Oklahoma Senate Passes Tax Hike on Oil and Gas

SlugSlinger

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Possibly largest tax increase in Oklahoma history. This is a half billion dollar tax increase.


November 7, 2017

In a move that rankled the oil and gas industry, the Oklahoma Senate on Monday passed a measure giving pay raises to teachers and state workers and increased the gross production tax on oil and gas.

The vote was 37-5 in support of what the Senators called a “bipartisan revenue bill.” Senate president pro tem Mike Schulz of Altus called it one of the “most difficult, agonizing votes that you’ll ever cast in your Senate career” during the floor debate.

Afterward, he and other GOP leaders spoke about the plan.

“Our members felt like we need to make one more shot at raising revenue and giving an honest, legitimate chance to do the right thing, raise the revenue that’s necessary to put this state on better footing into the future.”

The bill would increase the gross production tax from 2 percent to 4 percent on all new wells. It would also create a $1.50 tax on cigarettes and add a 6-cent tax on motor fuel.

But the Oklahoma Independent Petroleum Association responded immediately by expressing disappointment over what the Senate did.

“In their zeal to place a greater burden on the state’s largest single taxpayer, Senators have put investment in this state’s oilfields and the jobs of working Oklahomans in jeopardy,” said Tim Wigley, President of the association.

He pointed out that the vote came just a few days after State Treasurer Ken Miller announced gross receipts to the treasury were up by double-digits for the first time in four and a half years.

“The continued attack on tax policy that has drawn billions of dollars of investment capital into the stat’es oil and natural gas industry will only reduce our state’s ability to attract new drilling and will stymie the economic growth driving treasury collections,” charged Wigley.

He also said that the original rate of 2 percent for the first 36 months of production was put in place in 2014 by legislators, some who are still in office “because they understood a growing and vibrant oil and natural gas industry equals a growing and vibrant Oklahoma economy.”

Sen. Schulz admitted he and other leaders in the Senate did not notify House leaders of the decision to vote on the measure. But he added he hoped the House “did the right thing” and would pass it.

However, the House had no plans to take up the issue on Tuesday.

If adopted, the bill would raise the oil and gas production tax rate from 2 percent to 4 percent on all new wells. It would add a 6-cent tax on motor fuel and implement a $1.50 tax on cigarettes.

The bill includes a tax hike on smokeless tobacco and low-point beer.

“This is one of the most difficult, agonizing votes that you’ll ever cast in your Senate career,” Senate leader Mike Schulz said during floor debate.

Schulz, R-Altus, is president pro tem of the Senate, its elected leader. He said that over the past week, he and House leadership have talked about which agencies might be forced to cut their budgets if new revenue isn’t found.

“Our members felt like we need to make one more shot at raising revenue and giving an honest, legitimate chance to do the right thing, raise the revenue that’s necessary to put this state on better footing into the future,” Schulz said during a post-vote news conference.

He also said it’s the last chance to fix the shortfall without cuts. Among those cuts could be the elimination of the state’s involvement in the ADvantage Waiver Program, which provides in-home care.

Lori Taylor and Richard Anderson both rely on ADvan

Oklahoma Senate lawmakers are urging the House to adopt a package of tax hikes that could fill most of the budget shortfall, provide recurring revenue and pay for teacher and state employee salary increases.

The bill is considered by the Senate to be the “last chance” for lawmakers to avoid raiding the state government’s piggy bank and cutting the rest.

The measure adopted Monday is virtually identical to other proposals considered during the special session, but so far it is the only one to get this close to becoming law. If the House can muster 76 votes for its approval, it would be eligible for the governor’s signature.

Gov. Mary Fallin endorsed the bill after the bipartisan vote; just five Republican senators voted against.

If adopted, the bill would raise the oil and gas production tax rate from 2 percent to 4 percent on all new wells. It would add a 6-cent tax on motor fuel and implement a $1.50 tax on cigarettes.

The bill includes a tax hike on smokeless tobacco and low-point beer.

“This is one of the most difficult, agonizing votes that you’ll ever cast in your Senate career,” Senate leader Mike Schulz said during floor debate.

Schulz, R-Altus, is president pro tem of the Senate, its elected leader. He said that over the past week, he and House leadership have talked about which agencies might be forced to cut their budgets if new revenue isn’t found.

“Our members felt like we need to make one more shot at raising revenue and giving an honest, legitimate chance to do the right thing, raise the revenue that’s necessary to put this state on better footing into the future,” Schulz said during a post-vote news conference.

He also said it’s the last chance to fix the shortfall without cuts. Among those cuts could be the elimination of the state’s involvement in the ADvantage Waiver Program, which provides in-home care.

