2nd Journal of the Second Legislative Session of the 55th Legislature

February 3rd, 2016

This year’s legislative session began with a diverse mixture of messages from Governor Fallin.  On a positive note, I was very proud that she chose to identify the efforts made by two of the school sites in the Gore school district.  First, she noted that the Lower Elementary School led by Principal, Tonya Pugh, had received an A+ in the state A-F evaluation program and Principal Beverly Robison’s Upper Elementary site had risen from a D to a B rating.  Superintendent Mr. McCrary and Aspyn Cearley and Madison Gourd, 5th and 8th grade students respectively from the lower and upper elementary sites, were truly honored with a standing ovation by the Governor and all members of the House of Representatives. 

            While the Governor’s State of the State presentation on the first day of this 2nd Session was eloquent and well prepared, causing those in her leadership cluster to leave feeling that all is well in our state which is looking at a likely $1 billion loss of revenue for the funding of our state’s core services.  Perhaps they were thinking what a wonderful job they have done cutting state taxes over the last 10 years by approximately the same amount that we find ourselves short this year.  So as the Governor is proposing consolidating rural K-8 schools with K-12 schools to save money spent on administrative services, she is not addressing the issue that forcing the closure of our local K-8 schools will result in greater costs for the K-12 schools since the administrators of the former are responsible for numerous tasks beyond being the school’s superintendent.  Two other factors which must be addressed is the issue of which K-12 school the students and teachers will be assigned and the issue relating to the K-8 school boards being dissolved in this action. We were also told by the Governor that she strongly endorses the ESA or Education Savings Account where the state would assign yearly revenue to parents to spend in schools of their choice.  These include private, charter, virtual, homeschool as well as public school.  With the Education Savings Account, parents may accumulate revenue and apply it to the post-secondary funding needs of their children.  This is a direct and fatal shot at public education in Oklahoma.   I believe this session will be one of the most contentious in my service as a state representative!

            The Oklahoma Policy Institute recently captured this likely $1 billion loss by identifying the revenue shortfall caused by tax cuts to the state’s six largest agencies. These include:   Education $356 Million, State Regents to Higher Education $138 M, Health Care Authority $139 M, Human Services $97.2 M, Corrections $69.4 M, and Mental Health and Substance Abuse $48.4 M.  The total cuts for all state agencies equals $1.022 Billion.  To gain a sense of who benefits from this $1billion festival of cuts, the top 1%, or the wealthy elite, benefit at a far greater level than the middle and lower income brackets, 26% for the 1% top income level versus 28% for all other income levels. It was not surprising that Governor Fallin failed to talk about how she and the House and Senate leaders have failed to act on House Bill 2182 authored by the late Rep. David Dank and which became law on November 1st, 2015.  This law created an eight-member commission with the task of evaluating incentives and recommending to the Legislature which should be cut.  Unfortunately, the Governor and the Senate President ProTem have failed to appoint members to this Commission as the law required.  The Office of Management and Enterprise Services has created a list of 75 entities that merit consideration based on their incentives with the 15 largest beneficiaries receiving $345 million from state revenue.  This constitutes one-third of this year’s anticipated budget short-fall. 

 

Contact Information: PO Box 98, Porum, OK  74455, ed.cannaday@okhouse.gov,   918 448 5702.  Legislative Assistant, Connie Riley, at 1 800 522 8502 or 405 557 7375 and fax 405 962 7624 at the Capitol.

 

 

First Journal of the Second Legislative Session of the 55th Legislature

January 27th, 2016

As I begin my Journals for the 2nd Session, I’ll start by sharing information on House bills filed.  Of the 952 bills introduced, 737 were filed by Republicans leaving 215 filed by Democrats.  139 of them are Title 70-Education, which is the largest proportion of the bills followed by Title 63-Public Health.  There are 256 bills that are “shell bills” which carry no specific language in them so that they can be adapted to certain needs approved by the House leaders. 

