Lawmakers enact balanced budget, reforms

Part 1 of two-part series on accomplishments of 2014 session

Rep. Mike Sanders

The hard work of four months of legislative session has resulted in a number of legislative accomplishments that I would like to share with you in two columns. In this column, I would like to talk to you about the budget, tax cut, pension system overhaul, state employee compensation reform, extension of drilling incentives, Capitol repair bond, Common Core repeal, school spending flexibility and a reduction to the number of End of Instruction tests.

Common education, meaning K-12 public schools, received an increase of $80 million and another $25.5 million for ad valorem reimbursements. In total, they received $105.5 million in new money and $2.5 billion overall. Almost $2 billion will go directly to schools, while $600 million will go to fund the teacher retirement system, alternative education, state testing, reforms and the state education department. Higher education received $988.5 million and career and technology education received $138.9 million to career and technology education. In total, we are investing $3.5 billion in education when you combine these three separate appropriations.

The Department of Public Safety received a $5.4 million increase over the previous year for a total of $95.8 million. The increase will fund pay raises for state troopers and other employees. The Department of Corrections received a $7.7 million increase for pay raises. The chief medical examiner received a $1.5 million increase for operations and debt service for the new headquarters in Edmond.

This year’s tax cut legislation will gradually lower Oklahoma’s top income tax rate from 5.25 percent to 4.85 percent over several years, if general revenue increases during that time. The top personal income tax rate will fall to 5 percent in Fiscal Year 2016 or later when state revenue projects are greater than projections in the previous year. The rate will further fall to 4.85 percent at a minimum of two years after the first cut, if revenue increases again. Past tax reductions have reduced the rate from 7 percent to the current 5.25 percent rate.

The Legislature also enacted a major pension reform change that will take effect in November of 2015. House Bill 2630 will switch new state employees who participate in the Oklahoma Public Employees Retirement System to a 401(k)-style defined contribution plan. The new plan will enable new workers to contribute between 3 and 7 percent of their salaries into the retirement system and receive a match from the state. Current state employees will remain under the defined benefit system. The legislation is intended to reduce Oklahoma’s unfunded pension debt of more than $11 billion.

After a recent study requested by the governor found state employee salaries to be up to 20 percent below market, particularly in the areas of public safety, corrections and social services, the House took the lead to address the issue of state employee compensation. House Bill 3293 establishes a framework to move state employee pay within 90 percent of their private-sector counterparts within four years. It will create a politics-free process to set pay structures and determine if targeted pay band adjustments are necessary, rather than across-the-board pay raises as in years past.

We also enacted a plan to replace expiring drilling incentives to help us protect the oil and gas industry in the state. House Bill 2562 provides an incentive on oil and natural gas production from all new wells drilled after July 1, 2015, which makes the effective gross production tax rate two percent for 36 months. After the first 36 months, the gross production tax rate of 7 percent applies.

An agreement was reached to authorize $120 million in bonds to fund the biggest overhaul of the Capitol building since its construction. The House approved House Joint Resolution 1033, which will require that the repairs be overseen by a 9-member oversight committee made up of Republican and Democratic lawmakers. Exterior repairs could begin this summer, but the larger overhaul may take a while to get going. It will include replacing approximately 80 percent of the plumbing pipe inside and under the Capitol, reworking the mechanical and electrical systems and also replacing concrete throughout the building.

The Legislature also repealed Common Core standards this year. House Bill 3399 also prevents federal control over standards and assessments and creates a process to develop state standards.

We also enacted an extension to the flexibility we currently provide to schools on whether or not to buy new textbooks and other materials. That flexibility was set to expire on June 30, 2014. Senate Bill 1469 extends that flexibility through June 30, 2016.

Finally, I would like to mention House Bill 3170. This legislation will allow students who score proficiently on End of Instruction tests for Algebra I, English II, Biology and one additional subject to get out of taking further tests. I regularly hear about how over-tested our students have become and am glad we made this change.

In my next column, I will tell you about legislation to help the Oklahoma Highway Patrol recruit more troopers, public safety policy changes and a bill that will increase local revenues without increasing the cost to taxpayers. As always, I can be contacted at (405) 557-7407.

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