In The Know: Oklahoma faces budget crisis despite economic boom

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by April 23rd, 2014 Posted in ,

In 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 the Associated Press reported lawmakers have created and expanded so many tax breaks and earmarked so much money for special projects that Oklahoma is facing a budget crisis, despite an economic boom. A new set of fact sheets from Together Oklahoma show how much the skyrocketing tax break for horizontal drilling is costing every school district in the state. OU economist Robert Dauffenbach discussed a new study showing Oklahoma is a very low-tax state. The Senate passed a measure that would reduce the individual and corporate income tax rates even further in future years. It now goes to conference committee.

Rep. Jason Murphey is challenging House Speaker Jeff Hickman in the race to become the next speaker of the Oklahoma House of Representatives. The Oklahoma House voted down legislation that would authorize up to $160 million in bonds to repair the state Capitol building. A bill approved lawmakers to assess a fee on Oklahomans who give energy back to the grid with solar and wind generation is attracting national controversy, with critics calling it a “sun tax” and a crude attack on alternative energy.

The Oklahoma Supreme Court ruled that a capital gains tax break for Oklahoma-based businesses does not discriminate against interstate commerce. If they had ruled differently and required the tax break to be applied to all businesses, Oklahoma’s budget hole could have increased by $230 million. Governor Fallin said the Oklahoma Supreme Court exceeded its authority in ordering a stay of execution while a court battle plays out over whether Oklahoma can conceal details about lethal injection drugs, and she scheduled two executions for April 29.

On the 125th anniversary of the Oklahoma Land Run of 1889, Native American Times discussed the event’s impact on Native peoples. A state lawmaker is pushing to reopen a private prison in Watonga to save jobs in his district. The prison was planning to reopen with inmates from California. That plan was cancelled after a court order gave the state more time to reduce its prison population through rehabilitation programs.

The Number of the Day is how much the Oklahoma Tax Commission estimates SB 1246, which would lower top income tax rate to 4.85%, would cost in 2019. The Commission cannot estimate the full impact because its simulation model doesn’t extend that far into the future. In today’s Policy Note, the Congressional Budget Office has sharply lowered its estimates of the costs to states of adopting the Medicaid expansion, finding it is an even better deal for states than previously thought.

In The News

Oklahoma faces budget crisis despite economic boom

Oklahoma’s oil patch is booming, its capital city is thriving and the unemployment rate is falling through the floor, testifying to the state’s roaring recovery from the recession. But even though revenue is pouring into the state treasury, the legislature is wrestling with a self-inflicted budget crisis that could prompt cuts to education, public safety and health care. The problem is that lawmakers over the last decade have created and expanded so many tax breaks and earmarked so much money for special projects that there’s no longer enough for basic services.

Read more from the Associated Press.

What the horizontal drilling tax break is costing your kids’ school

For Oklahoma’s elected officials looking to increase funding for education, the sensible solution can be found right under our feet. By doing away with what has become an increasingly unnecessary and unaffordable tax break, every school district and every school child in Oklahoma would benefit A new set of fact sheets released today by Together Oklahoma, based on data from OK Policy, shows how much additional funding each school district in Oklahoma could receive if the increasingly costly and unjustified tax break for horizontal drilling was eliminated and the money was used instead to boost public education.

Read more from the OK Policy Blog.

See also: School district fact sheets from Together Oklahoma

Oklahoma is a low-tax state, study shows

Q: Recent data from the Tax Foundation examines taxes in Oklahoma and surrounding states. Can you provide us with some of those findings? A: Oklahoma is commonly seen as having higher per person tax collections than Texas. However, per capita, the Tax Foundation study found that Oklahomans paid an average of $2,143 to their state and local governments in comparison to $2,109 in Texas, a $34 difference. For fiscal year 2009 and 2010, state and local taxes were $43 and $69 higher in Texas. Oklahoma appears to have “closed the gap” with Texas.

Read more from NewsOK.

Senate sends measure that would reduce income tax rates to committee

The Oklahoma Senate on Tuesday passed a measure that would reduce the individual and corporate income tax rates. House Bill 2508 would reduce the top income tax rate to 5 percent from 5.25 percent and the corporate rate to 5 percent from 6 percent if revenues are sufficient to cover the cost. If fully implemented, the measure would cost $200 million in fiscal year 2017. Rep. Earl Sears, R-Bartlesville, and Sen. Mike Mazzie, R-Tulsa, are the authors of the bill, which now heads to a conference committee. If the measure comes out of the conference committee, it must return to the House and then the Senate.

Read more from the Tulsa World.

