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
- This year we can improve our social insurance programs to encourage work and support working families: In December 2020, OK Policy released its report Plateaus and Cliff Effects in Oklahoma, which shows how essential our social insurance programs like direct assistance and tax credits are to low- and middle-income Oklahoma families. We should act on some of these recommendations immediately given the economic impacts of COVID-19. [Paul Shinn / OK Policy]
- Legislators must protect Oklahomans’ health care: Privatizing Medicaid isn’t supported by any definitive evidence. In fact, it could potentially cost the state up to an additional $904 million per year. It will also likely hamper access to care for many Oklahomans. From rural residents to those with mental health needs, privatized managed care will have uniquely negative impacts for some Oklahomans. [Emma Morris / OK Policy]
- House Speaker unveils tax cut proposals (Capitol Update): House Speaker Charles McCall announced last week his intention to work on legislation to reduce the personal income tax and to eliminate the corporate income tax over five years. [Steve Lewis / Capitol Update]
- Policy Matters: Everything is bigger in Texas, including tax burdens: Texans like to brag that everything is bigger in Texas. And when it comes to financial issues, that’s certainly true: Property taxes, state sales tax, tax burdens on low-income residents, and corporate tax breaks. All are bigger in Texas. [Ahniwake Rose / Journal Record]
- Oklahoma’s children need funding to recover from the COVID-19 crisis: In the wake of the COVID-19 pandemic and the resulting economic downturn, Oklahoma’s Legislature will be facing some tough budgetary challenges in the coming fiscal years. If we want Oklahoma’s children to recover quickly from the COVID-19 crisis and grow up to be healthy, thriving adults, then now is the time to increase our investment in the programs that provide the stability that our children need. [Josie Phillips / OK Policy]
- Together OK Virtual Day of Action: Together Oklahoma, OK Policy’s grassroots advocacy arm, held its Virtual Day of Action on March 4 to help connect Oklahomans with their legislators. A video of the session is available along with the recorded messages that were provided by legislators and advocates. View the playlist of all videos on the Together OK YouTube channel.
Weekly What’s That
Budget reconciliation is a special process that makes specific legislation easier to pass in the U.S. Congress. In the Senate, reconciliation bills aren’t subject to filibuster and therefore need only a simple majority of 51 votes to pass.
The process starts when the House and Senate agree on an annual budget resolution that includes “reconciliation directives” for specified committees. These instruct specified House and Senate committees to prepare and report legislation by a certain date that: 1) increases or decreases spending (outlays) by specified amounts over a specified time; 2) increases or decreases revenues by specified amounts over a specified time; or 3) modifies the public debt limit. In most cases, a single budget resolution can generate only two reconciliation bills: a tax-and-spending bill or a spending-only bill and, if desired, a separate debt limit bill.
To ensure that reconciliation bills remain focused on budget measures, the Senate adopted the “Byrd rule”, which treats as extraneous any provision that doesn’t change the level of spending or revenues, or where the change in spending or revenues is “merely incidental” to the provision’s non-budgetary effects. The Byrd Rule is enforced only by points of order raised by members and decided on by the Senate’s presiding officer.
Congress has passed reconciliation bills 21 times since the procedure was first employed in 1980. It has been used on several occasions to pass major tax cuts, as well as the major welfare overhaul bill in 1996 and parts of the Affordable Care Act in 2010. Since no fiscal year 2021 budget resolution was adopted in calendar year 2020, the newly-elected 2021 Congress could first take up the overdue budget resolution for fiscal year 2021, use that to generate an initial reconciliation bill, and then take up a budget resolution for fiscal year 2022 (which begins on October 1, 2021) to generate a second reconciliation bill.
Quote of the Week
“It’s clear that the people of our state understand that a person battling mental illness and addiction ought to be viewed as a patient, not a prisoner.”
-Kris Steele, executive director of The Employment and Education Ministry and former House speaker, said legislative efforts to modify State Question 780 go against the will of the people. [Oklahoma Watch]
Editorial of the Week
Oklahoma legislative plan to cut taxes will be politically popular but fiscally foolish
Only a few years after a bloody fight to raise state taxes, House Speaker Charles McCall wants to cut them.
That idea is likely to be politically popular, but it’s fiscally foolish. Tax cuts got the state in a horrible mess throughout the last decade, and one good year of state revenue isn’t the cue for more.
Here’s the basic problem: It takes a simple majority of the Legislature to cut taxes, but, without a vote of the people, it takes 75% to raise them again. That means a small minority of the Legislature can prevent a tax hike even in an emergency, which is what happens…
Numbers of the Day
- 1 in 9 – U.S. Corporations headquartered in California, despite its nearly 10 percent corporate income tax rate [Source: Microeconomic Insights]
- 30th – Oklahoma’s ranking of highest corporate income tax rate. [Source: Tax Foundation]
- $516,931,578.29 – How much money Oklahoma’s corporate income tax generated in Fiscal Year 2018-2019 [Source: Oklahoma Tax Commission]
- 11th – Oklahoma’s corporate income tax is the 11th most business-friendly. [Source: Tax Foundation]
- 4th lowest – Oklahoma’s rank in state and local taxes, both per person and as a share of income, in 2017. Oklahoma’s taxes are the lowest in our region. [Source: Tax Policy Center]
What We’re Reading
- The Mixed Impact of U.S. Corporate Tax Cuts [Stanford Business]
- 50 years of tax cuts for the rich failed to trickle down, economics study says [CBS News]
- Column: A devastating analysis of the tax cut shows it’s done virtually no economic good [LA Times]
- Trump’s Corporate Tax Cut is Not Trickling Down [American Progress]
- The Relationship Between Taxes and Growth at the State Level: New Evidence [Brookings]