Governor’s Office, OMES Counter OCPAs Claims of Budget Savings

In reaction to the Oklahoma Council of Public Affairs proposals to help bridge the budget gap, Governor Fallin’s office and the Office of Management and Enterprise Services (OMES) crunched the numbers. While the Office applauds OCPA’s efforts, it calculates that the impact on the next state budget would only cover about five percent of the $878 million budget hole lawmakers are facing. (See the OCPA proposals here.)

The OCPA calculated its 13 recommendations would be $413 million savings. OMES said the savings are mostly cost avoidance and would not generate revenue to pay for the next budget.

OMES provided the comparisons below:

OCPA Claimed Savings vs. Actual FY 18 Revenue Creation

Medicaid Enrollment Audits

This function is already performed as required by the Centers for Medicare and Medicaid Services. As of the last review in 2013, Oklahoma’s payment error rate was 0.28 percent compared with the national average of 5.8 percent — the lowest among the 17 states reviewed that year. It’s difficult to calculate savings based on what other states have done.

OCPA Claimed Savings – $85.6M

FY 18 Revenue – $0

HealthChoice Enrollment Audits

HealthChoice is already in the process of receiving bids for an audit of member dependents. Savings to state agencies would be difficult to calculate at this time.

OCPA Claimed Savings – $6M

FY 18 Revenue – $0

HealthChoice Select Provider Reform

OCPA says HealthChoice “completely implemented the program last month.” That’s true, but the majority of the Select program was implemented last year, with the additional component of partnering with a local firm to provide outreach services to members to inform them of the Select program opportunity starting this plan year. This will not create new revenue for the FY 18 budget. Only half of the first year of any savings indicated by claim data for the Select program will be available for 2018 rate setting due in August.

OCPA Claimed Savings – $65M

FY 18 Revenue – $0

Moratorium on Agency Swag, Advertising, Memberships, Sponsorships and Transportation Project Art

Along with a moratorium on nonessential out-of-state travel, the governor issued limits on memberships as part of an Executive Order (#2015-46) to agencies in October 2015. Recent budget cuts have likely forced agencies to eliminate the vast majority swag. Eliminating the remainder would be cost avoidance. A moratorium on state-funded transportation project art doesn’t create revenue, it just avoids spending.

OCPA Claimed Savings – $39M

FY 18 Revenue – $0

Consolidation of Administrative and Back Office Functions of Higher Education

Without a breakdown of what all this encompasses, it’s difficult to put a dollar figure on how much these claimed savings would be cost avoidance versus actual revenue creation.

OCPA Claimed Savings – $32.8M

FY 18 Revenue – $0-$32.8M

Repeal Sales Tax Exemption for Tickets to NBA and NHL Games Effective on July 1, 2017

OCPA Claimed Savings – $2.2M

FY 18 Revenue – $1.9M*

Repeal Sales Tax Exemption for Admission to Professional Sporting Events Effective July 1, 2017

OCPA Claimed Savings – $492,000

FY 18 Revenue – $478,076*

Repeal Zero Emission Tax Credit for Any New Projects or Activity Effective on July 1, 2017

The impact in FY 18 would be minimal. New facilities (not yet operational) are not built into the budget. The impact would be in later fiscal years when other facilities drop off. The impact would “stop the growth” of the credits taken.

OCPA Claimed Savings – $15M

FY 18 Revenue – $0*

Cap Zero Emission Tax Credit Liability Payout at $15 million Annually Effective July 1, 2017

Assuming the cap applies per tax year beginning with tax year 2016 claims that are filed in FY 18, the impact would be a gain of approximately $50 million, however that could bring a substantial risk of litigation. If the cap begins with tax year 2017, the impact for FY 18 would be $0*.

OCPA Claimed Savings – $50M

FY 18 Revenue – $0*

Cap Ad Valorem Reimbursement for Wind at $15 million Effective July 1, 2017

Capping the ad valorem reimbursement would violate the Oklahoma Constitution unless done by a vote of the people, which would push back the impact past FY 18 if it were to be approved. The exemption is in the constitution as well as the obligation to reimburse the counties for the lost revenue.

OCPA Claimed Savings – $15M

FY 18 Revenue – $0*

Repeal Sales Tax Exemption on Wind Turbine Sales Effective July 1, 2017

According to the Oklahoma Tax Commission, there would be a state sales tax impact of $45,000 per turbine. In doing analysis for SB 96, the tax commission projected 115 turbines sold in FY 18 for a total state sales tax impact of $5,175,000.

OCPA Claimed Savings – $40M

FY 18 Revenue – $5.2M*

Repeal the “Hollywood Subsidy” Film Incentive Effective July 1, 2017

The legislatively created Incentive Evaluation Commission reviewed this incentive last year and made the same recommendation for lawmakers to consider.

OCPA Claimed Savings – $5M

FY 18 Revenue – $5M

Tobacco Settlement Reforms

Much of the TSET language is in the Oklahoma Constitution. In FY 16, $57 million was the deposit to the trust fund after legislative and attorney general apportionment. Changing the process would likely require a vote of the people and any funds wouldn’t be available until at least FY 20.

OCPA Claimed Savings – $57M

FY 18 Revenue – $0

Totals

OCPA Claimed Savings – $413M

FY 18 Revenue – $12.6M to $45.4M

*Source: Oklahoma Tax Commission