The Clock Runs Out
 
After a rough final few weeks, the Oklahoma Legislature adjourned on Friday, May 26. Controversy and dysfunction dogged much of the 2017 session, with a grand political compromise never reached. Disagreement over how to deal with the almost $900 million budget deficit overshadowed most other issues, right up until the final gavel fell.

Below is a look at how the major areas of interest were resolved. This summer, attention will turn to possible legal challenges to many of the revenue-raising measures passed in the final week. Please contact us if you have questions about any of these issues.

Revenue Raised (maybe)
The biggest area of dispute in 2017 was over how to balance the state budget. Should we increase taxes, and if so, which ones and how much? It turns out a true agreement was not to be had, only last minute bills that narrowly passed and are still in dispute. 
  • With a vigorous lobbying effort, the oil and gas industry was able to successfully defend the 2 percent gross production tax on horizontal wells. A more short-term deal was made to increase from 1-4 percent the tax on wells drilled between 2011-2015. Predicted revenue increase: $95 million
  • Despite failing to get the constitutionally mandated three-fourths majority required to pass a $1.50/pack increase in the tax on cigarettes, the House of Representatives passed a $1.50/pack "smoking cessation fee" by a simple majority of 51-43 on the last afternoon of session. Traditionally the courts have considered fee increases to only require a simple majority, but this measure is expected to face a swift legal challenge. Predicted revenue increase: $214 million
  • The legislature created a new 1.25 percent sales tax on vehicle sales. The new tax will be levied in addition to the current 4.5 percent excise tax on vehicles. This proposal was also unable to receive the three-fourths majority the state constitution mandates, garnering only 52 votes in the House and 25 in the Senate, so expect a lawsuit here as well. Predicted revenue increase: $110 million
State Government Funded 
The various tax bills were debated all session, but the $6.8 billion "General Appropriations" bill was unveiled around midnight on Wednesday, May 24. Appropriations committee members had approximately 11 minutes to review the 57-page bill before it was considered.

Most agencies received a 5 percent reduction in funding compared to the previous year, but some key departments (Education, Transportation, Human Services, Mental Health & Health Care Authority) received no cuts or a slight increase. Click here for a full summary of Fiscal Year 2018 appropriations.

Two notable success stories: 
  • $1 million for the Conservation Commission to match $2 million in federal funding for flood control structure rehabilitation and maintenance.
  • $2 million for the Oklahoma Cooperative Extension Service at OSU.
Bullets Dodged 
2017 was a tremendously unproductive legislative session by most measures, but perhaps the greatest victories we achieved centered on what was NOT done. Throughout the first three months of the session, legislators seemed to be fixated on increasing ad valorem taxes. Then there was a period in early May where a fuel tax increase seemed imminent. And during the second half of May a mandatory two-year car tag became the idea du jour. 

AFR opposed all of these proposals and are thankful none of them were enacted. However, all three will be pursued again in 2018, so much work will need to be done during the interim to prepare. Our policy committee will examine each issue and refine our position if needed, as we strive to best represent the AFR membership.

Trump Budget Threatens Rural Communities
A group of 29 U.S. senators sent a letter to President Trump this week outlining how his proposal to slash funding for USDA Rural Development would undermine the department's ability to provide support to small communities through home ownership programs and access to clean drinking water and medical care. The senators, including several members of the Agriculture Committee, cited Trump's proposal to zero out funding for loans and grants that help finance rural water and wastewater infrastructure projects as a critical concern. Click here to read the full letter.

 

For more information contact:

 

Steve Thompson |  steve.thompson@afrmic.com | 405-218-5563

Click below to visit our social media sites: