DISSATISFACTION AND FRUSTRATION ABOUNDED LAST FALL AS THE 2018 REGULAR LEGISLATIVE SESSION APPROACHED.
Governor Mary Fallin called the legislature into special session to close an FY18 budget gap of over $200 million leftover from the 2017 regular session. The legislature closed that gap by reducing budgets to over 50 state agencies through the use of one-time monies and adjourned the special session, however the Governor vetoed the legislation and called a second special session which convened concurrently with the 2018 regular session.
In response to the budget shortfall, and the need to raise revenue to provide a salary increase for teachers, a plan was developed and proposed by a bipartisan coalition of business and community leaders from throughout Oklahoma. Known as the Step-Up Oklahoma Plan, the bill (HB 1033xx) provided for a cigarette, little cigar, smokeless tobacco, gasoline and diesel fuel, gross production and wind tax levy and incentives. The bill was estimated to raise over $580 million in new revenue, however, as a revenue raising measure, the bill required a three fourths majority vote (76 votes) in the House. The bill only received 63 votes.
The failure of the Step-Up Oklahoma Plan lead to weeks of intense, and often heated negotiations, to raise enough revenue to close the FY18 budget gap, and provide for a teacher pay raise. Additionally, a two-week teacher walkout occurred in April that placed intense focus on legislators. Prior to the walkout, the legislature passed and Governor Fallin signed a revenue bill (HB 1010xx) increasing the state tax on cigarettes by $1.00 per pack, raising to 5% the gross production tax on oil and natural gas on the first 36 months of production, raising the excise tax on gasoline and diesel by three and six cents per gallon respectively and allowing tribal casinos to institute the use of ball and dice for roulette and craps. The bill is expected to raise over $470 million in new revenue, most of which will be allocated to the teacher pay raise, new textbooks and additional classroom support.
The length and intensity of the budget negotiations resulted in an anomaly to 2018 RIED scores due to the large number of votes missed by legislative leaders involved in negotiations. For example, the chairman of the House Appropriations Committee missed over half of the votes scored by RIED. The chairman of the Senate Appropriations Committee missed one-third of the votes. Because RIED scores are based on votes aligned with RIED positions, missing votes led to some legislators receiving failing scores where they would otherwise have received very high scores.
Another issue created the lowest number of perfect RIED scores in many years. While Second Amendment rights are important to Oklahomans, SB 1212 would permit the open, unlicensed carry of firearms to all persons over 21 years of age that are not otherwise unqualified to purchase a firearm. This bill eliminates the training requirements for persons carrying a firearm in Oklahoma, and it also reduces the level of the background check necessary to carry a firearm. In her veto message, Governor Fallin wrote, ‘SB 1212 eliminates the current ability of Oklahoma law enforcement to distinguish between those carrying guns who have been trained and vetted and those who have not.’ SB 1212 posed a threat to businesses currently operating in Oklahoma, and creates a barrier to some businesses that might be looking to relocate to Oklahoma.
Criminal justice reform has worked its way into Oklahoma businesses. The rising cost of incarceration is forcing the state to act before the federal government takes over our jails and prisons, and assesses large tax increases to make changes. Oklahoma can either raise taxes to build more jails and prisons or reform our criminal justice system. To that end, the legislature passed four measures, HB 2881, HB 2886, SB 649 and SB 689, designed to reduce the prison population by reducing sentences for crimes, revising the parole process and allowing judges more discretion for sentencing offenders to treatment and supervision programs. This is a positive beginning for more modern, fair and proper treatment of those who so desperately need help, and it should make Oklahoma a better place to live and conduct business.
Given the turmoil surrounding the 2018 legislative session, the legislature still passed legislation that will prove beneficial to Oklahoma businesses. Significant legislation included the creation of the Quick Action Closing Fund (HB 3324), expansion of the Small Employer Quality Jobs Incentive Act (SB 923), Creation of the Occupational Licensing Advisory Commission (SB 1475) and protection of our military bases (SB 1576) from encroachment.
I am pleased with legislators who kept their focus on the passage of pro-business legislation, and I am especially happy with the support of freshmen legislators who seem increasingly interested in growing Oklahoma businesses through quality legislation.
The 2019 legislative session will include over 50 new members, and Oklahoma needs senators and representatives to continue to support legislation that create jobs, expand businesses and attract new commerce to Oklahoma.
I appreciate your continued support of the Research Institute for Economic Development and look forward to next session.
President - Research Institute for Economic Development