A measure that calls for state employee salaries to reach 90 percent of private-sector pay over a four-year period cleared the Senate today.
House Bill 3293, by state Rep. Leslie Osborn, removes salary structures from statute and gives authority to the Human Capital Resource Division of the Office of Management and Enterprise Services to set pay structures and determine if targeted pay band adjustments are necessary, rather than the state doling out across-the-board pay raises as in years past.
“The state of Oklahoma is losing skilled and educated employees to retirement and the private sector,” said Osborn, R-Mustang. “Our state agencies need productive minds and ingenuity to fill those gaps, provide better services and address the problems of the future. This step towards creating competitive wages will greatly enhance the state’s ability to choose from the top recruits.”
House Speaker Jeff Hickman praised HB 3293, calling it a commitment to attracting and retaining quality employees who will provide efficient services to the people of Oklahoma.
“As stewards of the taxpayers’ money, it is our duty to provide core government services in a cost effective and productive manner,” said Speaker Hickman, R-Fairview. “To do so, we need to attract and keep great employees with competitive compensation.”
A recent study requested by the governor and state leaders found state employee salaries to be up to 20 percent below market, particularly in the areas of public safety, corrections and social services.
Auditor Gary Jones has issued a report addressing the short-term impact on the current state budget resulting from an overestimate of corporate tax revenues.
“It’s as important to understand how the overestimate occurred as it is to respond with a short-term solution and long-range plan,” Jones said. “This report points out that any miscalculation is attributable to an inability to know the number of tax credits issued, the financial impact of those credits, and when those credits are going to be cashed in.”
The State Equalization Board certifies revenue to be appropriated by the legislature based on estimates ultimately provided by the Oklahoma Tax Commission. As noted in the report, the estimate was ultimately decreased more than $174 million over a six month period when taxing officials became aware of a number of corporations taking advantage of perfectly legal options available to them to decrease their tax liability.
Estimate made on June 24, 2013 $481 million
Estimate made on December 19, 2013 $375 million
Estimate made on February 18, 2014 $307 million
“The intent of this report was to provide, critical information in a timely fashion and is not an in-depth analysis of corporate tax liability,” Jones said. “Oklahomans get two pictures each month of the financial health of the state. One picture paints a rosy place in which collections are up and all is right in the world of revenue.
“The official report usually follows the rosy characterization and is more accurate with regard to actual collections compared to the estimate and the authorized spending power of public entities.”
The Special White Paper Report notes the historical accuracy of the Oklahoma Tax Commission and the numerous OSU economists with whom it contracts to devise the estimate. The current revenue shortfall is more indicative of an inability to both know the number of tax credits in existence and the timing in which they will be utilized.
The Special White Paper Report, Estimating Corporate Income Tax Revenues in Oklahoma, is online at www.sai.ok.gov.
President Pro Tempore Brian Bingman issued the following statement after the House voted to approve SB 1246. Bingman is principal author of the income tax cut legislation, which now goes to Governor Fallin for her consideration.
“This plan represents a fiscally responsible way to lower Oklahoma’s income tax rate, fulfilling a commitment we made to our citizens last year. It’s going to bolster our ongoing efforts to help Oklahoma better compete for high pay jobs that will help our citizens, communities and state prosper. With the House giving its final approval, we look forward to Governor Fallin signing this tax relief measure into law.”
“When fully implemented, this bill will provide Oklahoma taxpayers with $200 million in tax relief. This is good legislation for the citizens of our state.” –Senator Mike Mazzei, R-Tulsa.
SB 1246 will reduce the state’s income tax rate from 5.25 percent to 5 percent beginning with tax year 2016, if certified revenues for FY 2016 at least equal the certification level for FY 2014. The legislation would further reduce the state’s top income tax rate no sooner than two years later to 4.85 percent if there is sufficient revenue growth to fund the reduction.
UPDATE: The Court voted unanimously late Wednesday to lift the stay of execution.
A member of the Oklahoma House drafted a resolution Wednesday seeking the impeachment of state Supreme Court justices who granted a delay of execution to two death row inmates.
