Lawmakers Chart Course After Tax Plan Misstep

OKLAHOMA CITY — Lawmakers were headed back to the drawing board and reassessing options Tuesday, hours after House legislators defeated a proposal that would have raised $581 million in taxes to help fund roads, health care and $5,000 teacher raises.

Lawmakers rejected a suggested $1.50 per pack tax on cigarettes and cigars; a 10 percent tax on chewing tobacco; a 6-cent tax on fuel; a 4 percent tax on oil and gas wells; and $1 per megawatt tax on wind production.

“The games are tiresome,” House Floor Majority Leader Jon Echols, R-Oklahoma City, said Tuesday. “They’re tiresome for the public. They’re tiresome for me. And the reality of that plan not passing with everything that was in it is there just simply is not a plan that can pass.”

House Republican leaders had touted the Step Up Oklahoma plan as the only viable option. But even a late night plea from Speaker Charles McCall, R-Atoka, urging his Democratic colleagues to change their stances, wasn’t enough to salvage the plan. A bipartisan group of lawmakers defeated the deal by a double-digit margin.

Step Up supporters said the new revenue would help fix the state’s ailing budget, which faces annual shortfalls, while giving teachers their long-awaited pay increase. Backers included prominent business, political and industry leaders

Hundreds of Oklahomans also turned out at the Capitol on Monday to press lawmakers to embrace the proposal.

“We believe we brought forth a balanced, measured plan, one that would benefit our teachers, schools, hospitals and businesses,” the Step Up coalition said in a statement Tuesday. “Yesterday’s solid turnout of supportive advocates at the Capitol shows us that Oklahomans are ready for a change. They want our problems fixed.”

The Step Up plan was the only revenue option being discussed, said Michael McNutt, a spokesman for Republican Gov. Mary Fallin, in an email.

“The governor's office will be turning attention to closing the books on the 2018 fiscal year, and then preparing to work with legislative leaders on the 2019 fiscal year budget,” he said.

In a statement, Fallin said she was disappointed most Democrats "chose politics over people" by refusing to vote for the package.

"Their 'no' votes resulted in votes against a teacher pay raise, funding our health and human services and protecting our most vulnerable citizens, and against putting our state on a stable budget path forward," she said. “House Democrats are saying there will be a better budget plan submitted that they can support, but don’t count on it."

With the prospect of no new revenue — coupled with a lingering $98 million shortfall — House lawmakers will turn their focus to balancing the 2018 budget, Echols said.

That vote is expected later this week, he said.

In addition to drafting the upcoming 2019 budget, legislators still need to balance the current one.

Fallin vetoed lawmakers' latest attempt, saying it did not provide a long-term solution to the state’s recurring budget deficits. Lawmakers already have failed to garner enough support to pass new taxes in an effort to fill the $215 million void they created by approving an unconstitutional cigarette tax expected to fund health care, social services and mental health programs.

Echols said lawmakers plan to use $53 million in cash to fill much of the remaining 2018 gap, but many state agencies likely will share $45 million in cuts.

“There’s a point at which you bang your head on the wall over and over and over again, and you eventually realize you have to pass a budget with the money that you have, and then everyone has to go back and defend their votes,” Echols said.

On Tuesday, advocates were both cheering and bemoaning the latest failure of the state’s Republican-controlled Legislature to raise revenue.

Public school teachers were banking on lawmakers to pass the plan, which would have given them their first state raise in nearly a decade and brought their pay up to the regional average.

“The failure of the state House to pass (the revenue measure) is a soul-crushing blow to public education in Oklahoma,” said Joy Hofmeister, the state superintendent for public education, in a statement. “The teacher shortage is real, it’s severe and each day it goes unaddressed we put our children at further risk.”

Hofmeister said until the state can offer regionally competitive pay, teachers will continue to leave for jobs in other states and professions, and young people won’t want to enter the classroom.

Oklahoma’s teacher pay is currently the lowest in the region, experts say. The average Oklahoma teacher made $44,921 during the 2016-17 school year, according to the state Department of Education. The regional average was $48,450, the agency reported.

“This crisis hurts every public school student in Oklahoma, and it’s a crisis that only the state Legislature can remedy,” she said.

Wind advocates, though, were pleased the portion that would have added a new tax to producers failed.

“Obviously, I think that ultimately the body saw some flaws with the overall plan and didn’t think it was the right thing to do at this moment for the people of Oklahoma,” said Mark Yates, executive director of OK WindPower, an advocacy group for the industry. “We’re happy to see a punitive measure for our industry didn’t pass.”

House Minority Leader Steve Kouplen, D-Beggs, who voted against the tax plan, said his caucus members had concerns about the Step Up plan. He said the new tax on oil and gas should have been higher while the proposed tax on the wind industry seemed “punitive” and would have hindered the industry’s growth.

“Some people may think it’s greedy, (but) we just want a fair and equitable tax structure that isn’t a regressive one,” Kouplen said. “We honestly believe everyone needs a little skin in the game.”

He said his caucus is willing to continue to negotiate revenue measures that both parties could support.

“We need not really rush into something,” he said. “I think that part of the plan was rush people (to vote) without really examining the effects of it.”

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