In The Know: March revenues down 9.1 percent after major increase in corporate tax credit claims

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by and April 16th, 2014 Posted in ,

In The KnowIn The Know is a daily synopsis of Oklahoma policy-related news and blogs. Inclusion of a story does not necessarily mean endorsement by the Oklahoma Policy Institute. You can sign up here to receive In The Know by e-mail or subscribe to the podcast on iTunes, Stitcher, or RSS. The podcast theme music is by Zébre.

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Today you should know that general revenue collections fell 9.1 percent below the estimates in March. The shortfall creates a possibility that all state agencies will face  mandatory budget cuts this fiscal year. Corporate income tax revenue fell especially low due to a major increase in corporate tax credit claims. The OK Policy Blog previously discussed how growing tax breaks and mandatory spending are causing budget shortfalls even though the economy is growing. OK Policy’s newly updated Budget Trends and Outlook fact sheet summarized key points on the budget.

 In an Oklahoman op-ed, Rep. David Dank argued that Oklahoma needs to reign in corporate tax credits to fund education. The House voted down a bill that would reimburse businesses at 105 percent of the cost of tuition and materials for their employees seeking further education. The bill has previously passed the Senate, and the House author, Rep. Elise Hall, said she may bring it back for another vote. The House approved a state trooper pay raise bill and sent it to Governor Fallin. The bill does not specify pay increases, but it repeals the existing pay scales and calls for troopers to be paid in accordance with a study that found they are making 14 percent less on average than their counterparts in other states.

On the OK Policy Blog, we shared 5 things in 5 charts that everyone should know about Oklahoma taxes. Supporters of a higher minimum wage in Oklahoma are considering other options after Governor Fallin and the Legislature banned cities from increasing their minimum wage higher than the state’s. A bill that would restrict the use of abortion-inducing drugs passed the state Senate by a vote of 37-5. A similar measure approved by the Legislature in 2011 was thrown out by the Oklahoma Supreme Court. Oklahoma’s attorney general has filed an anti-discrimination lawsuit against a Miami restaurant owner over allegations of sexual harassment of employees. The suit is the first legal action filed by the newly formed Office of Civil Rights Enforcement.

The House approved a bill to allow the state Department of Human Services to contract out child welfare investigations and case work. State Superintendent Barresi spoke out against a bill to reduce the number of mandated state tests. She argued that Oklahoma schools won’t teach history and geography if there’s not a standardized test for those subjects. A new church-sponsored program in Tulsa is housing women recovering from drug addiction. Rep. Joe Dorman is challenging the candidacy of Independent Joe Sills because he pled guilty to a felony 14 years ago.  Oklahoma law prohibits anyone convicted of a felony from holding a public office for 15 years after their sentence is completed. The Tulsa World editorial board congratulated Oklahoma’s many unopposed election winners. The Oklahoman wrote that counties across the state aren’t being funded adequately to maintain bridges.

The Number of the Day is Oklahoma’s ranking out of all fifty states and the District of Columbia for the share of personal income going to state and local taxes. In today’s Policy Note, the Brookings Institute shared new data on how tax credits targeted to low- and moderate-income working families are helping Americans in every Congressional district.

In The News

March revenues down 9.1 percent after major increase in corporate tax credit claims

Oklahoma’s finance secretary says collections by the general revenue fund fell 9.1 percent below the official estimate in March. Secretary of Finance Preston Doerflinger said Tuesday the state experienced another month of unusually low corporate income tax revenue. Doerflinger says that the decline followed a major increase in tax credit claims.March collections totaled $413 million, which is $41 million, or 9.1 percent, below the official revenue estimate upon which the fiscal year’s state budget is based. March’s weak collections rekindled the possibility of mandatory cuts for all state agencies this year.

Read more from The Oklahoman.

See also: Budget Trends and Outlook — April 2014 from Oklahoma Policy Institute; The mystery of the disappearing revenue from the OK Policy Blog

David Dank: Time is now for real tax credit reform

An ill-advised legislative plan to drain $30 million a year from state highway funds to bolster school spending will soon be considered in the House and Senate. This is a classic example of robbing Peter to pay Paul, and in the end making both of them poorer. Instead we should finally take a hard look at some of the wasteful tax credits and other areas of abuse that push the state budget to the brink year after year. If we want to inject extra dollars into the classroom, it makes no sense to shift money from one essential priority of state government to another.

