March 3, 2016
BUDGET and TAXES
- Senate leadership has been warning for months of the severity of the budget crisis, and that it’s likely to get even worse
- Today’s revenue numbers from OMES are proving us right – and we can’t even be sure that we’re yet seeing the bottom of this financial cliff.
- The experts and their estimates have been wrong; we’re 19 percent off estimates this month
- FY17 certification numbers could be off – it could have a built in revenue failure
- There’s no way around it – we’re going to have to make cuts to make up for this revenue shortfall
- To be clear: the income tax cut didn’t get us into this mess, and repealing the tax cut isn’t going to get us out.
- We’re going to have to get serious about real reforms: consolidations, eliminating inefficient programs, tax credit reform, even reducing the number of state employees (just like private sector companies have to lay-off workers when times are tough). We have to find a way to squeeze every penny possible to help us craft a balanced budget that protects core services like education, public safety and transportation
- ADDRESSING FY16 CUTS BY REOPENING THE GA BILL
- The system in place should be left to work itself out – OMES should proceed with automatic, across the board cuts
- With what are you going to make targeted cuts? That means taking money from Medicaid, taking money from child protective services, taking money from mental health services, taking money from rural hospitals
- The budget crisis is not a result of financial mismanagement by Republican leaders. Oklahoma is in a budget crisis because the energy industry is suffering. For better or for worse, Oklahoma’s finances are tied to the oil and gas industry.
- Mar 2014: WTI crude oil $101.67/barrel
- Mar 2015: WTI crude oil was $47.82/barrel
- Mar 2016: WTI crude oil was $34.52/barrel
- Gross production tax collections are down. Oil and gas activity is down so sales tax collections are down, and layoffs are occurring impacting income tax collections.
- January 2016, GRF Receipts (from OMES)
- Gross production tax collections of $7.2 million were $17.7 million, or 71 percent, below the estimate and $23.2 million, or 76.2 percent, below the prior year.
- Oil collections of $509,600 were $14.5 million, or 96.6 percent, below the estimate and $23.2 million, or 97.9 percent, below the prior year.
- Sales tax collections of $164.6 million were $26.9 million, or 14 percent, below the estimate and $20.9 million, or 11.3 percent, below the prior year.
- Total income tax collections of $233.7 million were $58.5 million, or 20 percent, below the estimate and $57.7 million, or 19.8 percent, below the prior year.
- January 2016, GRF Receipts (from OMES)
- An Oklahoma State University economic forecast (Aug 2015) said the state could lose more than 20,000 jobs due to energy price volatility through 2016. The Center for Applied Economic Research report says the estimate draws from analysis indicating every 10 energy jobs support six positions in other industries.
- It’s a dire budget picture. It’s going to take some serious and tough decisions this year to help us reach a balanced budget. Senate Republicans are leading the discussion at the Capitol about real reforms.
- It will take a combination of cuts, government reforms and consolidation, budgetary reforms to free up “off-the-top” money, and tax credit reform to help craft a balanced FY17 budget. When money is short, Oklahoma families balance their books by tightening their belt. State government shouldn’t be any different.
- TAX REFORM: The full Senate approved SB 1085 by Sen. Dahm which allows Oklahomans to donate their income tax refund to the GRF to support state government. Some say Oklahomans aren’t taxed enough. For those who agree with that sentiment, SB 1085 offers an opportunity for them to put their money where their mouth is and give their income tax refund back to the state.
- EMPOWERING LOCAL SCHOOLS TO INNOVATE:
- SB 1187 by Sen. Jolley passed out of the Education Committee but has yet to be considered by the full Senate. There has been a lot of misinformation about the bill. It doesn’t take away teacher rights. Amends the Empowered Schools and School Districts Act of 2010, which passed with a wide, bipartisan margin and was signed into law by Gov. Henry. Empowers local schools, if they choose, to operate like a charter school. The locally elected school board must decide to create an empowerment school, 60 percent of local teachers must vote to approve it, and the state Board of Education must approve the plan. Republicans believe parents, teachers and local school officials know what’s best for students. SB 1187 empowers local schools, if they choose, to pursue innovative models to improve their ability to educate students
- ELIMINATING END OF INSTRUCTION (EOI) TESTS:
- The Senate by a 41-0 vote approved SB 1170 by Sen. Ford which provides more local control to school districts while eliminating the concerns of parents and teachers of too many mandated tests. SB 1170 eliminates the end of instruction exams HS students must pass to graduate. It calls school districts to certify that graduating high school students have mastered curriculum requirements. Eliminating EOIs allows teachers and students to focus on classroom work and not end of year exams. Plus, ending EOIs could save millions of dollars.