Republican state Rep. Mike Christian told The Associated Press that the five justices engaged in a “willful neglect of duty” when they granted stays of execution Monday to Clayton Lockett and Charles Warner, both of whom were scheduled to be executed this month.
Lockett and Warner, who aren’t challenging their convictions, have filed a civil lawsuit seeking the source of the drugs used to execute them. Pending the resolution of that lawsuit, they asked for a stay of execution.
The Court of Criminal Appeals has said it couldn’t weigh in on the delay of execution because it didn’t have the power or the authority, so the high court said a “rule of necessity” led to its decision Monday. Under the state constitution, the Supreme Court handles civil cases while the Court of Criminal Appeals takes those involving inmates.
“This is a case of our state’s judges inserting their personal biases and political opinions into the equation,” said Christian, a former Oklahoma Highway Patrol trooper.
An impeachment effort would have no impact on the current proceedings, which has put the state’s two highest courts at odds. Attorney General Scott Pruitt claims Oklahoma is facing a “constitutional crisis,” but the high court’s action is a victory for the inmates and their lawyers, who have successfully used questions about drug secrecy to at least temporarily shut down Oklahoma’s death chamber.
While courts in Missouri and Texas have rejected claims that secretive death row procedures could expose inmates to painful executions, Lockett and Warner benefited by bypassing the Court of Criminal Appeals and taking their plea directly to the Oklahoma Supreme Court.
Gov. Mary Fallin halted Lockett’s execution to ensure he won’t be put to death before his day in court, but complains the state Supreme Court strayed from a mandate that it handle only civil matters when it issued its own order stopping executions over the drug question.
“There is no reasonable rationale of this being anywhere near the realm of a civil case,” said Rep. Aaron Stiles, the chairman of the House Judiciary Committee. He complained that the state Supreme Court, which often strikes down legislative initiatives as unconstitutional, has crossed a line by granting a stay of execution.
The Oklahoma House has defeated legislation that would authorize up to $160 million in bonds to repair the state’s nearly 100-year-old Capitol.
House members voted 62-34 against the Senate-passed measure that is one of Republican Gov. Mary Fallin’s top priorities for the 2014 Legislature. The bill’s author, Rep. Skye McNeil of Bristow, kept the measure alive by serving notice that she may ask the House to reconsider the vote.
Supporters and opponents agree that the Capitol needs extensive repairs. But they disagree on how to pay for them.
Rep. Paul Wesselhoft of Moore said bonded indebtedness has caused financial problems for other states. Others, including Rep. Ben Sherrer of Choteau, favored taking $160 million from the constitutional Rainy Day fund to pay for the repairs.
The full Senate has given its approval to legislation that would reduce Oklahoma’s top income tax rate by .25 and the corporate income tax rate by 1 full percentage point. House Bill 2508, by Sen. Mike Mazzei, was approved Tuesday. A Senate bill aimed at reducing income taxes is awaiting action by the full House.
“I think a lower tax rate tells prospective companies that Oklahoma is ready to compete and open for business,” said Mazzei, R-Tulsa. “It’s one more tool we’ll have for attracting new jobs and spurring greater economic growth, and that in turn will generate more revenue for core services like education, transportation and public safety.”
Mazzei, long-time Senate Finance Committee Chairman, said there are differences between the House and Senate tax cut proposals. HB 2508 would reduce the top income tax rate from 5.25 to 5 percent, and cut the state’s corporate income tax rate from 6 percent to 5 percent.
SB 1246 would not reduce corporate income taxes, but would allow for a further reduction in the individual income tax rate of .15 percent if there’s enough revenue growth, taking the top rate from 5.25 to 4.85 percent. Mazzei said both bills have triggers requiring specific revenue levels before the cuts could go into effect, with 2016 the earliest year the cuts could be implemented.
The principal House author of HB 2508 is Rep. Earl Sears, Vice Chair of the House Appropriations and Budget Committee.
“I’m pleased the Senate approved this responsible tax cut for the hard working people of Oklahoma,” said Sears, R-Bartlesville.
