New state budget raises taxes while borrowing $325,000,000

To avoid cutting public education and health care, the governor and state lawmakers plan to raise a host of taxes and borrow hundreds of millions of dollars.

Faced with a $1.3 billion shortfall (the largest in state history), the state will slightly increase common education funding in the next fiscal year. That should stop the teacher layoffs forecast by the, school administrators, the liberal news media and the teachers’ union. The projects of 5-20 percent cuts in education funding didn’t materialize.

To pay for those decisions, tax increases (some are termed “revenue enhancements”) are:

  • Eliminating the personal income tax double-deduction ($87,300,000.00 in new taxation)
  • Making the “earned income tax credit nonrefundable ($25,900,000.00 in new taxes)

Higher education will be cut by 7.66 percent. The Oklahoma Health Care Authority (the state Medicaid provider) will get a 9.24 percent increase. The Oklahoma Department of Mental Health and Substance Abuse Services will get a 2.18 percent increase.

Republican leaders plan to borrow $200,000,000.00 in bonds for roads and take $35,000,000.00 from the Unclaimed Property Fund to get funds for health and education. Another bond is for the Capitol restoration and will amount to $125,000,000.00

Gov. Mary Fallin, Senate President Pro Tempore Brian Bingman and House Speaker Jeff Hickman negotiated the deal.It sets the new budget at $6,780,000,000.00, which is 5 percent less than last year.

The Oklahoma Health Care Authority had prepared for provider rate cuts of up to 25 percent, which would have caused some hospitals and nursing homes statewide to close or dramatically reduce services.

Most agencies will see cuts between 1-10 percent compared to the midterm adjusted budget.

The Department of Corrections budget is unchanged but the Department of Human Services gets a 2.6 percent increase. Transportation budgets will be cut.

“The absence of various revenue measures required deeper reductions to higher education and transportation in order to avoid truly unacceptable funding levels for K-12 schools and hospitals,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger. “Transportation and higher education have superior financial positions compared to the rest of government and can absorb reductions far better than common education and health care could. In fact, transportation has said no projects will be significantly altered under this plan, and higher education has already implemented several cost-cutting measures in anticipation of reduced funding. These were difficult decisions, but they had to be made when faced with a challenge of this magnitude.”

Bingman, R-Sapulpa, said, “For months, the public has been concerned about the possibility of four-day school weeks and mass closings at rural hospitals and nursing homes because of drastic budget cuts. The budget agreement is a practical solution that closes the shortfall while avoiding extreme cuts and worst-case scenarios in our schools, our hospitals and nursing homes.”

“The Republicans who put this year’s budget deal together will point to ‘no cuts’ to common education; but this stagnant budget leaves our schools, our teachers, and our children exposed rather than protected.”

Hickman, R-Fairview, said: “This agreement fully reflects the House Republican priority to see that schools are protected, hospitals stay open and road projects stay on track. It is a balanced approach that reins in tax breaks, responsibly bonds long-term infrastructure and causes agencies to make the difficult spending reductions necessary in a historic oil bust. House members worked harder than ever this session to find conservative solutions to the greatest budget challenge of our generation and we have those solutions in this agreement. We committed months ago to leading our state out of this hole and now we must be committed to seeing this budget through to the finish line.”

“We are deeply grateful that in the proposed budget, common education funding will be held flat next fiscal year,” said State School Superintendent Joy Hofmeister. “We know this has been a difficult session for lawmakers, and we greatly appreciate their commitment to making hard decisions and doing everything they can to protect our kids. This budget represents a best-case scenario as we plan for the next school year and continue to work together to maximize educational outcomes for Oklahoma schoolchildren.”

In a related story, the Tulsa Board of Education gave new Superintendent Deborah Gist a annual $25,000 bonus. Gist immediately announced she would donate it to the Foundation for Tulsa Public Schools.

Gist has a compensation package worth more than $372,000.00 for the 2015-16 school year. That jumps to $431,000.00 in 2017-18. In three years, her total package will be about $1,156,600.00.

After passing a $120,000,000.00 bond issue to repair the crumbling State Capitol Building in 2014, Gov. Fallin and the Republican-led Legislature are going to borrow another $125,000,000.00 because there didn’t find money in the budget to pay cash for the project.

This means that the citizens of Oklahoma will borrow $245,000,000.00 to remodel and renovate the aging structure.

House Bill 3168, which will allow for the issuance of up to $125 million in bonds to continue the repair and restoration of the state Capitol, was sponsored by Bingman and Speaker Hickman.