Gov. Fallin addresses budget deficit, oil prices during ‘State of the State’

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OKLAHOMA CITY – In recent weeks, many Oklahomans have been wondering exactly how state leaders plan to make up a $900 million budget deficit.

On Monday, Gov. Mary Fallin kicked off the 2016 legislative session with her annual ‘State of the State’ address.

Fallin began her speech by recognizing Rep. David Dank and former Labor Commissioner Mark Costello, who both passed away last year.

Fallin says that the drop of oil and gas prices are out of our control, but they are hurting the state’s economy.

“We can use this budget crisis to build a solid foundation for Oklahoma,” Fallin said.

She said she is asking for drastic reform to put the state on a different economic route.

If no action is taken, Fallin says most state agencies will face a 13.5% cut next year. As an example, she says education would be cut by $330 million.

“This is an unacceptable path,” Fallin said.

Even if all the money is withdrawn from the Rainy Day Fund, education would still be facing a $244 million cut next session.

Fallin proposes a budget that would cut agencies by 6 percent and would rely on recurring revenue.

It would also call for a consumption tax on cigarettes.

“Smoking is Oklahoma’s leading cause of preventable death and it costs our state $1.6 billion in related health care costs each year,” said Fallin.

Fallin also calls for $200 million to be collected by reforming the state’s tax exemptions. Oklahoma’s tax codes are similar to the tax codes from the 1980s.

She says she would begin by taking a look at $8 billion in sales tax exemptions. Fallin calls for eliminating outdated exemptions and looking at other states’ sales tax codes.

Fallin says she wants to improve education, reduce the state’s incarceration rate and improve health outcomes for residents this year.

Due to the state’s revenue failure, she says the Department of Corrections will run out of money before this year.

She is calling to provide DOC more money so the department doesn’t have to house prisoners in unsecured areas and furlough correctional officers.

Fallin also said she is supporting sentencing reforms that would lower the state’s incarceration rates.

She targeted the state’s drug laws, saying while they were paved with good intentions, they are doing more harm than good.

Fallin says first-time nonviolent drug offenses should not equal a mandatory sentence. Instead, she says the discretion should be given to the district attorney to classify the crime as a misdemeanor.

“Oklahoma’s drug possession sentences haven’t deterred substance abuse and have filled our prisons to overcapacity,” said Fallin.

She also called for lowering mandatory sentences from two to 10 years in prison to zero to five years.

As an example, she said second time offenders would face zero to 10 years in prison for the drug crimes.

Fallin also said property crimes values should be raised from $500 to $1,000.

“A teen who steals someone’s smartphone could be branded as a felon because smartphones cost more than $500,” she said.

She says nonviolent offenders are flooding the state’s prisons, which are now at 119 percent capacity.

“We just can’t keep doing what we’ve been doing. It’s just not working,” she said.

Click here to read Fallin’s full State of the State address.

Fallin also called to provide more money to the Department of Human Services to help with foster children, and provide $178 million to give every teacher in the state a raise.

“We were sent here to lead, and we need to lead now more than ever,” she said.

Fallin also called to complete the Capitol restoration project, after contractors said they needed more than $120 million to finish.

She also praised several decision that were made in the past, especially education improvements like the Reading Sufficiency Act an the A-F grading system.

Immediately after the 'State of the State,' responses were released.

"Governor Fallin has rightfully recognized that Oklahoma has a revenue problem and that we must find new recurring revenues to make it through this budget crisis. Her proposals to modernize the sales tax and create savings with smarter criminal sentencing policies are a good starting point. Oklahoma should adopt these ideas along with other common sense revenue options, such as canceling an income tax cut that was never meant to happen in these conditions, repealing wasteful tax breaks like the double deduction for state income taxes, enforcing combined corporate reporting to prevent multi-state corporations from shifting their Oklahoma profits to out-of-state tax shelters, and accepting federal dollars to expand health coverage to working families.

If on the other hand we continue to ignore sensible revenue options and double down on budget cuts, we will do devastating damage to our economy and to critical public services. This crisis will be painful to Oklahoma families who need health care, education, and safe communities, but Oklahoma has the tools to ease this pain if our lawmakers have the political courage to use them," David Blatt, the Oklahoma Policy Institute's executive director, said in a statement.

Several members of the Democratic party spoke after Gov. Fallin's State of the State saying she did not provide any legitimate solution to Oklahoma's problems.

Rep. Scott Inman said Democrats were shocked to hear that Gov. Fallin would offer up $900 million worth of tax increases on middle class families to pay for her "failed income tax experiment over the last several years."

He said that for her to offer to tax the middle class families rather than the wealthier Oklahomans that could afford the tax increases is appalling.

He says that his caucus will oppose every effort to tax the middle class until Gov. Fallin can bring a serious tax plan to the table.

Rep. Inman also says that Gov. Fallin failed to provide a solution to the lack of funding to our education system.

With the significant amount of earthquakes Oklahoma has seen over the past several years, many members of the Democratic party were frustrated the governor never mentioned how Oklahoma will deal with the growing problem.

"There are houses shaking all over this state and not one moment did she stand up and say, 'Earthquakes are shaking and damaging property values across the state," said Rep. Scott Inman, (D) District 94.

The Cooperative Council For Oklahoma School Administration and the Organization of Rural Oklahoma Schools released a statement following the governor's speech saying that while educators are glad Gov. Fallin addressed the need for increasing teacher pay, they are concerned with her support for vouchers or "Education Savings Accounts."

"We appreciate the Governor’s acknowledgment of the need for increasing teacher pay in Oklahoma. Our state’s teacher shortage crisis is a real threat to student achievement and the economic prosperity of our state. Even when accounting for salary and benefits (i.e. Health Insurance) Oklahoma ranks 48th in teacher pay and 47th in the amount of money spent on school administration. The Governor’s willingness to offer a plan for raising teacher pay in Oklahoma is an important part of the conversation about increasing our state’s investment in public education.

Like everyone else, we look forward to further reviewing the teacher pay plan offered by Governor Fallin. As representatives of those responsible for the implementation of any pay raise proposal, we hope to engage the Governor and her staff in a meaningful dialogue about the merits of her plan to raise teacher pay.

We do have grave concerns with Governor Fallin’s support for vouchers or “Education Savings Accounts” as well as her plan to rob communities of their ability to control local education matters. Governor Fallin’s proposal to consolidate rural K-8 or elementary school districts is misguided, impacts student achievement, and provides no real cost savings for Oklahoma schools. 

Governor Fallin’s support of vouchers or “Education Savings Accounts” will continue to erode funding for local schools and will only add to the unacceptable conditions facing Oklahoma students."

State Superintendent of Public Instruction Joy Hofmesiter released the following statement:

"We applaud Governor Fallin for recognizing the need to pay Oklahoma teachers competitively as soon as possible. The proposed $3,000 salary increase outlined in her State of the State address is an important step in aligning our educators' pay with the regional average and could help alleviate the teacher shortage we are facing in all areas of pre K-12 education. We look forward to further discussion of the Governor's plan."