The Oklahoma Legislature is required by law to complete its work and finalize the budget to adjourn Sine Die no later than 5 pm on the last Friday in May. We have been working diligently to meet this deadline and agree on a budget before we return to our districts for the interim. Today we completed that task.
Like most General Appropriations bills passed by the Legislature, the FY18 budget is not a perfect bill – but it is an incredible accomplishment, considering that House Democrats refused to compromise on the original budget packet the Senate sent over last week. That bill generated $510 million in new, recurring revenue.
This year’s passed budget is a combination of minimal cuts to agencies (average of 4.5%), new revenues, and budget reforms. The new revenues and budget reforms begin to address the structural deficits that have plagued the state budget for years, long before Republicans took over. The Senate approved several measures that will generate new revenue, providing stability in the budget moving forward:
- $95 million by raising the Gross Production Tax (GPT) on “1 percent” wells to 4 percent
- $46 million by eliminating oil and gas GPT rebates
- $15 million from increased tax enforcement
- $9 million from approval of long-lateral drilling bill
- $215 million from cigarette fee ($1.50 per pack)
- $110 million by eliminating an existing sales tax exemption on vehicle sales
In addition, the Senate approved a measure that accelerates the sunset date of the zero-emissions tax credit for wind energy, saving the state millions of dollars in future budget years.
The Legislature is running a trailer bill (HB2360) to the FY18 General Appropriations bill (SB 860) that provides an additional $18 million from the Rainy Day Fund to schools. The trailer bill is an agreement by the Senate and House which keeps the school funding formula at the same level as FY17 in spite of a nearly $1 billion shortfall in state revenues.
This budget package is a plan that generates new revenue for this year and beyond, protects education, DOC and DHS, and implements reforms to address chronic budget shortfalls.
To put things into perspective, here are some historical facts:
- When HB 1017 was passed in 1991, the average student/teacher ratio was 16. In 2016, the student/teacher ratio is still 16. When HB 1017 was enacted, Oklahoma was 46th or 47th in teacher pay. In 2016, Oklahoma is still 46th or 47th in teacher pay because when they enacted this revenue measure, they put mandates in the bill to eat up the revenue: mandates like smaller classrooms, hiring teacher aides, expanding administration, and creating PreK for families below the poverty level. Years later, they have now expanded PreK to all four-year-olds. As an aside, the PreK enrollment is now around 40,000 and this is the number used for “student growth” when they talk about per-pupil spending.
- In 1994 Democrats passed an incentive for horizontal drilling, decreasing the 7% rate to 1% for 24 months. In 2004, after it was proven that horizontal drilling would increase production, Democrats voted to increase the incentive for oil and gas to 1% for 48 months.
Through a supplemental appropriation, the Legislature gave $47 million to schools that was lost when the apportioned HB 1017 fund experienced a revenue failure; The Legislature gave another supplemental appropriation of $18 million to keep the school funding formula at the same level as FY ’17 in spite of a nearly $1 billion shortfall in state revenues.
We actually increased education spending from the 2017 appropriations. The GA bill also fulfilled the state’s obligation to cover 100 percent of the health insurance costs of educators by providing an additional $20.6 million earmarked for that purpose.
The question has been raised: will this budget be challenged in court? The answer is probably yes. This is why they build court houses. State Question 640 requires that any tax increase be approved by 75 percent of the members of each legislative chamber, but the bills we passed this year only required a simple majority vote because we removed tax exemptions and incentives and imposed fees rather than creating new taxes. For decades the Legislature has passed measures to enact new programs and fund them with fees, so this isn’t anything new.
The Legislature also moves money from one fund to another fund by apportionment reform.
I feel that we were sent here to govern by our constituents, and even though I am not a fan of raising taxes, I understand that we have to find stable revenue sources to assure that our core functions remain funded, regardless of the volatility of the oil and gas industry.
I also feel that good governance means we should identify and cut unnecessary state spend. My office identified six schools in the state that were paying for school board member health insurance. In my opinion, this takes money away from the classroom. SB 858 would have fixed the problem of school board members receiving health benefits being paid for with district funds. This bill passed the Senate, but was held up in a House committee.
On a more personal note, I wish to thank each of the pastors who served as Senate Chaplain of the Day during this final week of session. They are as follows: Pastor Ron Miller from Old Bokoshe Church, Administrative Pastor Aaron Williams from Covenant Church in Poteau, Pastor LeRoy Billy of Trinity Baptist Church in Poteau, Associate Pastor Jimmy Hunt of the Muldrow First Assembly of God and Senior Pastor Rodney Fouts of North Church in Oklahoma City. Thank you all for taking the time to travel to the Capitol and pray for the legislators in session.
We needed those prayers, and appreciate all those who contacted our office by phone or email. Thank you for engaging in the political process. My office is always glad to hear from you.
Until next time,
Senator Mark Allen