The measure now returns to the House of Representatives.
Chad Warmington, President Oklahoma Oil & Gas Association
The Sooner Survey that was released today confirms that Oklahomans strongly reject higher taxes on the oil and gas industry, the state’s largest industry and tax payer. The public understands that higher taxes will lead to fewer jobs and less revenue to the state.
The negative impacts of higher taxes will be disproportionately felt in rural Oklahoma where the majority of oil and gas drilling activity is taking place. That is why 77% of rural Oklahomans say that taxes on the oil and gas industry should stay the same or be cut.
In fact, Lt. Governor Todd Lamb said it well in an editorial column this weekend, “We must be vigilant, not just for the companies operating one or two rigs, but for the suppliers, small-town restaurant owners, home builders, truck drivers and others who depend on this industry.”
Raising taxes to grow government could have devastating long term economic impacts and the Sooner Survey confirms that the public does not want to see that happen.
Pat McFerron President, Cole Hargrave Snodgrass & Associates
When Oklahomans are asked about our current taxing of oil and natural gas recovered from the horizontal drilling practices, only the most liberal elements of the electorate favor an increase, while the vast majority (69%) support it staying the same (48%) or having it further reduced (21%). While there is little doubt creative polling could create a question to get a different result, if messaging is removed and the simple facts are evaluated, it is clear this is an issue with an ideological edge and potentially an important electoral issue, especially for Republican primary voters.
Any Republican should have grave concerns about being perceived as being for a tax increase. Without any messaging, 83% of Tea Party supporters (who represent 37% of all voters and 57% of Republicans) oppose an increase as do 78% of those who have voted in three or more Republican primaries. Even among those on the left of the ideological spectrum there is not even plurality support for an increase (39% increase tax; 42% Keep as is; 13% cut tax among those who disagree with the Tea Party).
Once voters are told that the 1% tax is set to expire and that allowing that to happen would result in a 7% tax on the first day of production, we again see a strong sentiment for the tax to remain at today’s rate (64% keep at 1%; 28% increase). Among registered Republicans 71% support keeping the tax at 1% and only 19% support an increase. While the breadth of support for keeping the tax at 1% is seen in the overall number among registered Democrats (58% Keep at 1%; 35% Increase), the importance of this issue in a general election scenario rests in intensity among the most important swing group in Oklahoma politics, anti-Obama Democrats (70% Keep at 1%; 25% increase).
Very simple messages resonate with Oklahoma voters on this topic. After being told that other states such as North Dakota or Texas could lure away drilling jobs, 74% want to keep the tax on the first four years at 1%; being told that higher taxes means fewer jobs encourages 73% to want to keep the tax at 1% and 72% say to keep it at 1% after hearing the sentiment that it is better to have jobs and lower taxes than higher taxes and fewer jobs.
We did not not just test messages of those advocating the 1% tax rate. We also tested those of opponents. Voters remain committed to the conservative principle of lower taxation even after hearing opposition messages such as: the current structure is unfair to those using conventional drilling methods (64% keep at 1%); and, this is a tax break for big oil that pays higher taxes in other states and still makes a profit (60% keep at 1%).
One of the most significant findings of this study is that voters do not buy into the idea of taxing oil and gas production at a higher rate and then using that revenue to lower the state income tax. When told that is an option that has been discussed, 65% support leaving the tax at 1% and only a quarter (25%) support an increase. Those comprising this 65% tend to be the more conservative elements of the electorate.
After the discussion, we see even greater support for keeping the current tax structure (70% Keep at 1%; 25% Increase). At this point, 77% of rural residents, 78% of registered Republicans, 77% of senior citizens, 87% of Tea Party Supporters and 83% of Republican primary voters support keeping the rate at 1% for the first four years of production.
Following The McCarville Report’s story earlier this week that Governor Fallin, House Speaker Jeff Hickman and Senate President Pro Tem Brian Bingman have agreed on a proposal to hike the gross production tax from 1 to 2 percent, there’s been growing opposition.