House Democrats Unveil ‘Restoring Oklahoma Budget Plan’

OKLAHOMA CITY (23 March 2017) – House Democrats unveiled their “Restoring Oklahoma Plan” of nearly $1.4 billion revenue proposals that would plug the state’s $878 million budget hole, finance a significant teacher pay raise and balance the state budget – without raising taxes on middle-class families – Minority Leader Scott Inman announced Thursday.

For the last seven weeks House Democrats have been waiting for Republicans who control the reins of state government to propose a solution to the state’s recurring budget gap, Inman said during a State Capitol news conference at which he was flanked by several members of the House Democratic Caucus.

Public education, public safety, transportation and health care – all are “in crisis,” the Del City Democrat said. “Our citizens are suffering … and they’re waiting for their leaders in this building to lead.”

At the beginning of this year’s legislative session in early February, Republican Governor Fallin proposed $840 million in new sales taxes on 164 services that would “balance the budget on the backs of middle-class families,” Inman charged. Fallin’s proposal has received no support from either the House of Representatives or the Senate, nor from Republicans or Democrats in either chamber, he noted.

Republican Lt. Gov. Todd Lamb resigned from the Governor’s Cabinet because he disagreed with her posture on the tax issue, but has offered no recommendations for plugging the huge budget hole. “All he’s done is tell us what he doesn’t like,” Inman said.

The Speaker of the House and his Republican colleagues have proposed “less than $200 million worth of revenue,” Inman continued: a cigarette tax increase, changing the way state lottery revenue is calculated, and raising taxes on owners of electric vehicles.

Therefore, the 26-member House Democratic Caucus unveiled their “Restoring Oklahoma Plan” that would “balance the budget, fund a teacher pay raise, support rural hospitals, support public transportation and support public safety.”

Yesterday, the Oklahoma House Democratic Caucus unveiled the Restoring Oklahoma Plan, and right now it's the ONLY budget proposed. You can learn more about it from Leader Scott Inman today during "Leader Inman Live" at 10:45 a.m.

Posted by Oklahoma House PAC on Friday, March 24, 2017

Measures proposed by the Democratic Caucus include:

  • Boosting the gross production tax on oil and natural gas from 2% to 5%, which would generate approximately $312 million.

“While we understand, and we agree, that oil and gas are important to our state’s economy, investment in our children and our infrastructure are mutually beneficial,” said Rep. Chuck Hoskin, D-Vinita.

“Families that earn more than $8,000 a year are taxed at the 5% rate under Oklahoma’s income-tax schedule,” Inman said recently. “We see no reason why oil and gas companies can’t pay taxes at that same rate.”

  • Reversing the state income tax cuts on high earners would generate $204 million. The Democrats propose to reinstate the 6% bracket on single filers making $100,000 and joint filers earning $200,000, and adopting a 7% bracket for single filers making at least $200,000 and joint filers who earn $400,000 or more.

“A single mom who works at Wal-Mart or Home Depot pays the same percentage in income tax as the CEO of Devon Energy,” said Rep. Eric Proctor, D-Tulsa.

  • Eliminating the capital gains exemption would produce an estimated $157 million. The State of Oklahoma allows an income exemption for profits on the sale of real estate, investments and stocks. Studies have shown this exemption provides limited to no benefit to the state.
  • Converting itemized deductions to a credit would produce an estimated $112 million.
  • Ending the tax credit for production of coal that is “nearing the end of its usefulness” would produce $4 million, said Rep. Jason Dunnington, D-Oklahoma City.
  • Eliminating a vendor discount on sales taxes: $26 million.
  • Capping the new jobs tax credit at $25 million annually would save taxpayers an estimated $27 million. The State of Oklahoma paid more than $57 million on that tax credit in 2016.
  • Requiring combined corporate reporting: $100 million. Oklahoma does not require businesses that have a nexus in this state to report all of their profits on state income tax forms. This effectively enables large, multistate corporations to harbor profits made in Oklahoma in other states that have lower corporate income tax rates.
  • Eliminating the Equal Opportunity Education Scholarship Credit: $1 million. (The cap has grown to $5 million in future years.) The state should not allow the credit to be claimed in any year where any fund for public education experiences a shortfall or failure, or when the amount of state appropriations is insufficient to meet the needs of a majority of public school students, Democrats contend.
  • Removing sales tax exemptions on specific industries: $290 million. These would include, for example, the sales tax exemption for use of electricity and water by the oil and gas industry. It also would include certain entertainment productions, such as motion picture productions. These exemptions are offset by tax credits that are available to those industries.

House Democrats oppose increasing taxes on services, but compromised on several services that Governor Fallin suggested in her budget proposal (see attached list). “We did this in an effort to find common ground and reach across the aisle without hurting middle-class families,” Inman explained

  • “Sunsetting” the wind industry tax credit at the end of this year.
  • Raising the cigarette tax by $1.50 per pack: $160 million initially. In another effort to “reach across the aisle,” House Democrats agreed to support the cigarette tax increase proposed by Speaker of the House McCall “so long as it’s part of a broad-based revenue and budget package,” Inman said.

“We will support increasing the cigarette tax as a response to take care of our citizens’ health, thereby freeing up healthcare resources by instilling healthier habits,” said Rep. Cyndi Munson, D-Oklahoma City. The increased revenue “must go to fund Medicaid provider rates, uncompensated care, or another critical health care, as it is not a reliable source of funding,” she said.

Republican State Treasurer Ken Miller has said the Republican-controlled Legislature erred in reducing the state income tax without replacing it with another source of revenue, and State Finance Secretary Preston Doerflinger has conceded that Oklahoma needs to restore a reliable revenue stream, Inman noted.

“What we Democrats have proposed are sensible solutions to counter Republican tax measures that have siphoned nearly $4 billion from the state treasury through tax cuts, tax credits and tax rebates,” Inman said.

On the same day that House Republicans held budget meetings outlining what 14.5% budget cuts would mean to core services “and failed to offer any revenue solutions to protect Oklahoma citizens from those drastic cuts,” House Democrats “instead focused on finding revenues to invest in core services in order to restore Oklahoma’s prosperity,” Inman said. The GOP’s Oklahoma “looks like 14.5% budget cuts,” he asserted. “Our citizens cannot afford those. We have to restore Oklahoma’s future, and we can do that through revenues, not budget cuts.”