The Oklahoma House of Representatives made a historic vote this evening, passing a $447 million revenue package 79-19. The vote on HB 1010XX marked the first time the body has hit the three-fourths supermajority for advancing tax measures since Oklahomans added that requirement to the state constitution 26 years ago.
“I’m happy that after about 15 to 17 months of me being in this building, we finally have a bill before us that was actually negotiated and put forth as a bipartisan compromise,” Rep. Matt Meredith (D-Tahlequah) said during debate on the bill, noting the oil and gas gross production tax incentive rate specifically. “It needs to be 7 percent, but we’re going to take 5 percent tonight because we’ve said all along we were going to take it (in the Democrat Caucus).”
But more than a dozen of the House’s most conservative Republican members — who have almost universally opposed new revenue votes over the past year — asked questions and debated against Monday night’s primary revenue bill.
Rep. Bobby Cleveland (R-Slaughterville) criticized House leadership for choosing to “rush it through.”
“In my six years of being here, I’ve never seen anything like this,” he said. “I’ve never seen a bill come out of nowhere.”
The revenue package within HB 1010XX includes:
- Raising the gross production tax incentive rate from 2 percent to 5 percent
- Adding a $5-per-room tax on hotel stays
- A $0.03 increase to gas taxes
- A $0.06 increase to diesel taxes
- Adding a $1 cigarette tax and other tobacco taxes (sans “moist” smokeless tobacco)
Taken with other pending measures, the revenue bill would fund greater than a $5,000 raise to the minimum teacher pay scale, public employee raises, support staff raises and additional education funding.
The bill marked the first chance for House Democrats to vote for the 5 percent GPT figure, something they have called for since early 2017 in exchange for their votes favoring tax increases.
All 28 House Democrats voted in favor, but they did so without the blessing of the Oklahoma Education Association, which has set an April 2 deadline for the roughly $900 million tax package they requested. That would be twice the size of the bill passed by the House tonight, and the OEA tweeted during debate on HB 1010XX that it is “still asking for a complete package.”
April 2 is still on. Our ask is still our ask. The House is considering a number of bills tonight that could be a step in the right direction. We’re still asking for a complete package, including funding for years 2 and 3. More details as they become known. #OKwalk4kids#oklaed
— OK Education Assoc. (@okea) March 27, 2018
But Rep. Earl Sears (R-Bartlesville) praised the bill for containing “targeted taxes” that will free up revenue for education funding and teacher pay raises.
“I stand here tonight, and I am ready to invest in the future and invest in the great state of Oklahoma,” Sears said. “Join me tonight, vote yes, and let’s all invest in this great state we call home.”
If Senate passes, a referendum on the horizon?
Rep. Kevin Calvey (R-OKC) said there is a “strong likelihood” that if HB 1010XX passes the Senate and is signed by Gov. Mary Fallin, it could be challenged via signature gathering and sent to a referendum vote of the people under Article 5 of the Oklahoma Constitution.
“There are already groups who have the political will to do that who are talking about that,” Calvey said.
Such a referendum occurred in March 1992 after HB 1017, a large tax increase to fund education. The referendum vote of the people failed, with only 46 percent of voters casting their ballots to repeal the education-funding measure.
Joined by several other conservative Republican House members, Calvey debated against HB 1010XX Monday night.
“It is a job-killer bill. It will also kill jobs in the tourism industry because of the hotel-motel tax,” Calvey said, noting that voters declined to pass a tax increase for education funding on the 2016 ballot. “This is an attempt to go back on the will of the people as expressed in the state question in November of 2016. Let’s put this on the ballot if you think this is a great thing and see what the people think about it.”
Treat: ‘Crying wolf scenario’ hurt oil and gas perception
Senate Majority Floor Leader Greg Treat (R-OKC) said earlier Monday that some Republican members of the Legislature became more likely to support a 5 percent GPT rate after the industry itself went from opposing 4 percent on new wells to supporting 4 percent on new and existing wells.
“There was a little bit of a crying wolf scenario where they said in October, ‘If you go to 4 (percent) on new, you’re going to destroy the industry,'” Treat explained. “And then all of a sudden (they) come out for 4 (percent) on all in January and say, ‘Hey, it really isn’t going to have a huge impact on our business model.’ I think there’s been some issues there.”
Treat said the oil and gas industry is well-liked and appreciated across Oklahoma.
“We know that it drives a lot of local economies, people going to restaurants and shops and all of that, so we’re still cognizant that anything we do can have an impact,” he said. “But I do think there has been a — ‘credibility issue’ is probably too strong of a word — but people are questioning numbers now coming out of the oil and gas industry since they said 4 (percent) in October was going to decimate them but 4 (percent) on all wells in January somehow would be fine.”
Oklahoma Oil and Gas Association president Chad Warmington issued a statement Monday saying that his organization’s past support for a 4 percent GPT incentive rate was “completely incumbent upon the approval of a broad-based revenue package” such as Step Up Oklahoma, which included a higher fuel tax and higher cigarette tax, as well as a series of government reforms.
“We do not endorse a plan that will continue Oklahoma’s over-reliance and unsustainable dependence on a single industry for financial stability; put Oklahoma families out of work; and add to the state’s social services burden,” Warmington said in his statement. “We have zero confidence today’s state leaders will act any more responsibly than those of the past who enacted massive tax increases with promises to fix education and other vital services.”
Warmington’s group supported the Step Up Oklahoma proposal, which included 4 percent GPT on all wells. In November, OKOGA and the Oklahoma Independent Petroleum Association opposed the “Plan A+” vote, which included 4 percent GPT on only new wells.
“The oil and natural gas industry is willing to support an increase in the gross production tax on new wells to ensure education and all other core government services are funded properly,” OIPA Chairman Berry Mullennix said in a press release Monday. “However, an increase to 5 percent eliminates the economic advantage that has made Oklahoma one of the top places for oil and natural gas investment in the world and would deter future investment in our state.”
House passes other components Monday, too
The House considered and passed other bills Monday night. With their votes included in parenthesis, they are:
- HB 3705 is the Fiscal Year 2019 appropriation for the Oklahoma State Department of Education. (94-6)
- HB 1011XX caps itemized deductions on income tax returns at $17,000 (59-40)
- HB 1013XX allows for games involving balls and dice to be administered in Oklahoma casinos (72-27)
- HB 1014XX accounts for fuel and diesel taxes added in HB 1010 as financing pertains to the ROADS fund (88-11)
- HB 1015XX extends existing fuel and diesel tax exemptions to the new taxes added by HB 1010 (99-0)
- HB 1016XX creates a Health Care Enhancement Fund (97-2)
- HB 1018XX places a limit on the sale of cigarette excise tax stamps (77-22)
- HB 1024XX provides for public employee raises (93-6)
- HB 1026XX provides a $1,250 raise for school support staff (91-8)
- HB 1023XX sets a new pay scale for teachers (98-1)
One other bill was pending on the calendar as well, but a vote did not occur:
- HB 1012XX caps tax credits for the wind industry at $35 million annually
Revenue bill: Read HB 1010XX
(Editor’s note: This story is being updated as other bills in the House package are being considered. It was also updated to clarify that the teacher pay bill adjusts the minimum salary scale.)