Read more from NewsOK.

House rejects Quality Workforce Act

An Oklahoma workforce development bill that legislative opponents called “socialistic” and “utterly ridiculous” was defeated Tuesday by the state House of Representatives. House author Elise Hall, R-Oklahoma City, served notice that she might bring Senate Bill 1639 back for another vote after it was defeated 39-49 on the House floor. The bill, backed by state Senate leaders, had sailed through the Senate by a vote of 45-1. It would offer rebates equal to 105 percent of the cost of tuition and materials to companies paying those costs on behalf of employees seeking licenses, certificates or degrees in certain jobs targeted as having high potential for growth and building wealth. Money to pay the rebates would come from state income tax revenues.

Read more from NewsOK.

State troopers pay raise bill headed to Governor Fallin

Oklahoma Highway Patrol salaries could rise as much as 14 percent as the result of a bill passed and sent to the governor Tuesday by the state House of Representatives. Senate Bill 232, by Sen. Clark Jolley, R-Edmond, does not specify pay increases, but instead repeals the existing pay scales and says OHP employees shall be paid “in accordance and conformity” with a state employee compensation study conducted last year at the behest of Gov. Mary Fallin. That study says OHP troopers are paid 14 percent less than the average for counterparts in other states.

Read more from the Tulsa World.

State ban on minimum wage increase draws ire across Oklahoma

Those seeking a higher minimum wage in Oklahoma said they’re upset with Gov. Mary Fallin’s decision to sign a bill that prohibits cities from establishing mandatory minimum wage or vacation and sick-day requirements. Attorney David Slane, who wrote the initiative petition for Oklahoma City, said that the new law, inked Monday night, threatens an effort to raise Oklahoma City’s minimum wage to $10.10 an hour. “I think that we sort of lost common sense on this, and giving the people the right to vote on what they do in their city is really important,” Slane said. “It’s a real national debate with the $10.10 an hour minimum wage supported by the president, and this is sort of a microcosm of that debate.” He said those collecting signatures will continue to do so with hopes of getting the 6,200 necessary to put the issue on the city’s ballot. The group is also considering a host of other options, including challenging the constitutionality of the new law and trying to get the 165,000 signatures necessary to amend the Oklahoma constitution.

Read more from the Associated Press.

5 things you should know about Oklahoma taxes

It’s tax day — the annual event when procrastinators, or those who just like to live on the edge, rush to get their tax returns filed before the midnight deadline. If your return is safely filed, or if you just want another excuse to procrastinate, here are 5 things in 5 charts that everyone should know about Oklahoma taxes.

Read more from the OK Policy Blog.

Abortion Drug Ban Bill Clears Senate

A bill that would restrict the use of abortion-inducing drugs in Oklahoma has easily passed the state Senate. The Senate voted 37-5 Tuesday for the bill that was written in direct response to a state Supreme Court decision that tossed a similar measure approved by the Legislature in 2011. The bill would prohibit off-label uses of certain abortion-inducing drugs by requiring doctors to administer the drugs only in accordance with U.S. Food and Drug Administration protocol.

Read more from Public Radio Tulsa.

Office Of Civil Rights Enforcement Files First Lawsuit

Oklahoma’s attorney general has filed an anti-discrimination lawsuit against a Miami restaurant and its owner over allegations of sexual harassment of employees. The lawsuit filed Tuesday in Ottawa County District Court is the first legal action filed by the newly formed Office of Civil Rights Enforcement in Attorney General Scott Pruitt’s Office.

Read more from KGOU.

Oklahoma House passes bill allowing outsourcing of DHS child welfare work

The state Department of Human Services would be able to contract for services related to child welfare investigations and case work under the provisions of a bill that was passed by the House of Representatives and returned to the Senate on Monday. Senate Bill 1182 by Sen. Kim David, R-Wagoner, and Rep. Jason Nelson, R-Oklahoma City, would permit DHS to “employ or contract with active or retired social work, medical and law enforcement professionals who shall be strategically placed throughout the state.” DHS requested the bill as a way to help meet staffing shortages more cheaply.

Read more from the Tulsa World.

