Does Anyone Like This Budget?

Capitol Considerations 

by Senator Micheal Bergstrom

Does Anyone Like This Budget?

We have a budget.

On Wednesday, at about 1:30 in the morning, the Oklahoma State Senate’s Joint Committee on Appropriations and Budget (JCAB) passed a $6.9 billion budget for fiscal year 2018. Then late Wednesday night we passed it again and sent it to the House.

I don’t think anyone is thrilled with it. Why? Well, let’s consider how it is funded.

There’s a $1.50 cessation fee on each pack of cigarettes, which is not a tax.  There’s also an increase to four percent on the gross production tax (GPT) of wells currently paying only one percent.  The bill also contains a 1.25 percent sales tax on vehicle sales, plus a variety of new fees, bonds, and revolving fund cash sweeps.  We also removed a number of tax refunds and rebates.

With the refusal of the Democrats in the House to cooperate and seriously negotiate, we were forced to get creative with funding. It seems that Minority Leader Inman, in his quest for political power, was not interested in helping solve long-term funding issues, so we ended up with an excise tax and a sales tax on new cars and trucks.

What’s in the bill?

One of my top priorities this session was to see that common education was held harmless in this budget. The budget avoids cuts or increases funding for the Department of Education and 16 other agencies. We are going to pass an $18 million trailer bill to make sure common education has no cuts. In fact, this budget provides approximately $21.6 million more for schools than the original FY’17 budget.

The Departments of Public Safety, Health Care Authority, Human Services, Rehabilitative Services and the Office of the Chief Medical Examiner all saw significant increases. Most of the remaining agencies saw a cut of less than five percent.

What’s not in this package of bills?

New wells will continue to pay only two percent GPT for 36 months before the rate rises to seven percent.  A travesty, since after 36 months much of the well’s production will have been depleted and since quite a few in the industry have told me in private conversations that a reduction to 18 months coupled with an increase in the GPT to four or even five percent will NOT have a negative impact on drilling. Also, there is no change in the income tax rate, nor is there a cap on deductions. I argued that reducing the rate further was foolish at this time and though I initially considered the cap on deductions I decided it was bad policy.

There is also no fuel tax increase.

There is no teacher pay raise. While that was a priority for us, fully funding education and crucial services had to take precedence. I’m hopeful we can get this done next year.

So we have a budget.

Nobody is thrilled with it. Still, it does protect our core services, we have eliminated some waste, and we have overcome a massive budget deficit.

It’s not perfect, but it is progress.

I welcome your questions and concerns, so please feel free to contact my office at the State Capitol if you would like to discuss a particular issue or problem.  Our office can be reached by phone at 405-521-5561 or by email at bergstrom@oksenate.gov.   If you visit the Capitol, we are located in Room 527A.

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