Gov. Mary Fallin and Republican lawmakers presented a budget plan Monday that is highlighted by a $3,000 teacher pay raise and includes increased tax money from cigarettes, alcohol, gasoline and diesel.
The plan was unveiled after four weeks of negotiations in the Legislature’s ongoing special session. Lawmakers are trying to fill a current budget hole and look ahead to future legislative sessions, since a budget hole already looms for next year.
The decisions being made at the Capitol now will affect almost every Oklahoman. Here is a look at critical questions concerning the proposal:
What should you do right now?
No matter how you feel about the details below, you should contact your lawmaker.
Go to tulsaworld.com/contactthecapitol. Enter your address and you’ll have information about your lawmakers, including their phone and email contacts.
If you want to call the House of Representatives, the numbers are: 405-521-2711 and 800-522-8502. If you want to call the Senate, the number is 405-524-0126.
What are details of the plan proposed Monday?
Here is the overview, with preliminary numbers from House Speaker Charles McCall’s office. (The numbers could change, because they are still being reviewed by the Office of Management and Enterprise services.)
• A $3,000 teacher pay raise that would take effect Aug. 1, 2018. Cost: $144 million per year.
• A $1,000 employee pay raise that would take effect Aug. 1, 2018. Cost: $36.2 million per year.
• A re-creation of the earned income tax credit, which benefits low-income families. Cost: $28.9 million per year.
• A $1.50 per pack increase in the cigarette tax. Anticipated revenue: $257.8 million
• A 6-cent per gallon tax on gasoline and diesel. Anticipated revenue: $170.4 million
• Tax on smokeless tobacco and cigars. Anticipated revenue: $12.9 million
• Accelerating the impact of an alcoholic beverage tax increase due to go into effect with voter-approved changes in beer and wine laws. Anticipated revenue: $14.6 million
What is the next step?
Lawmakers must determine how many pieces of legislation this will require. It’s still unclear, because the proposal was being finalized late Monday. But it could be about six. Legislative leaders expect to hold committee meetings Tuesday and then present the plan on the House floor Wednesday, when a vote is expected.
What is needed for this to become law?
First, it must pass the House of Representatives with a supermajority of 76 votes out of the current 100 members. Then, it must pass the Senate, where it also needs a supermajority of its 46 members. If it passes both chambers, the governor would sign it into law. The taxes would go into effect 90 days later.
There is urgency. The longer lawmakers take to reach a deal, the harder the budget hole becomes to fill because the number of days to collect higher taxes shrinks. In the case of a revenue failure, state agencies that include core services — such as health care, education and human services — face deeper cuts.
Will this pass the House?
Republican leadership faces some work. If this passes, it will be the first time a revenue-raising measure passed the 75-percent threshold since the supermajority was enacted by a statewide vote in 1992. Here is how the numbers break down in the House:
There are 72 Republicans. House Speaker Charles McCall, R-Atoka, says he believes about 75 percent of Republicans will support the package. That’s approximately 54 votes.
There are 28 Democrats in the House. McCall says he believes that 75 percent of Democrats will support it. That’s 21 votes — putting the package at 75 votes, close enough to the 76 for supporters to believe there is a chance.
The House Democratic caucus has issued a strong statement against the proposal, but proponents hope pressure from those who would benefit from the proposal will help turn those votes.
Will it pass the Senate?
It seems likely to pass the Senate if it passes the House. There are 39 Republicans and seven Democrats in the Senate. President Pro Tem Mike Schulz said he was confident the supermajority would be met.
Who opposes it in the House?
Some Democrats will oppose this, because it doesn’t include an increase in the gross production tax, the money energy companies pay when they extract oil and gas in Oklahoma. Democrats have insisted for months that the gross production tax should be part of any budget deal.
A news release issued by the Democratic caucus on Monday afternoon included this statement: “It is obvious that this budget is meant to meet one objective, which is to find a way out of this budget shortfall without restoring the gross production tax on oil and gas wells. Instead of asking the oil and gas industry to pay a fair and just tax, Republican lawmakers would rather tax working class Oklahomans.”
Fallin said the state has changed laws in the last two years to produce more revenue from the oil and gas industry. She noted that five exemptions were removed in the most recent regular legislative session. “When the oil and gas industry says, ‘You’ve touched us,’ we have touched them,” Fallin said.
McCall said that when members of the Republican caucus conducted informal votes, there wasn’t enough support for a gross production tax increase.
Opponents say the state is not close to the historic level of gross production taxes. Some oil industry leaders have argued that geology and petroleum prices have much more to do with production decisions than a few points in the state tax rate.
Are there other House opponents?
Yes. Some Republicans will not support a tax increase, which is the primary reason why McCall estimates he will lose about 25 percent of his caucus’ votes.
Why is a plan necessary?
Gov. Mary Fallin called the special session to plug a $215 million budget hole that was created when the state Supreme Court ruled that legislators created a $1.50-per-pack cigarette “fee” in an unconstitutional fashion during the regular legislative session. The revenue from that fee, which the court ruled was actually a tax, had been expected to fund part of state government, particularly the Oklahoma Health Care Authority, the Department of Human Services, and the Department of Mental Health and Substance Abuse Services.
Beyond that, the Legislature has about a $400 million deficit looming next year. That hole is because there were one-time funds — instead of recurring revenue — used last session.
Most lawmakers, in both parties, seem to have reached agreement on this point: Oklahoma doesn’t have enough general revenue money to fund core services such as education, health care, transportation and more. Where they disagree is how to raise the money to fund them.