Fallin predicts $500M-$600M hole in upcoming budget

By: Sean Murphy Associated Press December 14, 2016

OKLAHOMA CITY – Early projections are that the Oklahoma Legislature will have to grapple with a deficit of as much as $600 million in next year’s budget, Republican Gov. Mary Fallin said Wednesday.

Fallin said she expects a shortfall of between $500 million to $600 million – or nearly 10 percent of state spending – when the State Board of Equalization meets next week to certify available revenues. That figure includes about $245 million in one-time sources of money that were spent on this year’s $6.8 billion budget, Fallin said.

The Board of Equalization will meet Dec. 21 to certify a revenue projection that Fallin will use to prepare her executive budget, which includes the governor’s spending priorities and is typically used as a starting point for negotiations with the Republican-controlled Legislature on state appropriations. The same panel will meet again in February for a final certification of available revenues.

Fallin says she’s optimistic that an increase in the price of oil and natural gas could reduce the shortfall before February’s board meeting. If prices were to increase, the state could see an increase in oil and natural gas production tax collections.

The governor added that she met Tuesday with incoming House Speaker Charles McCall and Senate President Pro Tempore Mike Schulz and that finding a way to fund a pay raise for public school teachers will be a priority next session.

“I think the Legislature understands it’s an issue the public is very concerned about and one that I am certainly going to push forward on, but it’s going to be a challenging year,” Fallin said. “There’s a lot of competing interests out there for money.”

Fallin says she expects she will continue to propose ideas to generate revenue, including a tax on cigarettes and the elimination of some of the dozens of sales tax exemptions that total more than $8 billion annually.

“There are 150 different items and services that we exempt from sales tax, much more than Texas, New Mexico and surrounding states,” Fallin said. “We’ve exempted a lot of things over the decades.”

Oklahoma’s legislative session begins on Feb. 6.

Was looking for a list of the sales tax exemptions. Found this Tulsa World article from earlier this year.
http://m.tulsaworld.com/news/state/oklahoma-sales-tax-exemptions-a-tale-of-haves-and-have/article_7202af64-6ae7-5b38-96ad-4b1ffbd34338.html?mode=jqm

Exempt from sales taxes

Biomedical research foundations
Boys & Girls Clubs Of America Affiliate
Boy Scouts Of America; Girl Scouts Of U.S.A.; Camp Fire U.S.A. Council organizations
Career technology student organizations
Charitable health organizations
Children’s homes on church-owned property
Children’s homes supported by churches
Church
City or county trust or authority
Community blood banks
Community mental health center
Community-based health center
Community-based autonomous member
Construction by organizations providing end-of-life care and hospice access
Cultural organization for disadvantaged children
Disabled American Veterans Dept. of Oklahoma Inc.
Federal government or its instrumentality
Federally chartered credit union
Health center
Federally recognized Indian tribes
Grand River Dam Authority
Hazardous waste treatment facility
Indigent health care revolving fund clinic
Meals On Wheels
Metropolitan area homeless service provider
Museums accredited by the American Association of Museums
NRA/other organizations that defend Second Amendment rights
National volunteer women’s service organization
Oklahoma coal mining
Older Americans Act
On-site universal pre- kindergarten education
Organizations for rehabilitation of court-adjudicated juveniles
Organizations for educating community regarding the developmentally disabled
Organizations funding scholarships in the medical field
Organizations providing education relating to robotics
Organizations supporting state parks in Oklahoma
Parent-teacher associations or organizations
Preservation of wetlands and habitat for wild ducks
Preservation and conservation of wild turkeys
Private schools-elementary/ secondary
Private school-higher education
Public school districts
Public schools of higher education
Qualified neighborhood watch organizations
Rural electric cooperative
Public nonprofit rural water district
School foundations
Shelter for abused neglected or abandoned children
Spaceport user
State of Oklahoma local or county government entity
Veterans of Foreign Wars of United States Oklahoma chapters
Volunteer fire department- Title 18
Youth athletic teams
Youth camps
YWCA or YMCA
Nonprofit corporation rural water district

Was looking for a list of the sales tax exemptions. Found this Tulsa World article from earlier this year.
http://m.tulsaworld.com/news/state/oklahoma-sales-tax-exemptions-a-tale-of-haves-and-have/article_7202af64-6ae7-5b38-96ad-4b1ffbd34338.html?mode=jqm

