OKLAHOMA CITY – It has been a tumultuous week at the Oklahoma State Capitol.
On Monday, Gov. Mary Fallin announced that an agreement had been reached to fill the $215 million deficit.
House Bill 1035 included a tax on cigarettes, a motor vehicle fuel tax, and an additional tax on beer while giving a pay boost to teachers and state employees.
“We can’t let the perfect be the enemy of the good. We have to find a resolution to close the $215 million budget gap and to put our state on a sustainable, stable path forward,” she said Monday. “We can’t keep having budget shortfalls year after year.”
Almost immediately, the plan was criticized by Democrats and some Republicans.
Republican Rep. Roger Ford took to Facebook saying the plan “will bomb on Wednesday.”
“You’re confused? So am I, and I think so is the general public,” Ford told News 4 on Tuesday. “To me, it feels like something that was thrown together to get out of here quickly and it doesn’t fix the problem. It may be a short-termed fix if it worked, which I don’t think it will because I don’t think it will pass.”
As it turns out, Ford was right.
The measure failed to receive the necessary 76 votes to pass, finishing with a final vote of 54-43.
After the measure failed, House Speaker Charles McCall called out Democrats for not buying into the measure.
“We have spent months putting together something that could pass this chamber, pass the Senate chamber and be signed into law. We didn’t ask all the Democrats to vote for this bill. We didn’t ask all the Republicans to vote for this bill. All we asked for was a 75 percent bipartisan effort. The Republicans have put theirs up. I’m calling on the Democrats right now to pass this measure. I’m giving them what they’ve said they’re holding out for. If this measure passed, I guaranteed a vote on House Bill 1009, which is Rep. Inman’s filed bill on GPT at 5 percent for 36 months. It’s guaranteed. I moved it out of rules, directly to the calendar,” McCall said.
“I’m giving them what they want. I’m giving them what they’ve asked for,” McCall added. “We have made every compromise possible. It is time, and it is actually past time for partisan politics.”
Democratic Rep. Cory Williams says that they tried to add the GPT increase and a tax on high earners to the current proposal, but those attempts were defeated.
“We went down to 4 percent today on the floor of House. So for the Speaker to say that he’s done everything he can, he’s either an effect-less leader or he’s disingenuine, you can pick one of the two, I don’t care. But he’s right about one thing- this is bs. We should have a better plan. Those people who were here yesterday deserve a better plan. We got here because we cut the gross production tax. We got here because we cut the income tax. Are either one of those a part of this? No. We are shifting the tax burden of this state to the working poor and the indigent. And for Chairman Wallace to say, ‘Well, it taxes everybody across the board.’ We all know it’s a regressive tax. It hits the poor and the least among us the hardest. I’ve heard nothing but disingenuous claims from the majority caucus for the better part of two months. We are not going to change our vote. The Speaker can close it and go back to the negotiating table and come back with a solution that works for everybody in Oklahoma, not the wealthy, not an industry, but every single Oklahoman,” Williams said.
On Thursday, the Oklahoma Senate passed a resolution that would add an increase of the gross production tax to the measure. The Senate resolution asks the House to amend the budget agreement to include an increase in the gross production tax on new oil and gas wells to four percent.
During a news conference on Thursday, Senate Majority Leader Greg Treat said the gross production tax doesn’t solve the problem, since it will only bring in $15 million in FY 19.
“[Speaker McCall] exhausted every effort on the revenue package that was agreed upon between the House, Senate and governor. He put a full faith, a good effort and he should be applauded and commended that he tried to do it,” Treat said.
A short time later, House Democrats released a statement saying they support the resolution.
“We are pleased that the Senate has confirmed their willingness to bring gross production tax to the negotiating table. Though not specific regarding the length of time of the incentive rate, Senate Resolution 1 indicates a willingness to have a discussion around an increase to 4 percent. The House Democratic Caucus joins with Senate Democrats to support an increase to the incentive rate to help put the state’s financial future on a more stable path. We encourage the Republican House Caucus to stand with their colleagues across the rotunda, include an increase to the gross production tax in their revenue plan, and allow a vote tomorrow in order to complete the work our constituents expected us to do months ago.”
House Democrats also released a letter that they say was sent to Speaker McCall on Wednesday, saying they tried to reach a compromise before the measure failed.
“On behalf of the Democratic Caucus, I am offering you a compromise to end the budget gridlock that is the most palatable for the most Members, Democrat or Republican. House Democrats will bring every vote to the table to approve the revenue increases contained in HB1035X if the measure is amended to contain a provision to increase the gross production tax on oil and gas by one of the following methods: (1) increase the incentive rate to 4% for the first 12 months of production, (2) increase the incentive rate to 4.5% for the first 18 months of production, or (3) increase the incentive rate to 5% for 36 months of production. Our hope is that you consider this request in an attempt to put a prompt and fruitful end on special session,” the letter read.
Democrats say that there still could be some negotiating when it comes to the rate’s time frame.
“For horizontal drilling, the first 36 months are currently at 2 percent. Anything above that goes to seven so, if you take it and have everything go to seven after 12 months, it’s a substantial difference rather than just two percent,” Rep. Eric Proctor told News 4. “The difference between 36 months at 4 percent to 12 months at 4 percent over a $100 million annually that could be invested in education, criminal justice, public safety.”