House fails revenue-raising measure immediately after it passes House and Senate JCAB

eCapitol News

Author: Cynthia Santos
Date: 05/16/2017

(eCap) The House failed a revenue-raising measure Tuesday night that would have increased both cigarette and gas taxes and moved the gross production tax rate from 2 percent to 7 percent after 18 months, rather than 36 months.

HB2414, by Rep. Leslie Osborn, R-Mustang and Sen. Kimberly David, R-Porter, adds a $1.50 per pack tax to cigarettes. The bill creates the Health Care Authority Enhancement Fund, the Mental Health and Substance Abuse Enhancement Fund, the Human Services Enhancement Fund, Oklahoma State University Medical Authority Enhancement Fund and the Health Department Enhancement Fund and apportions the first $185 million among the funds for FY2018. It apportions the full amount to the Health Care Enhancement Fund for subsequent fiscal years. The bill also imposes a tax of six cents per gallon on all gasoline used or consumed in this state and diesel fuel used or consumed in this state. The measure also reduces the time in which new wells are allowed an introductory 2 percent gross production tax from 36 months to 18 months.

Language was made available to members in a meeting Tuesday afternoon of the Joint Committee on Appropriations and Budget and passed out of committee with an 18 to 9 vote. A motion to suspend joint rules was adopted on the House in order to hear the bill on the floor immediately after it passed out of both the Senate and House JCAB.

The bill would “raise revenue for the budget crisis we’re in,” according to Osborn.

Democrats were quick to point out the gross production tax portion of the bill would not raise any money for the 2018 fiscal year budget.

Osborn noted that the gross production tax portion would begin to generate money in FY2019, generating a total of $33.6 million in FY2020. The projected revenue to be generated from the cigarette tax in FY2018 is $215 million and $171 for the fuel tax.

Before taking up the bill, Minority Leader Scott Inman, D-Del City, vowed his caucus would vote in block against the measure, effectively setting it up for sure failure.

Rep. Regina Goodwin, D-Tulsa, asked Osborn about increasing the gross production tax rate immediately, which has been part of the Democrat’s Restore Oklahoma plan for over two months. Democrats have held their ground on voting against certain measures unless a gross production tax rate increase was put on the table.

Osborn said she would not comment on the GPT increase, as it is not in the bill and questions were to be specifically kept to the bill.

Goodwin continued, asking about “helping all of Oklahoma” by increasing GPT rates generating about $500 million if raised from 5 to 7 percent. Osborn said those numbers are incorrect and inflated.

Republicans also chimed in, with Rep. Earl Sears, R-Bartlesville, saying the bill is “trying to close that (budget) gap and help Oklahomans.”

Rep. Scott Martin, R-Norman, asked what the effect would be should the bill not pass. Osborn said transportation, education funding and Department of Corrections funding would all be affected should the new revenue not be generated.

“We’re still short a half a billion in revenue,” said Walke. “Where is the next half billion going to come from in the next 48 hours.”

Osborn said that many more revenue bills will be coming down the pipeline, including the possibility of raiding agency revolving funds and using Rainy Day Fund money.

“Do you think that this is the proper way, the best way we can go about funding state government today,” asked Rep. Monroe Nichols, D-Tulsa.

“All I know is it’s one way to make sure we don’t cut every agency in the state 25 percent,” replied Osborn.

While Democrats continued to voice opposition, a freshman Republican agreed that the measure is not an easy vote for him.

“I have compromised to point of potentially harming my next election…because I care about the State of Oklahoma,” said Rep. Scott Fetgatter, R-Okmulgee.

Osborn emphasized the importance of compromise, saying there will always be “things you can live with and things you can’t.”

Inman noted, though, that there could have been no compromise because members of his caucus were not invited into budget negotiations

I don’t believe you were at the table…I hope that after today you are.

In debate against the bill, Rep. Matt Meredith, D-Tahlequah, said he feels frustrated with the continued meetings behind closed doors.

“There continue to only be one or two people who decide what bills get heard,” he said.

A total of nine members debated against the bill and four in favor.

Rep. Shane Stone, D-Oklahoma City, said the measure is the most “disgusting and immoral” bills he’s seen in his three years at the Capitol. Rep. John Bennett, R-Sallisaw, also debated against the measure, saying the state must first “cut out the fat” from state agencies.

“Cut the waste and protect the most vulnerable,” he said.

“I’m glad to hear that we’re now concerned about (the most vulnerable,)” said Rep Emily Virgin, D-Norman, in debate. The bill, though, asks those people do disproportionately fund certain services.

Many members debating against the bill, including Inman, noted that the bill generated nearly $1 billion of revenue in three years in taxes on middle-class families and only $30 million form oil and gas companies.

Rep. Eric Proctor, D-Tulsa, said the bill was the largest tax increase on middle class families in state history. The Democrats, he said, believe the bill to be unjust. He also reiterated that the vote would be a bipartisan vote against the measure.

Others called out the Democrats. Rep. Chad Caldwell, R-Broken Arrow, alluded to a week in which Democrats asked the same questions regarding recurring revenue on the House floor over 90 times, but refused to vote for bills containing recurring revenue.

“Let your hypocrisy shine bright,” he said.

Rep. Scott Martin, R-Norman, also called out the Democrats for proposing to vote down a bill that includes two proposals in their budget plan.

“Do your own plan, it’s not hard,” he said. “Real people are going to be impacted by our inability to do things…because we’re going to play politics.”

Inman reiterated his point in debate against the measure, saying those proposals were included as a compromise not a take it or leave it deal.

“If you’re using the word compromise, I don’t think it means what you think it means,” he said.

In closing debate, Osborn said she has “never been more disgusted” with the happenings in the building.

“They sent us here to fix the problems. Let’s start to fix them,” she said.

The bill received 51 aye votes and 46 nay votes, which is short of the 76 votes or three-quarters of the House necessary for legislative approval of the measure, but it is more than the 50 percent of the votes needed to place it on the ballot as a referendum.

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