Lori Taylor and Richard Anderson both rely on ADvantage. They both use
 
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Judi

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Well,...they should start by cutting the fat,...Like cutting their pay in half, or more !!!.....for starters, ...next, put on notice all state employees, guess what....no pay raises, (exclude LEO's Fire, Teachers) ... pensions ...start a 401 ... All these political hacks (staff) that work for you, cut them numbers in half also, most are relatives who do nothing anyhow.....NO more tax dollars for extra crap that furthers their political careers. Remember ....They are "suppose" to be doing this for the state, you know civic pride.... to many make a career from it.

Now ...that is just a stop gap....Start taking bids from gas companies for provides gas for cars, trucks,....Must be lower the listed price...Just like the big cities do if not doing already.....Electric ...all lights and power items turned off when after hours.

revenue .....Triple all out of state license fees for hunting, fishing. After all they come here to hunt a extra $10 on the lic. is not going to cancel trips....

I know this will raise eyebrows now,....Ready,...Legalize marijuana ...Tax it ...sell to other legal states. Those states that have are making a ton of money,....

Showcase the land. Attract tourist.....give start up Mom & Pop businesses a three year tax break,....New chain stores, factories every local person hired they get a break for three years on the state tax....unless they invest back into the state,....then half it.


Just my thoughts,....but who the hell am I but a voter and tax payer.......
 

steelfingers

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Can't pick and choose who you want to cut. Do you think prison guards that qualify for food stamps should be excluded in your broad brush fix? Not only do they not get any raises they are in danger everyday of getting killed. So understaffed it dangerous even to visit a prison.
 

Judi

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Can't pick and choose who you want to cut. Do you think prison guards that qualify for food stamps should be excluded in your broad brush fix? Not only do they not get any raises they are in danger everyday of getting killed. So understaffed it dangerous even to visit a prison.
...

No...prison guards are LEO's....I would not want to work in a zoo ...I agree very dangerous job, seeing the scum that goes into those places they should always ...always be staffed to the T/O ....
 

steelfingers

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The state's a mess. Embarrassed to be seen in the rotunda. Visits to the elected is like talking to a brick about Quantum theory.
The sad thing is, no matter what happens, it has zero impact on those cats.
 

Shadowrider

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*scratches head* Remind me why I continue to vote GOP?
It's getting hard to remember isn't it? We need more like this one for sure.

This spring, Terry Cline, Gov. Mary Fallin's then-secretary of health, berated me for refusing to vote for tax increases. Last week, Cline was forced to resign when apparent fraud and/or mismanagement was uncovered at the Department of Health.

This makes one wonder: If we had passed all the tax increases during the 2017 session, would this corruption have remained hidden? I suspect so. The additional money would have filled accounts emptied by mismanagement.

I suspect we've only seen the tip of the iceberg of exposing corruption in state spending, because state agencies haven't been independently audited in years!

State government insiders are lying to those who serve vulnerable Oklahomans, telling them that tax increases are necessary to preserve services, when there is enough available cash to plug the current $214 million gap without any tax increase. These lies cause needless anxiety to the vulnerable, causing them to pressure legislators for tax increases.

Perhaps now we are seeing the real reason for the increasingly desperate attempts by government insiders to raise your taxes. The insiders need tax increases to cover up the corruption.

The insiders have raised taxes by $500 million these past two years. Instead of more tax increases, we should audit state agencies to expose corruption and waste. Even before auditing, we can identify more than enough potential savings to fill the current gap, cover next year's expected shortfall, and raise teacher pay. Here's a sampling:

• Roll back wind subsidies. Over a billion of your tax dollars have subsidized corporate welfare for huge wind companies, often foreign-owned, which provide almost no jobs. (By contrast, the oil and gas industry employs over 150,000 and pays 25 percent of all Oklahoma taxes).

• Trim university administration costs. Oklahoma's universities have administrative costs 70 percent higher than the national average. Reducing administration to the national average saves $374 million annually.

• Shift more education dollars to teachers. Who received the money from House Bill 1017 and the lottery that “saved” education? Administrators and other non-teacher costs. Rolling back this noninstructional staffing surge saves $373 million annually, to raise teacher pay by $8,000.

• Increase low-income scholarships. A recent study by Oklahoma City University shows every $1 spent on the Opportunity Scholarship Tax Credit leverages private donations to save $1.24 for the state budget, and produces $2.58 for education. Increasing the cap on this credit saves taxpayers millions and helps low-income children.

• Reserve TSET funds for Medicaid. Reserving the Tobacco Settlement Endowment Trust for Medicaid saves at least $85 million annually.

• Criminal justice reform. I'm tough on crime — I prosecuted terrorists for the Army in Iraq. Let's be tough on crime in a cost-efficient way. Too many Oklahomans are jailed for what amounts to debt collection, often for minor offenses.

If we raise taxes now, we will never expose the corruption or cure the state's spending addiction. Should we cut waste first? Or raise taxes? Please let me know at www.okhouse.gov/Members/Default.aspx.

Kevin Calvey, R-Oklahoma City, represents District 82 in the Oklahoma House of Representatives.
 
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