Large tax increases in new budget

Taxes are going up in Oklahoma.

Gov. Mary Fallin is expected to sign a last-minute budget that contains a series of tax increases designed to bring more money into state coffers.

Republican and Democrat lawmakers voted last Friday – the last day of the 2019 legislative session – to approved a $6,800,000,000.00 budget that increases funds for some agencies and cuts others (with an average cut of about 4 percent).

The plan could face court challenges because state law requires a supermajority to pass a new tax and some elements of the budget that involved tax hikes were passed by simple majorities.

Earlier in the year, Fallin pushed for more than 160 new taxes to try to overcome a projected $678 million budget shortfall. Budget projections rarely are completely accurate. In her state-of-the-state address, Fallin called for elimination of sales tax on groceries but that proposal never had a chance of passage.

Smokers will pay an extra $1.50 per pack new tax and other tax increases are in the bill. Sales tax on new and used cars will rise.

Fallin signed a bill that would eliminate the mandatory 35 percent of state lottery revenues to public education. Lottery officials have pushed for an end to that requirement. They argued that they could offer bigger cash prizes, luring more Oklahomans into gambling, and eventually pay more actual dollars to education.

Fallin signed a bill that would eventually end tax credits to wind power operators. She also approved the repeal of a .15 percent drop in state income tax.

The budget bill cuts funding for Oklahoma’s 25 public colleges and universities by only 6 percent. Higher education gets $773 million with a drop of only $36 million from this budget. Oklahoma University and Oklahoma State University will lose about $12 million each in this budget.

Senate Bill 860 increases funding for public education. But the minimum teacher salary did not go up.

“This plan keeps our government from shutting down,” Fallin said. “It is not an ideal budget, but it avoids draconian cuts to our core services such as education, health and human services, and public safety; unfortunately it leaves many agencies facing cuts for the sixth year in a row. It puts some recurring (taxation) on the table, but does not address the structural budget challenges that I have been working to fix since I took office.

“Year after year, I have repeated my warning about our reliance on one-time funding and our eroding tax base, and yet again we have crafted a budget that only fixes some of the defects in our funding formula.

“Let there be no mistake, there is still work to do. When legislators return next year, they will already face a $400 million hole caused by one-time funds and $100 million of obligations coming due over the next 12 months that will need to be paid. Hopefully, in the months that follow they will begin putting together a real plan to address the budget to fill that hole when they return in February of 2018 – an election year when we know it is difficult to pass revenue measures.”

Lawmakers passed a trailer bill that adds $18 million to the appropriation made in Senate Bill 860.

“While the budget crisis has been a formidable challenge for all involved, I am deeply grateful that the Oklahoma State Legislature has worked hard to successfully make the school funding formula whole for common education,” said State School Superintendent Joy Hofmeister. “This has been a tough process and many state agencies have weathered steep cuts, but legislators deserve praise for prioritizing education on behalf of Oklahoma’s schoolchildren.

“Under the trailer bill, the Legislature will ensure that the funding formula is preserved and that the state fulfills its statutory obligation to cover 100 percent of the health insurance costs so vital for educators. This agreement is welcome news for Oklahoma schools after a year of uncertainty and financial hardship.”