Barresi Decries Plan To Eliminate Oklahoma Tests

Oklahoma State Superintendent Janet Barresi is raising concern about a bill before the Legislature that would eliminate state testing in social studies and geography. In a statement Tuesday, Barresi complained the bill would erase the state’s ability to measure student knowledge in those topics, as well as in a “significant portion of U.S. history.” Senate Bill 1654 would eliminate several state-mandated tests beginning in the fall, including social studies in grades five and eight, and geography in grade seven.

Read more from NewsOn6.

New house helping Tulsa women recovering from addiction

A program that helps women struggling with different kinds of addiction in Tulsa officially opened its doors. “Being such a key part in such a normal neighborhood and having such a normal kind of life is just something we didn’t have,” said Vicki Jones, the program manager at the New House of Tetelestai. The house was once three different sober living homes across the Tulsa area, now it’s under one roof. “We get them to church, and we get them to the meetings. We get them to the step studies. We pretty much stay with them the whole way,” said Jones.

Read more from FOX23.

Counties face stiff challenge in keeping bridges in good shape

Closure of a bridge linking Purcell and Lexington poses a major hardship on local citizens. Until the bridge is repaired, they’re forced to drive 30 or more miles for a journey that would normally be less than two miles. The bridge is 76 years old and plagued by structural issues that made its closure and repair mandatory. As hard as this is on the people who regularly make the crossing, it’s temporary. The situation offers the advantage of a fast-tracked repair because the bridge is owned by the state. Were this bridge not part of the highway system and state-owned, it could be years before the structure was repaired. That’s precisely the scenario county commissioners face across Oklahoma.

Read more from The Oklahoman.

Joe Dorman challenges rival Oklahoma gubernatorial candidate on felony claim

An independent candidate for governor pleaded guilty to a felony 14 years ago and, therefore, is not eligible to run for public office, another candidate told the state Election Board on Tuesday. Democratic gubernatorial candidate Joe Dorman is challenging the candidacy of Joe Sills. The board will hold a hearing Monday to decide the matter. In his challenge, Dorman included documentation from Cleveland County District Court showing Sills pleaded guilty on April 19, 2000, to a felony charge of unauthorized use of a motor vehicle.

Read more from NewsOK.

Congratulations to unopposed election winners

Filing for political office wrapped up Friday, meaning the campaign season has started. Before things get too involved in that debate, we would like to take a minute to congratulate the candidates who have already won —— those who brought no opposition in the election. Whether because their credibility with the public is so substantial, their political presence is so daunting or their opposition so disorganized, a lot of officeholders were guaranteed another term in office, which deserves public acknowledgement.

Read more from the Tulsa World.

Senate leader reelected to third term

Oklahoma Senate President Pro Tem Brian Bingman has been re-elected to a historic third term as the Senate leader. Bingman – a Republican – said Tuesday he was selected by the 36 Senate Republicans in a closed-door caucus meeting. Bingman said in a statement that he is “incredibly humbled.” He will become the first Senate leader re-elected to a third term since Republicans took control of the chamber in 2008 for the first time since statehood. He will be formally elected to the post in 2015, after this year’s elections.

Read more from NewsOn6.

Quote of the Day

“These revenue issues are the creation of government, not the economy. Off-the-top apportionments, corporate income tax declines, tax credits and other tax and budgeting choices that in some cases date back decades are the reason this situation exists.”

-Oklahoma Secretary of Finance Preston Doerflinger, speaking about March revenues for Oklahoma coming in $41 million below estimates and the possibility of mandatory budget cuts for all state agencies this year (Source: http://bit.ly/1qIHatx)

Number of the Day

48th

Oklahoma’s ranking out of all fifty states and the District of Columbia for the share of personal income going to state and local taxes in 2011.

Source: Oklahoma Policy Institute

See previous Numbers of the Day here.

Policy Note

New Data Illustrate Local Impact of Tax Credits for Working Families

This Tax Day we want to draw your attention to newly-released resources that demonstrate the widespread impact of federal tax policies targeted to low- and moderate-income working families, particularly the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). New IRS data for Tax Year 2012, now available through our EITC Interactive, show that in 2012, 26.2 million filers received the EITC, claiming an average credit of $2,359. Almost 60 percent (15.7 million) of EITC filers also went on to receive the refundable portion of the Child Tax Credit, claiming an additional $1,266 on average.

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