Guthrie Republican challenges Okla. House Speaker

A four-term Republican state representative from Guthrie is challenging House Speaker Jeff Hickman in the race to become the next speaker of the Oklahoma House of Representatives. Rep. Jason Murphey confirmed Tuesday he was the only candidate to challenge Hickman, a Republican from Fairview. The 72-member House Republican caucus will meet behind closed doors on May 5 to select the speaker-designate who will lead the caucus for the next two years.

Read more from the Associated Press.

House defeats bond issue to repair Capitol

The Oklahoma House overwhelmingly defeated legislation Tuesday that would authorize up to $160 million in bonds to repair the state’s nearly 100-year-old Capitol. By a vote of 62-34, House members rejected the Senate-passed measure that is one of Republican Gov. Mary Fallin’s top priorities for the 2014 Legislature. The bill’s author, Rep. Skye McNeil, R-Bristow, kept the measure alive by serving notice that she may ask the House to reconsider the vote. Lawmakers who opposed the measure indicated they agree that the Capitol, one of the state’s most visited tourist attractions, needs extensive repairs, but did not like how the state planned to pay for them.

Read more from the Associated Press.

Spotlight put on Oklahoma’s solar- and wind-energy producer tariffs

A bill that passed through the Oklahoma Legislature with little opposition is getting some after-the-fact attention since being signed by Gov. Mary Fallin on Monday. Senate Bill 1456, by Sen. A.J. Griffin, R-Guthrie, sets up a mechanism for electric utilities to levy a tariff on customers with “distributed generation” — that is, electricity from on-site wind or solar generation. MSNBC and others have dubbed the possible tariff a “sun tax” and a crude attack on alternative energy.

Read more from the Tulsa World.

Oklahome Supreme Court rules out-of-state companies cannot claim capital gains tax break

A Florida-based company cannot claim a capital gains tax break for its Oklahoma business, the Oklahoma Supreme Court ruled on Tuesday. In a 5-4 decision, the state’s highest court ruled against CDR Systems Corporation, a now-defunct Florida-based company that had claimed the Oklahoma capital gains deduction on its 2008 income tax return for gains realized from a stock purchase agreement for the sale of all of its assets. The Supreme Court’s majority opinion, written by Justice Noma Gurich of Oklahoma City, found that there was no discrimination against interstate commerce and that the deduction does not have a discriminatory purpose.

Read more from the Associated Press.

Previously: Court’s tax ruling could have seismic impact on state budget from the OK Policy Blog

Fallin says Supreme Court exceeded authority on execution stays

Saying the state’s highest court exceeded its authority in granting stays to two inmates, Gov. Mary Fallin issued a seven-day stay of execution Tuesday for one of the inmates. Fallin’s office said it now plans to execute both inmates — Clayton Lockett and Charles Warner — on the same day, April 29. Both executions were ordered stayed indefinitely by the state Supreme Court on Monday while it considers appeals of a lower court’s ruling that the state’s execution-secrecy law is unconstitutional.

Read more from the Tulsa World.

On the anniversary of the Oklahoma Land Run, a look at its effect on Native peoples

My great grandmother, Nellie Tissoyo (Comanche), recalled the settlers, horses and cattle moving into the land. Being blind, she told of the earth trembling with a thunder-like sound around her. I wonder if she or other Indian people realized then that these events would drastically affect their lives. April 22nd is a historic day in Oklahoma, for on this day 125 years ago, thousands of settlers streamed into our state with hopes to stake their claim for land. The Land Run of 1889 opened 2 million acres in present day Canadian, Cleveland, Payne, Kingfisher, Logan and Oklahoma counties. This wide swath of land was home to the Cheyenne & Arapaho, Iowa, Sac & Fox, Kickapoo, Pottawatomie and Shawnee people. Though the most famous land opening, the Land Run of 1889 was only one of the methods used to transition land ownership from Tribes to individual settlers.

Read more from Native American Times.

State lawmaker wants to reopen private prison to bring back jobs

Plans to deactivate the Diamondback Correctional Facility in Watonga have been met with a state representative’s announcement that he will be working to get the prison reopened and bring jobs back to the community. “I am committed to working with the Corrections Corporation of America, the city of Watonga and the Department of Corrections to get this facility not only back up and running, but to also bring 300 or more jobs back to the community,” state Rep. Mike Sanders, R-Kingfisher, announced Monday.

Read more from the Enid News & Eagle.

Quote of the Day

“The left hand has no idea what the right hand is doing in Oklahoma. It’s absolutely ludicrous. If I handled my business like they do out here, I’d be riding a bicycle to work.”

-State Rep. David Dank (R-Oklahoma City), speaking about the legislature’s pattern of approving new tax breaks without calculating the budget impact first (Source:

Number of the Day

$267 million

Oklahoma Tax Commission estimate of cost in 2019 of SB 1246, which would lower top income tax rate to 4.85%. The Commission cannot estimate the full impact because its simulation model doesn’t extend that far into the future.

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