Among the 139 Title 70-Education bills, we find several serious attacks on public education.  One is HB 2824 by Rep. Denny, R-Cushing, which calls for any K-8 school to be consolidated with a K-12 school site within a 30-mile radius unless they have an A-F grade of B or higher.  Another very troubling group of 3 bills and 3 Joint Resolutions being submitted by Sen. Holt, R-Tulsa, has been in the headlines as proposing a “$10,000.00 annual raise for teachers” without tax increases.  The most horrific one of these being proposed is the reduction of the 500 plus school districts in the state to 200. The Joint Resolutions call for eliminating tax credits, district consolidation, and dedication of “savings” from administrative consolidation.  The “resolution approach” is designed to by-pass legislative resistance and place the issues on a ballot. The two step $5,000.00 raises will be voted on by the legislature without any specified funding mechanism or revenue stream.  This is an election year scam by the state’s leaders who are up for re-election and know that it sounds good but it will be impossible to implement.

The legislation addressing the budget crisis are not numerous but most critical because we are being told to expect approximately $1 billion cuts in funds for state agencies.         This leads me to share with you a recent conference meeting with Chancellor Johnson who oversees the Oklahoma State Regents for Higher Education.  Attending were the Presidents, Administrators and Office Staff of Connors, Eastern, Carl Albert, Seminole, and Murray State Community Colleges.  The Chancellor advised us that he was informed by Rep. Earl Sears, Chair of House Appropriations and Budget, that potential cuts to Higher Education may be up into the 10 percent range for the 2016/17 school year since the state government is extremely short of revenue.  As the legislators present were given the opportunity to address issues impacting this group, I began my turn by stating that the Chancellor was not given all the information concerning the state being forced to institute major revenue cuts because there is not revenue available.  My point was that the legislature only receives 45 percent of the revenue generated by the state through various taxes.  The other 55 percent or approximately $3 billion of state taxes is referred to as “off the top” revenue which consists of tax rebate incentives or money directed to various business interests.   Two examples that I shared was $4.4 million per year given to the owners of Oklahoma City Thunder Basketball franchise and over $29 million given to companies in other states under the Oklahoma Jobs Incentive Act.  This is just the tip of the so-called ice burg of revenue that could help fund the cuts to our schools and other important state programs. 

The legislature passed legislation last Session mandating that we study this “off the top” revenue diversion so that we would keep only that which actually produces jobs in our state and subsequently additional revenue but to date, that study has not been done.  Why wasn’t this information shared with Chancellor Johnson?   This is information that I feel should be shared with all Oklahoma citizens so that they are made aware that there is funding available but the leadership would prefer that the members of the legislature not make decisions on this revenue.

 

Contact Information: PO Box 98, Porum, OK  74455, ed.cannaday@okhouse.gov,   918 448 5702.  Legislative Assistant, Connie Riley, at 1 800 522 8502 or 405 557 7375 and fax 405 962 7624 at the Capitol.

 

 

51st Journal of the First Legislative Session of the 55th Legislature

January 21st, 2016

            This Journal will be the last entry before we begin the 2nd Session of the 55th Legislature.  As I am sure you are aware, the state legislature will be facing the greatest financial challenge of the 9 years that I have served in this body.  It will be evident that there will be political spins placed on this to say that the root cause of this crisis belongs to the Democratic Party which had been in control of our state government prior to 2006.  On the other hand, one can say that we did not experience massive cuts in the various state service agencies such as education, health, transportation, public safety, etc. until the Republican Party gained total control of the state government.

Providing another perspective of this, the Director of the State Budget, Preston Doerflinger, presented his take on the Republican leaderships’ approach to what is being described as an economic crisis concerning the budget crises as he stated the following.  “The fact that we find ourselves in this position is providing us with a tremendous opportunity.”   I’m not sure if he is referring to a large segment of our population having an opportunity to find new employment since many now experience unemployment.  Maybe he is telling us that this gives us the opportunity to experience living on less "personal income” or to deal with less state agency assistance when faced with issues that had previously been addressed by the state.  The irony of his statement is that during the state’s economic downturn, Director Doerflinger has been given the opportunity to enjoy the experience of being awarded a yearly salary increase of over $60,000.00 to a grand annual salary of over $169,000.00 a year.  This constitutes a 17.5 percent increase in 5 years of state employment or 24 percent in the last 2 years.   Maybe he meant to say that “he has been provided with a tremendous opportunity.” Perhaps this total situation caused the Republican leaning publication by Oklahoma Council of Public Affairs to quote one of their writers as stating: “our leaders need to cut the grimness and ramp up the enthusiasm.” I do believe that is what we will be experiencing from the state leaders to detract from the damage they seek to accomplish.  

