HB1037XX update: bill changed to deduction split, still raises taxes

Yesterday, the House JCAB met and passed several "revenue measures" (i.e. tax increases) related to the Fallin/Step Up Oklahoma plan. Among these was HB1037XX, which I wrote about in Fallin/Step Up income tax hike is higher than we're being told.

HB1037XX was originally a major income tax hike for lower- and middle-income families in particular. The good news is that that language was stripped from the bill in committee yesterday - a small, temporary victory for taxpayers. However, the language was replaced with changes to the standard deduction that will still mean a triple-digit tax hike on single individuals making over $25,000 or married couples making over $50,000.

HB1037XX leaves the standard deduction in place for single individuals who make less than $25,000, for married couples filing jointly who make under $50,000, and for head-of-household filers who make less than $37,500.

If you make above those figures, the standard deduction will be changed to the following levels:

• Single-filer: from $6,350 down to $5,250 (minus $1,100)
• Head of household filer: from $9,350 down to $7,700 (minus $1,650)
• Married filing jointly: from $12,700 down to $10,500 (minus $2,200)

Current bill language does not change the income tax brackets or remove the personal exemption like the previous language did. It does, however, unnecessarily render our income tax even more complicated that it currently is, in addition to raising taxes.

Back to three scenarios I presented in the previous post on HHB1037XX:

• Married couple filing jointly, 2 kids, standard deduction, earning $40k: $0 more in taxes
• Married couple filing jointly, 2 kids, standard deduction, earning $60k: $110 more in taxes
• Married couple filing jointly, 2 kids, standard deduction, earning $80k: $110 more in taxes

Single-filers who make over $25k would pay an additional $55 in income taxes. HOH-filers over $37,500 would pay $82.50 more, and married-filing-jointly over $50,000 would pay $110 more.

The fiscal analysis for this current language estimates it would raise $41M in income taxes for FY2019.

I'll post more on the other tax hikes passed by the House JCAB later.

Fallin comments on tax bill failing in House JCAB

Governor Mary Fallin Statement on House Committee Failure to Advance Budget Bill

OKLAHOMA CITY –  Governor Mary Fallin today issued the following statement after the House of Representatives Joint Committee on Appropriations and Budget (JCAB) failed to advance House Bill 1054x:

“I was hopeful that the Senate’s resolution would have provided a path for success. It met the elements of most of my special session call: providing a teacher and state employee pay raise; putting Oklahoma on a path to long-term stability by making more recurring revenue available; and reducing the use of one-time funds to balance our budget.

“I’m extremely disheartened by the inability of the House Joint Committee on Appropriations and Budget (JCAB) to advance House Bill 1054x. I believe Oklahomans lost today by the House committee’s inability to move this budget solution forward.

“It appears that as a result of the House JCAB’s failure to pass the budget bill,  we will have to prepare a budget that will include drastic across-the-board cuts for all state agencies to deal with the loss of revenue. The House JCAB’s inability to pass a meaningful revenue bill means our state will not have enough funds for agencies to deliver essential core services that work for our people. As a result, worst-case scenarios will become reality. Our state is at a fiscal crossroads, and it’s unfortunate that this House committee couldn’t get the job done and failed so miserably by keeping us on a road to failure.

“Oklahomans deserve better!”

House committee deadlocks in tie vote on GPT increase

Just a few minutes ago, the House Joint Committee on Appropriations deadlocked 11-11 on the new tax hike plan that included raising the Gross Production Tax on new wells to 4% for the first 36 months.

The measure, HB 1054X, would have raised an estimated $186M for the remainder of the current fiscal year and $455M for following years. Here is the roll call from the JCAB vote:

YEAS: 11 -- Caldwell (R), Casey (R), Cockroft (R), Dunnington (D), Echols (R), Ortega (R), L. Osborn (R), Ownbey (R), D. Roberts (R), Sears (R), Watson (R)

NAYS: 11 -- Calvey (R), Hall (R), Kouplen (D), Lepak (R), Loring (D), Murphey (R), O'Donnell (R), Pfeiffer (R), Proctor (D), Stone (D), Virgin (D)

The measure can be brought back up for another vote. Committee ch‎airman Kevin Wallace (R) did not cast what would have been a tie breaking vote. According to news reports, he opted against doing so, as the lack of Democratic support (1 for, 5 against) indicated that it would fail in a vote on the House floor.

