State of State Launches Session
The 2012 legislative session started this week with Gov. Mary Fallin’s State of the State address, where she unveiled an ambitious agenda.
The headline proposal was her call for significant tax reform. The governor’s “Oklahoma Tax Reduction and Simplification Act” would immediately cut income taxes for all Oklahomans and simplify the tax code.
If approved, her plan would give Oklahoma the lowest income tax rate in the region aside from Texas.
In the short term, her plan would reduce the number of income tax brackets from seven to three with lower rates for all. Our current tax structure technically taxes the first penny you earn at a 0.5 percent rate, and increases to 5.25 percent for families with taxable income of $15,900.
Under the governor’s plan, starting next January, families with incomes of $30,000 or less would pay no income tax at all. Families with joint income of $30,000 to $70,000 would pay a 2.25 percent rate, and everyone above that level would pay a 3.5 percent rate.
Under the proposed rates, a middle-class couple making $40,000 a year would pay 37 percent less in taxes next year.
In the future, tax rates would be lowered another quarter-point every year the state experiences revenue growth of 5 percent until the income tax is completely eliminated.
To pay for the plan, the governor called for eliminating tax loopholes, carve-outs and other exceptions, as well as achieving greater government efficiencies.
The other big item in the speech was a plan to address Oklahoma road and bridge funding.
For years, Oklahoma has topped the national “bad bridges” lists. However, only 413 of Oklahoma’s 706 structurally deficient bridges are currently scheduled for rehabilitation or replacement within eight years, leaving 293 bad bridges in place.
Under Governor Fallin’s plan, Oklahoma will repair the remaining 293 structurally deficient bridges by 2019.
To accomplish this goal, Governor Fallin’s budget restores an additional $15 million taken from roads and bridges in the past and raises the cap on the state ROADS fund from $435 million to $550 million. Bumping the incremental contribution will have a compounding effect that generates an estimated $479 million over eight years to fund our most pressing road and bridge needs.
She also called for earmarking a larger share of motor vehicle collections to county roads.
This year, there were 962 bills and 26 joint resolutions filed in the Oklahoma House of Representatives for the 2012 legislative session, and an equally large number filed in the state Senate.
The committee process is now underway to thin out those numbers.
Tax credit constitutional amendment heads to full House
A resolution to place tax credit criteria in the Oklahoma Constitution passed the House Rules Committee on an 11-1 vote.
House Joint Resolution 1089 would create a ballot question allowing voters to decide whether to place the tax credit criteria adopted by the Task Force for the Study of Tax Credits and Economic Incentives in the Oklahoma Constitution.
HJR 1089 now goes to the full House for consideration. If approved by the House and Senate, the state question would be placed on the November 2012 statewide ballot.
The task force developed the criteria after months of intensive scrutiny of Oklahoma’s tax credit system revealed widespread shortcomings that can lead to credits costing taxpayers more than the credits actually benefit the economy. The task force found the shortcomings are largely due to a lack of accountability and structure within the tax credit creation process.
Under the criteria:
- All credits must create or retain jobs;
- All credits would require pre-approval by the state;
- No tax credit would be transferable;
- All tax credits would be subject to full transparency and regular auditing by the State Auditor;
- Any proposed tax credit would have to be accompanied by a fiscal impact statement detailing how it would affect the state budget;
- All tax credits would be subject to caps and specific termination dates;
- No tax credit could be enacted within the final five days of any legislative session.
The resolution does not apply to tax deductions or exemptions for individuals.
The resolution is part of a larger tax credit reform package proposed by House leadership that is designed to save between $250 and $300 million in fiscal year 2013 and millions of dollars more in the future. It proposes:
- Extending the current moratorium on all tax credits another two years;
- Enacting a constitutional amendment establishing specific criteria for tax credits;
- Ending transferability of tax credits;
- Requiring all future tax credits and all credits placed on moratorium to meet the constitutionally-required criteria and receive legislative approval in order to be enacted or removed from moratorium.