Perhaps the discussion that needs to take place will be done during the 2016 general election when the citizens of the state will be given the opportunity to select state leaders who will be willing to address issues that citizens deem critical to the state’s wellbeing.  My concern on this solution is that the state’s electorate will be as dormant and non-responsive as they were in the 2014 general election with a mere 40 percent of registered voters choosing to vote. 

            Meanwhile, let me conclude this Session’s journal with a brief update on where we are at financially relative to our public education funding.  (1) In 2016, our schools had $376 million less state revenue than they received in 2015.  This was made more dramatic since our schools have gained some 50,000 new students in that time period.  (2) The previous data resulted in a 24 percent drop in per pupil funding.  (3) The 2016 budget was decreased by $611 million but after taking $150 million from the Rainy Day fund the shortage was reduced to $385 million.  (4) As a result of this drop in appropriated revenue under the 95 percent threshold, this year’s available funds were reduced by $176.2 million with education taking a $46.7 million loss.  (5) It has been stated that we will experience a $900.8 million or $1.1 billion loss in the 2017 budget.  It is my hope that I will have better news for you in the Journal Entries covering the 2nd Session of this 55th Legislature.   

Contact Information: PO Box 98, Porum, OK  74455, ed.cannaday@okhouse.gov,   918 448 5702.  Legislative Assistant, Connie Riley, at 1 800 522 8502 or 405 557 7375 and fax 405 962 7624 at the Capitol.

 

 

50th Journal of the First Legislative Session of the 55th Legislature

January 14th, 2016

               As we move closer to the opening of the 2016 legislative session, the issue that seems to dominate news reports coming from the Capitol is that our state government is facing a new budget crisis which will impact the state agencies that are operating on the revenue commitment made by the legislature during the last session.  They were informed that they should build their agency budgets on the revenue that the legislature assured them that they would have for 2015/16.  Now in mid-January they are told that they must plan to cut this amount by 3 percent for the remaining year which means they must come up with 6 percent reduction in order to provide all mandated services.  For example, the State Department of Education has to endure $47 million more in cuts impacting the remainder of the school year.  This might be a reasonable task if they were operating under budgets that reflected the increased student enrollments combined with new state and federal mandates.  Unfortunately, their budgets have been cut every year since 2009 so there is no working revenue surplus.  In addition, they are preparing for state budget cuts for 2017/18 to be in the range of $900 million to $1.2 billion.  This process is impacting all other areas of state services including corrections, public safety, transportation, and health.  The leader of one of our area community colleges said that if these cuts are implemented at this level they will be required to cut programs to the extent that will dramatically impact their ability to continue operations.  Our public schools will be cutting programs with some even advocating shutting down all extra-curricular programs including intermural sports and competitive academic activities.  I would like to repeat the quote from the Oklahoma Policy Institute in that it directs our focus to the base of our state’s problems. “Is this a revenue failure or a leadership failure?”