PROTECTING OKLAHOMA VETERANS
- The full Senate approved SB 913 by Sen. Simpson this week what would allow authorized Oklahoma National Guard personnel to carry weapons with them at state military buildings. The threat facing our military heroes doesn’t end when their deployment is over. We’ve seen military personnel attacked in the homeland, and we know our enemies desire to attack us here. It makes sense that we allow Guard members, who are highly trained in the use of weapons, to carry on state military facilities to protect themselves and others in an emergency situation.
SUPPORTING CRIME VICTIMS AND THEIR FAMILIES
- The Senate gave unanimous support to SB 1214 by Sen. Sharp. The bill Senate Bill 1214 would add a “guilty but with mental defect” defense for those individuals who are found guilty with a mental illness but who also have an antisocial personality disorder. The law needs to be modified to take into account those who suffer from a mental illness but are still mentally capable of understanding their actions. They need to be held accountable. The rights of crime victims are often overshadowed. This change ensures justice is served for the victims and brings certainty and closure to the crime victims’ families.
WORKERS’ COMPENSATION REFORM
- The Workers’ Compensation Commission and the Oklahoma Supreme Court recently issued bad rulings declaring parts of workers’ comp reform laws unconstitutional. The Commission declared the “opt-out” system unconstitutional, but the commission’s order will be appealed to the state Supreme Court. The Supreme Court ruled this week that the cumulative trauma restrictions were unconstitutional. We are continually reminded of the need for judicial reform in Oklahoma.
- Pro Tem Bingman statement: The workers’ comp reforms we passed are working. Oklahoma businesses are saving money and injured workers are getting medical care more efficiently and quickly allowing them to return to work sooner. It’s disappointing the court is undoing effective reforms that are making a difference for business and injured workers. The Senate will not stand idly by and let the court undue the success of our workers’ comp reforms.
AUBREY MCCLENDON’S DEATH
- Pro Tem Bingman statement: My prayers go out to Aubrey McClendon’s family and friends during this difficult time. Aubrey made an incredible impact on the energy industry and the state of Oklahoma. He was a leader in the energy industry, helping to usher in the shale gas revolution that has moved our nation closer to energy independence. He was an incredible philanthropist who supported countless non-profit organizations and charities. He will be missed, but his legacy of entrepreneurship and generosity will live on for years.
NEWS OF INTEREST:
Oklahoma House passes bill cutting 111,000 from Medicaid
OKLAHOMA CITY — Just how grim the state’s budget situation has become was apparent Wednesday morning as the state House of Representatives discussed and ultimately agreed to a bill that would cut 111,000 Oklahomans, most of them women, from Medicaid. House Bill 2665, by Rep. Doug Cox, R-Grove, instructs the Oklahoma Health Care Authority, which administers the state’s Medicaid program, to request a federal waiver that would allow it to exclude all able-bodied adults younger than 65. Currently, Cox said, about 111,000 single, non-disabled parents earning less than $9,500 are covered by SoonerCare, Oklahoma’s version of Medicaid. Cox said 77,000 of those are women.
Oklahoma House passes bill cutting 111,000 from Medicaid
OKLAHOMA CITY (AP) – Facing a $1.3 billion hole in next year’s budget, the Oklahoma House of Representatives on Wednesday passed legislation that would cut 111,000 Oklahoma residents with dependents from Medicaid and potentially save up to $130 million in state-appropriated health care funds. But implementation of the measure is dependent on the federal government’s approval of a waiver that would permit the state to exclude adults younger than 65 who are not pregnant, deaf, blind or disabled from the program, said Jo Kilgore, a spokeswoman for the Oklahoma Health Care Authority, the state’s Medicaid provider. Kilgore said 794,919 of Oklahoma’s 3.9 million citizens are enrolled in its Medicaid program.
Lawsuits in the pipeline: Company says counties overvalued property by $500M
OKLAHOMA CITY – A Denver-based gas pipeline company claims assessors in nine counties overvalued its property by half a billion dollars. DCP Midstream filed separate lawsuits against the western Oklahoma counties after challenging its 2015 property tax valuations. According to a review of the lawsuits, DCP’s pipelines and other equipment were valued at about $1 billion. DCP argues the actual value is closer to $500 million. The company has property that was assessed in 29 other Oklahoma counties.
Tulsa World editorial: American Airlines says it’s committed to Tulsa
Its air fleet is changing and so are its maintenance needs, but American Airlines is in Tulsa to stay, the company’s senior vice president of technical operations said last week. In an interview with Tulsa World reporter Casey Smith, David Seymour said this is a transitional period for the airline, but “we’re in Tulsa, we’re here to stay….”
Oklahoman editorial: Plan to repeal income tax sure to invite court challenge
LAST week, state Senate Republicans insisted that an income tax bill can generate $290 million in new revenue without being a revenue-raising measure. Why resort to such Orwellian double-speak? Because the bill has constitutional problems.