Fallin Applauds House, Senate JCABs for passing Tax-and-Spend bills

Governor Mary Fallin Applauds House, Senate Budget Committees for Passing Appropriation Bills

OKLAHOMA CITY –  Governor Mary Fallin today commended the House and Senate joint committees on appropriations and budget for their support of House Bill 1035 and other measures dealing with adjusting the current 2018 fiscal year budget: 

“These measures are part of the budget agreement that will help fill our budget hole for the current fiscal year as well as put Oklahoma on a more stable budget path and allow us to address the funding of core services going forward. The budget package provides much-needed pay raises for public school teachers, which I hope will begin a longer term commitment to our educators. It also includes pay raises for Oklahoma’s hard-working state employees as well as tax relief for low-income Oklahomans. I appreciate the support of both committees in approving these vital measures.”

House, Senate committees pass $6.8B budget near midnight

Under cover of darkness, both the House JCAB and Senate JCAB passed a $6.8B budget bill, after giving members less than 45 minutes to peruse the measure. Dropped at around 11:15pm, the House committee passed it just a few minutes before midnight.

Copies were initially unavailable for members, the press, and the public. Bill summaries, detailing what the massive budget bill actually does, were also initially not presented. At some point, State Sen. David Holt (R-OKC) got a hold of the summary and posted it online:

The House passed two version: one with a teacher pay raise and ~8% cuts to many agencies, and the other with no teacher pay raise and smaller, 4%-5% cuts.

Most of the core agencies receive flat or slightly increased funding under this budget: Education, Transportation, DHS, DRS, Corrections, Public Safety, and a handful of smaller ones.

The complete and total lack of transparency regarding how this was brought forth is absolutely appalling. Literally brought and passed under cover of darkness, without the public being able to see, without legislators being able to read the budget, without being given adequate time to ask questions of debate this measure. This outrageous manner of legislating must end.

This trainwreck is absolutely not how state government should operate.

House JCAB passes $381M in "new revenue"

The House Joint Committee on Appropriations and Budget met late this evening and, among other measures, passed two bills that raised over $381,000,000 in new revenue.

SB845: Creates the “Smoking Cessation Act of 2017”. Bill proposes to assess a fee of $1.50 per pack of cigarettes to be paid by the wholesaler. Estimated Fiscal Impact: $257,841,000

HB2433: Bill proposes to amend the sales tax exemption for motor vehicles to provide that a portion of the state sales tax levy (1.25%) will apply to sales of motor vehicles. Estimated Fiscal Impact: $123,383,000

How this gets around the State Constitution Article 5, Section 33 (SQ640) is beyond me:

House Committee rejects bill to cut spending on non-essential trinkets and swag

Late last night, the House Joint Committee on Appropriations & Budget (JCAB) rejected a measure designed to cut non-essential agency spending on promotional items and other trinkets (the "anti-swag" bill).

Presented by Rep. George Faught (R-Muskogee), the bill could have saved as much as $30M, which could have avoided additional cuts or paid for half of a $1000 teacher pay raise. Instead, JCAB members shot down the measure, specifically objecting to cutting items such as FFA trophies (which could be paid for by private funds) and stress balls for veterans.

The final vote was 5-21.

These members felt that nonessential promotional spending should be cut, and should be commended:

• Jon Echols (R)
• John Paul Jordan (R)
• Jason Murphey (R)
• Terry O'Donnell (R)
• Todd Russ (R)

These members felt that nonessential promotional spending is just too important, and shouldn't be cut:

• Scott Biggs (R)
• Chad Caldwell (R)
• Dennis Casey (R)
• Josh Cockroft (R)
• Jason Dunnington (D)
• Katie Henke (R)
• Scott Inman (D)
• Steve Kouplen (D)
• Ben Loring (D)
• Scott Martin (R)
• Charles Ortega (R)
• Leslie Osborn (R)
• Pat Ownbey (R)
• John Pfeiffer (R)
• Eric Proctor (D)
• Dustin Roberts (R)
• Mike Sanders (R)
• Earl Sears (R)
• Shane Stone (D)
• Emily Virgin (D)
• Kevin Wallace (R)

It's a shame that so many so-called Republicans are rejecting efforts to make the easy cuts (nonessential spending) and instead push for tax hikes.