Exempt from sales taxes

Biomedical research foundations
Boys & Girls Clubs Of America Affiliate
Boy Scouts Of America; Girl Scouts Of U.S.A.; Camp Fire U.S.A. Council organizations
Career technology student organizations
Charitable health organizations
Children’s homes on church-owned property
Children’s homes supported by churches
Church
City or county trust or authority
Community blood banks
Community mental health center
Community-based health center
Community-based autonomous member
Construction by organizations providing end-of-life care and hospice access
Cultural organization for disadvantaged children
Disabled American Veterans Dept. of Oklahoma Inc.
Federal government or its instrumentality
Federally chartered credit union
Health center
Federally recognized Indian tribes
Grand River Dam Authority
Hazardous waste treatment facility
Indigent health care revolving fund clinic
Meals On Wheels
Metropolitan area homeless service provider
Museums accredited by the American Association of Museums
NRA/other organizations that defend Second Amendment rights
National volunteer women’s service organization
Oklahoma coal mining
Older Americans Act
On-site universal pre- kindergarten education
Organizations for rehabilitation of court-adjudicated juveniles
Organizations for educating community regarding the developmentally disabled
Organizations funding scholarships in the medical field
Organizations providing education relating to robotics
Organizations supporting state parks in Oklahoma
Parent-teacher associations or organizations
Preservation of wetlands and habitat for wild ducks
Preservation and conservation of wild turkeys
Private schools-elementary/ secondary
Private school-higher education
Public school districts
Public schools of higher education
Qualified neighborhood watch organizations
Rural electric cooperative
Public nonprofit rural water district
School foundations
Shelter for abused neglected or abandoned children
Spaceport user [???]
State of Oklahoma local or county government entity
Veterans of Foreign Wars of United States Oklahoma chapters
Volunteer fire department- Title 18
Youth athletic teams
Youth camps
YWCA or YMCA
Nonprofit corporation rural water district

In bold are all things that at first glance, to me, seem to be the most viable candidates for cuts.

Some of the animal ones I would have bolded as well, but I hesitate because I feel like there are probably some very very good reasons for it that I'm completely ignorant about. But they are certainly within eye-sight.

They could also start taxing those huge for profit mega churches as well. That would take care of the shortfall in and of itself.

They could also start taxing those huge for profit mega churches as well. That would take care of the shortfall in and of itself.

Agreed.

Was looking for a list of the sales tax exemptions. Found this Tulsa World article from earlier this year.
http://m.tulsaworld.com/news/state/oklahoma-sales-tax-exemptions-a-tale-of-haves-and-have/article_7202af64-6ae7-5b38-96ad-4b1ffbd34338.html?mode=jqm

Exempt from sales taxes

Biomedical research foundations
Boys & Girls Clubs Of America Affiliate
Boy Scouts Of America; Girl Scouts Of U.S.A.; Camp Fire U.S.A. Council organizations
Career technology student organizations
Charitable health organizations
Children’s homes on church-owned property
Children’s homes supported by churches
Church
City or county trust or authority
Community blood banks
Community mental health center
Community-based health center
Community-based autonomous member
Construction by organizations providing end-of-life care and hospice access
Cultural organization for disadvantaged children
Disabled American Veterans Dept. of Oklahoma Inc.
Federal government or its instrumentality
Federally chartered credit union
Health center
Federally recognized Indian tribes
Grand River Dam Authority
Hazardous waste treatment facility
Indigent health care revolving fund clinic
Meals On Wheels
Metropolitan area homeless service provider
Museums accredited by the American Association of Museums
NRA/other organizations that defend Second Amendment rights
National volunteer women’s service organization
Oklahoma coal mining
Older Americans Act
On-site universal pre- kindergarten education
Organizations for rehabilitation of court-adjudicated juveniles
Organizations for educating community regarding the developmentally disabled
Organizations funding scholarships in the medical field
Organizations providing education relating to robotics
Organizations supporting state parks in Oklahoma
Parent-teacher associations or organizations
Preservation of wetlands and habitat for wild ducks
Preservation and conservation of wild turkeys
Private schools-elementary/ secondary
Private school-higher education
Public school districts
Public schools of higher education
Qualified neighborhood watch organizations
Rural electric cooperative
Public nonprofit rural water district
School foundations
Shelter for abused neglected or abandoned children
Spaceport user
State of Oklahoma local or county government entity
Veterans of Foreign Wars of United States Oklahoma chapters
Volunteer fire department- Title 18
Youth athletic teams
Youth camps
YWCA or YMCA
Nonprofit corporation rural water district

Looks like lobbyists have loved this section of state statutes. So many are sub-industry or payor-specific. Wow.

A couple of my favorites.
--Oklahoma coal mines
--Spaceport user

A couple of my favorites.
--Oklahoma coal mines
--Spaceport user

Didn't know we had coal mines or spaceports.

Didn't know we had coal mines or spaceports.

Well you learn something every day.

http://www.sourcewatch.org/index.php/Oklahoma_and_coal

The Burns Flat Spaceport has long been a proposal for Oklahoma.

http://www.photostospace.com/spaceports/oklahoma-spaceport/

Yeah, just give up on the spaceport. That's exactly what Oklahoma needs to do.

did Harold Hamm prepare that list for TW

I think the governor is trying to tell us you don't really want tax cuts. Instead, you want to be taxed differently with new sales taxes placed on services and exemptions, while at the same time gradually trying to getting around to resuming cutting the state income tax. So an upturn in tax revenues will mean another cut in the income tax. And in turn yet more items, especially services, being subject to a sales tax. And maybe Gov. Fallin thinks people wouldn't mind higher property taxes. Whatever it takes to get rid of the state income tax and be more like Texas.

