February 23, 2017
Week No. 3 of 56th Legislature
Senate Bills introduced in 2017: 831 SJRS introduced in 2017: 46
Budget Shortfall/Revenue Failure
• It’s not surprising the budget shortfall increased – Oklahoma’s economy continues to suffer from the effects of huge slumps in the oil/gas industry and the agriculture sector
o Fortunately those two sectors – the two main drivers of our economy – appear to have hit bottom so hopefully things will get better moving forward
• We already understood this year’s budget would be a challenge – that doesn’t change now that the budget shortfall has grown
• The governor has proposed $1 billion in tax increases; only if 75 percent of the House approves of those proposals, can the Senate consider them.
• All options are on the table to help us deal with this challenge, but let’s not forget those options include:
o Tax credit/incentive reform: eliminate wasteful credits that aren’t creating jobs and redirect those savings to critical services
o Apportionment reform: give legislators more flexibility to shift revenue that currently is taken “off the top” of tax collection to critical government services
o Agency efficiency: state government can always do things better, cheaper and more efficiently – it’s the Legislature’s job to advance this idea during “good” and “bad” budget times
• These measures will help provide short-term relief and long-term budget stability
• Senate has been hard at work on this year’s budget; we’re moving legislation quickly through the process; we’ll keep working on a budget that mitigates the effects of cuts on core services as much as possible
Repealing Income Tax Cut Trigger
• Senate Appropriations Committee approved SB 170 (Sen. Thompson) to stop the automatic income tax cut trigger
• This is among the ideas Senate Republicans have been talking about to provide budget stability
• The tax cut would be automatically triggered with a revenue growth of $97 million. With declining state revenue, it wouldn’t take much to activate the income tax cut trigger
• SB 170 is a fix that allows future Legislators – rather than an automatic trigger – to determine the best time and manner to lower the income tax rate.
Education Money/BOE Supplanting Determination
The truth is the Legislature didn’t supplant funding for common education, higher education or CareerTech
o Disagree with OMES methodology
The larger cut (approx. 16 percent) given to Higher Ed skews calculations
o OMES could have informed Legislature anytime including during last year’s budget negotiations up until the beginning of this session so that the Legislature could have remedied the problem with a supplemental appropriation
Governor’s Office, Budget Director were a part of budget negotiations – never raised this point before and Governor signed budget into law.
The Legislature made a policy decision to cut the budget of higher education at a level higher
o There is plenty of administrative costs in Higher Edu to cut and find savings
o Higher EDU has the ability to raise tuition to make up for any reduction in state funding
The Legislature has always taken great strides to not supplant education lottery funds
o Held Common Ed to as little cut as possible next year
What doesn’t get talked about:
o Legislature makes up the difference to common EDU when the HB1017 fund or the Lottery fund comes up short
The Legislature has protected Common EDU from the significant cuts that other agencies have taken during the last couple of tough budget years – we’ll do our best again this year to protect Common EDU
•The REAL ID fix (HB 1845 by Pro Tem Schulz and Speaker McCall) is one vote and one signature from being signed into law
•The Legislature – with this bill – is addressing an issue the vast majority of Oklahomans want us to quickly resolve.
•Allows Oklahomans the convenience of continuing to use their state-issued driver licenses to fly commercially
•More importantly, allows the thousands of Oklahomans who work on military bases and need to maintain that access to continue their important work supporting the brave men and women in our Armed Forces who protect our freedoms.
•Bill gives Oklahomans the choice of getting a REAL ID compliant license, or a non-REAL ID compliant license