditures — the credits, deductions, exemptions, and incentives that allow taxes not to be paid when they otherwise would have been — significantly cut into Oklahoma’s annual revenue and our ability to fund services. [Oklahoma Tax Commission]
- 9.2% – Percentage of family income that sales and excise taxes represent for the lowest 20% of Oklahoma families. By comparison, Oklahoma families with income in the 80th to 95th percentile (average annual income of $127,900) pay about 3.6% of their family income towards sales and excise taxes. [ITEP]
- 4% – Oklahoma’s corporate income tax rate, which is tied for the second lowest in the nation with Missouri. [Tax Foundation]