gross production tax
Clouds drift over the Oklahoma State Capitol on Oct. 21, 2017, in Oklahoma City. (Elizabeth Sims)

With a smattering of Republican House members roaming the upper chamber, the Oklahoma Senate passed a resolution at noon requesting that the House pass the same revenue bill that failed Wednesday with one major addition: an increase in the gross production tax on new wells from 2 percent to 4 percent.

The resolution of the Senate is non-binding, but it represents agreement between Senate Republicans and Senate Democrats. Senate President Pro Temp Mike Schulz (R-Altus), Senate Majority Floor Leader Greg Treat (R-OKC) and Senate Minority Leader John Sparks (D-Norman) were all authors of the resolution.

Revenue measures are required to originate in the House of Representatives, and the House is expected to meet in the Joint Committee on Appropriations and Budget at some point this afternoon.

After passing the resolution, Senate leadership distributed a press release.

“Teachers deserve a pay raise and we can’t let mental health services, rural hospitals and child welfare services bear the brunt of massive budget cuts,” Schulz said in the release. “Though the deal we announced earlier this week achieved those goals, it’s clear it cannot pass unless gross production taxes are included. Adding GPT to the budget deal certainly wasn’t my first choice, but if it breaks the stalemate it is an option we have to pursue. We now have an opportunity to deliver on teacher pay raises, stop massive budget cuts to health care, and eliminate the constant budget problems plaguing our state. I’m grateful my Democratic and Republican colleagues in the Senate showed leadership in approving this compromise to move Oklahoma forward. We’re hopeful our colleagues in the House will act quickly and join us in solving this problem.”

Sparks also offered support.

“This is the time for leadership, real compromise and a long-term plan of action for Oklahoma and its people,” Sparks said in the release. “We are committed to working together with the Governor and Senate and House leadership toward a resolution that benefits all Oklahomans.”

Echols: House GOP likely on board

An hour after the Senate passed its resolution, House Majority Floor Leader Jon Echols (R-OKC) said he would “anticipate” House Republicans being “on board” with a revenue bill that includes a raise in the GPT incentive rate from 2 percent to 4 percent

“The Republican Caucus will meet today at 1:30,” Echols said. As always, we will follow the will of the caucus, but I would anticipate, based on a bipartisan resolution being passed by the Oklahoma Senate, that the House Majority Caucus will be on board with putting 4 percent GPT in the bill from yesterday.”

Two other House Republicans spoke to NonDoc on the condition of anonymity and said they would like to see a deal advance but that caucus members are wary about taking more tax votes that do not pass.

“It shows that the Senate is actually serious about reaching a compromise,” one Republican member said. “We’ve been told for months that the Senate won’t do anything on gross production tax, and I think it will change the calculous and make us reconsider our positions knowing that it will pass in the Senate.”

Another member said the Senate’s action puts more pressure on House Republicans and House Democrats to pass a deal.

“I think we’re all ready to get a deal done, get teachers a pay raise and get out of here,” the second GOP member said. “It looks like there is a compromise in the Senate. Maybe that’s where the House is going to go.”

Thursday about 4:30 p.m., acting House Democratic Minority Leader Steve Kouplen (D-Beggs) issued the following statement, which Senate Republicans said seemed to be an acceptance of the proposal.

Kouplen’s full statement:

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.

OIPA opposes, Dorman supports

The Oklahoma Independent Petroleum Association president Tim Wigley released a statement at 2 p.m. Thursday criticizing the Senate’s request for a GPT increase:

We are disappointed the Senate has joined House Minority Leader Inman and his caucus in calling for increased taxes on Oklahoma’s defining industry because increasing the state’s gross production tax for new wells harms Oklahoma businesses and harms working Oklahomans.

The oil and natural gas industry is proud of its role as the economic backbone of Oklahoma. The tax dollars generated and the jobs created in the state’s oilfield account for approximately 25 percent of all taxes paid in Oklahoma, which means one industry funds one-fourth of teacher pay, state-funded healthcare, public safety, transportation infrastructure and all other government-funded services.

When the state faced budget shortfalls in 2010, 2014, 2016 and earlier this year, lawmakers turned to the oil and natural gas industry by increasing the state’s gross production tax or eliminating tax provisions created to encourage investment in Oklahoma’s oilfields. The continued erosion of tax policy that has drawn billions of dollars of investment capital into the state will only reduce our state’s ability to attract new drilling.

But Oklahoma Institute of Child Advocacy CEO Joe Dorman — a former Democratic member of the House and the 2014 Democratic nominee for governor — said he hopes House Republicans and Democrats alike support the Senate compromise.

“The need for compromise is imperative at this point because we have to have a deal by Nov. 1 or far too many Oklahomans will suffer,” Dorman told NonDoc. “All of our lawmakers here need to quit acting like Washington politicians.”

Dorman responded to House Democrat statements that they prefer to accept the 4 percent GPT proposal if it includes a reduction in the incentive months.

“To haggle over the months and have that be the hold up is going to affect too many lives,” Dorman said.

Eventful week in the #okleg

On Wednesday, the Oklahoma House of Representatives voted on the GOP budget “agreement” that had been announced Monday. While the final vote was 54-44, it failed to receive the support of the 76 members required for revenue-raising measures.

That package — which included a cigarette tax, a fuel tax, an alcohol tax change and other tobacco tax adjustments — went down as word spread that House Democratic Minority Leader Scott Inman (D-Del City) had announced the termination of his gubernatorial campaign and his intention to resign in January.

Inman’s announcement and the failure of HB 1035 each occurred one month to the day that special session began. Lawmakers returned to special session at the call of Gov. Mary Fallin to address a $215-million budget hole caused by the Oklahoma Supreme Court’s ruling that a cigarette “fee” passed in May violated the Oklahoma Constitution.

(Update: This story was updated at 1:15 p.m., Thursday, Oct. 26, to include House GOP members’ comments. It was updated again at 2:30 p.m. to include OIPA’s press release and statements from Joe Dorman It was updated a third time at 4:45 p.m. to include Kouplen’s statement.)