I really do think picking off a few group off the list will solve the big budget problem. Hiking property tax (what about the 3 % cap??) is only going to hurt the working poor and the people on fixed incomes, including me. I am retired with a pension but cannot go back to work with my current health issues. I could not move to Texas because the properties tax is not affordable for me. I own a nice acreage property with a small house. I don't want to be priced out of it by property tax. I am not a "senior" Currently even seniors don't get that big of a tax break on their property taxes. I think we need to roll back the last round of income tax cuts and consider raising the upper teir taxes. Nobody wants tax increases but how low can we go on taxes cuts and still somewhat maintain basic services???

Well you learn something every day.

http://www.sourcewatch.org/index.php/Oklahoma_and_coal

The Burns Flat Spaceport has long been a proposal for Oklahoma.

http://www.photostospace.com/spaceports/oklahoma-spaceport/

Lol 222 coal miners... 22nd out of 55 states.

That tax exemption did a great job of going back in time and creating more fossils to dig up.

Commission to review $233 million in credits, rebates, incentives

By: Dale Denwalt The Journal Record December 22, 2016

OKLAHOMA CITY – In its second year, the Incentive Evaluation Commission will review $233 million worth of tax credits, rebates and other incentives.

Included in the 2017 schedule are the capital gain deduction and an examination of the Quality Jobs Act.

The commission, which is appointed by elected officials, will also review and make recommendations on other quality jobs programs, the clean-burning-fuel vehicle credit and five other energy-related incentives.

The Incentive Evaluation Commission just finished its first round of reviews that lasted almost a year, recommending that lawmakers keep 10 tax breaks already on the books.

The commission has flexed its muscle since meeting for the first time this year, ultimately deciding to add comments to the reports, which are prepared by private financial adviser PFM Group. They were swayed, however, by officials with the Oklahoma Department of Transportation who argued that the Industrial Access Road Program did not qualify to be reviewed. It was removed from the list because it is an internal ODOT program and not appropriated directly by the Legislature.

According to the Office of Management and Enterprise Services and the Tax Commission, Oklahoma’s capital gain deduction costs the state nearly $115 million each year. The commission’s job, however, is to find out how much the incentive helps and then recommend changes, if necessary.

Oklahoma has a number of exemptions from the capital gain tax, but one has been controversially applied. To qualify for a deduction when selling substantially all Oklahoma-based assets of a company, the company must have been headquartered in Oklahoma for at least three years.

The main Quality Jobs Act incentive costs the state about $73 million in rebates to companies that expand or move jobs to Oklahoma.

The program is nearly universally lauded as beneficial for the state, but it has received criticism for high payments to energy companies and the Oklahoma City Thunder basketball team.

Republican leaders rethinking income tax cut

By: Sean Murphy Associated Press December 27, 2016

OKLAHOMA CITY – Republican leaders in Oklahoma are reconsidering whether to keep an income tax cut that could be triggered as early as next year.

Their decision comes at a time when the state has a budget hole of nearly $870 million and declining revenue collections.

The trigger for the individual income tax rate cut from 5 percent to 4.85 percent is when tax collections increase by about $100 million annually – enough to cover the cost of the tax cut.

The average savings per tax return would be about $56, according to the Oklahoma Tax Commission, but cost the state about $97.8 million in 2018.

Oklahoma’s Gov. Mary Fallin’s chief budget negotiator, Secretary of Finance Preston Doerflinger, and Treasurer Ken Miller both have suggested lawmakers should either scrap or revise the trigger point until state revenues have stabilized.

“I’m not a fan of triggers in general, but I certainly think if most legislators had the chance to do it over again, they wouldn’t time a tax cut to take hold when you’re in a recession as we’ve been in Oklahoma,” Miller said.

The triggers were put in place by the Legislature in 2014, before oil prices plummeted and Oklahoma’s revenue collections dropped precipitously. The first trigger was pulled at the end of 2014 and cut the top income tax rate from 5.25 percent to 5 percent on Jan. 1. The State Board of Equalization will meet in February and could determine the next trigger has been met.

One bill already introduced in the state Senate by Seminole Republican Ron Sharp would require collections to increase by closer to $600 million before the tax cut would be triggered.

“Even if our economy does improve, the growth will be anemic for several years,” Sharp said. “We can’t be taking another $100 million to $140 million out of that budget, and that’s exactly what the purpose of this bill is.”

A similar bill to delay the trigger easily passed the Senate last year, but never made it out of the House.

New House Speaker Charles McCall hasn’t said publicly where he stands on further reducing the income tax, but some Republican House members say they are open to Sharp’s proposal.

“I would be very favorable to doing that,” said state Rep. Earl Sears, former chairman of the House Appropriations and Budget Committee. “As of right now, I can’t tell you what the will of the (Republican) caucus will be, but I personally would like to have that discussion about … reviewing that trigger and modifying it.”