            At the very time our state’s unemployment is below the national level by at least one percent, we read reports that our national employment figures have improved during the last eight years as demonstrated by this year’s economy creating over a quarter of a million new jobs. Where shall we look to find an answer to our state’s budget crisis?  Perhaps we need to comply with legislation that was passed and signed by our Governor last year which called for an analysis of the estimated $3 billion of potential state generated revenue that is considered “off the top” and dedicated to various sources with the intent to motivate additional and continued economic growth.  We have another $1.7 billion in tax credits, incentives and exemptions provided for individuals and business interests each year. The legislation we passed last year was to study each area of this revenue diversion from the legislature to see if it is truly promoting economic growth and subsequent increases in revenue.  It is doubtful that Oklahoma citizens are aware that the legislature only has access to 45 percent of tax revenue generated by our citizens, business enterprises and corporations.  This amount has decreased by 10 percent in the last eight years.  When state leaders were asked which tax credits were going to be scrutinized we were told “the Commission has not set this list yet.”  Recently I was told by a Republican Representative that there were “unofficial” discussions taking place.  Did they discuss, for instance, the $1.1 million the state gives the Thunder Basketball team each quarter as part of the Quality Jobs Act?  Let’s have open meetings to discuss this crisis!    

 Contact Information: PO Box 98, Porum, OK  74455, ed.cannaday@okhouse.gov,   918 448 5702.  Legislative Assistant, Connie Riley, at 1 800 522 8502 or 405 557 7375 and fax 405 962 7624 at the Capitol.

 

 

 

49th Journal of the First Legislative Session of the 55th Legislature

January 7th, 2016

          As indicated in Journal 48 we must go deeper into the causes of the current budget deficit crisis rather than merely pointing to the negative impact that our state is experiencing due to falling petroleum prices and the associated reduction in that industries employment figures. Using the Oklahoma Policy Institute’s (OPI) research data we find six data driven factors which places the 2nd Session of the 55th Legislature in a budgetary crisis mode.  Usually we would begin by addressing the anticipated budget shortfall for 2016/17 but with the current fiscal calamity, we will be addressing the loss of revenue for the agency budgets for the current 2015/16 year. 

            The first category to consider is the impact caused by the legislature having earmarked a large portion of tax revenue for specific priorities thus leaving less tax revenue for other state government functions.  This is often referred to as “off-the-top” allocations.  To demonstrate this we can study the $417 million dedicated to the ROADS Fund for the state’s roads and bridges, $140 million for county roads and bridges and $61 million for higher education scholarship programs.

 Secondly, we must factor in the rising Health Care costs for the increasing percentage of the state’s senior citizen population.  This area has a natural increase in medical costs associated with the state’s aging population and its subsequent greater state assisted health care needs.

 Third, as technology advances we must deal with the fact that purchasing goods on-line which often bypass sales tax is replacing our local or state brick and mortar retail outlets with its sales tax generating consumption.

Fourth and perhaps of greatest significance is the increasing rate of tax credits, deductions and exemptions.  While these are difficult to quantify, the tax incentives are estimated at between $1.8 to $2 billion annually.  This figure reflects the doubling of state agencies’ revenue losses in the last four years.  This year alone the tax breaks for horizontal drilling has climbed to $380 million. 

Lastly, we must consider the rate of tax cuts instituted by the legislature impacting the amount of tax revenue realized from the top tax brackets since the mid-2000s which has fell from 6.65 percent to 5.25 percent combined with the increased standard deduction exempting most of retirement and military income and Oklahoma held capital gains as well as abolishing the state estate tax.  In total we are losing over $1 billion in these areas of tax revenue each year.   In addition, the top income tax rate fell again to 5 percent on January 1, 2016 and is scheduled to fall to 4.85 percent in 2018.  This last category of cuts is based on revenue trigger. 

            The problem that the above list creates is that as we cut funding for the state agencies services we do not have analysis being done to insure that any of these reductions in revenue is dedicated only to economic activity which generates new employment growth and thus increased revenue from such speculated economic growth.  The OPI captured the effects of this process in the following quote.  “To kick off 2016, agency budgets are being cut a further 3 percent, while a 0.25 drop in the top income tax rate takes effect.   The median household will get $2.50 more a month, while we cut schools, colleges, health care, public safety, and the arts even more.  Is this a revenue failure or leadership failure?”

 

Contact Information: PO Box 98, Porum, OK  74455, ed.cannaday@okhouse.gov,   918 448 5702.  Legislative Assistant, Connie Riley, at 1 800 522 8502 or 405 557 7375 and fax 405 962 7624 at the Capitol.