Legislation Would Protect Assisted Living Center Residents’
Right to Choose Pharmacy
Legislation approved unanimously by the House Long Term Care and Senior Services Committee would allow assisted living center residents to continue doing business with local pharmacies without fear of penalty.
House Bill 2566 would ban assisted living centers from penalizing residents for using their choice of providers for medical services and supplies.
The bill was filed after residents in Western Oklahoma complained of having to pay a fee of roughly $150 to use a local pharmacy.
Committee Greenlights Long Term Care National Background Check Program
Legislation that would increase the safety of vulnerable Oklahomans was approved unanimously by the House Long Term Care and Senior Services Committee.
House Bill 2582 authorizes the implementation of a fingerprint-based National Background Check for certain classes of long-term care providers. The program will be supported by a grant from the Centers for Medicare and Medicaid Services of up to $2.75 million to cover 75 percent of costs in the first three years of the program.
The legislation would set up a fingerprint system operated out of the Health Department to run background checks on all people who work with Oklahoma frail and elderly citizens.
House Bill 2582 now proceeds to the House floor for consideration.
Committee Votes to Resolve National Guard Service Controversy
Legislation approved by the House Rules Committee would ensure any public official called up for service in the military could not be removed from office as a result.
The legislation addresses a controversy that arose last year when the Office of the Attorney General declared that Rex Duncan, district attorney for Osage and Pawnee counties, had officially vacated his job when he was mobilized by the Oklahoma National Guard to lead a combat adviser team in Afghanistan.
House Joint Resolution 1082 would amend the Oklahoma Constitution to exempt members of the National Guard or U.S. military reserve from the prohibition on holding a state and federal office at the same time. The attorney general’s opinion indicated that service in the military effectively represented holding a second office.
Duncan, a colonel in the Oklahoma National Guard, was mobilized shortly after taking office in 2011. After going on active duty, Duncan chose not to collect payment for the district attorney position. In his absence, a first assistant was in charge of the office.
House Joint Resolution 1082 will next go before the full Oklahoma House of Representatives. If approved by the Oklahoma Legislature, it will eventually be sent before the voters for final approval next November.
Committee Votes to Strengthen Regulation of Boxing Matches
After the tragic death of a Tulsa boxer at an unsanctioned event, a House committee voted to strengthen regulation of combative sporting events.
House Bill 2746 would give the Oklahoma State Athletic Commission regulatory authority over “combative sport” events, including bouts with boxers, kickboxers, mixed martial artists and wrestlers.”
The bill defines promoters to include any person or entity that produces, stages, sponsors, organizes or otherwise holds a “combative sports” event.
The legislation also increases the penalties for second-and-subsequent violations of the Oklahoma State Athletic Commission Act to include a fine of up to $5,000 and up to two years in prison.
The bill was filed in response to the death of George Clinkscale, a former University of Tulsa linebacker and father, who died after participating in an unsanctioned boxing event at a Tulsa church.
House Bill 2746 was approved by the House Economic Development, Tourism and Financial Services Committee. It will now proceed to the floor of the Oklahoma House of Representatives.
Committee Approves Bill Banning Lawmakers from State Jobs After Term Ends
Voters would have the chance to decide whether or not to allow lawmakers to take state jobs right after they finish their term in office under legislation clearing committee.
The House Rules Committee approved House Joint Resolution 1071, which would send a constitutional amendment to a vote of the people to prohibit lawmakers from receiving compensation from any state entity for two years after the end of the lawmaker’s term in office. The amendment, if approved by voters, exempts retirement benefits and compensation from a school, career technology district or institution of higher education.
Although there is currently a ban on lawmakers taking state jobs for two years after the end of their terms in office, that ban applies only to positions funded directly by legislative appropriations. That loophole has allowed lawmakers to accept jobs paid with federal dollars or fee revenue that is not appropriated.
House Joint Resolution 1071 now heads to the House floor for consideration.