Capitol Insider: Bills Advance As State Revenue Concerns Grow
Lawmakers have advanced a bill that would reduce the taxes on vehicle sales, which would be a win for consumers, but would mean less money in the state treasury in a time when gross receipts are dropping. Dick Pryor and eCapitol News Director Shawn Ashley talk about the week at the state Capitol.
Dick Pryor: This is Capitol Insider, your weekly look inside Oklahoma politics, policy and government. I'm Dick Pryor with eCapitol news director Shawn Ashley. Shawn, the last few days the legislature been dedicated to floor work. Bills were moving fast and most with little or no debate. Almost all of the bills were on third reading. What is that stage in the approval process? Third, reading.
Shawn Ashley: Well, the Oklahoma Constitution requires that every bill be read three times on separate days in each chamber of the legislature. Now, as you might expect, they're not actually read in full. But what third reading is, is really the first time for the entire chamber to vote on a piece of legislation. After that legislation is approved on third reading, it then goes to the opposite chamber - House bills to the Senate, Senate bills to the House, and then it begins that process all over again. And as everyone probably remembers from Schoolhouse Rock, if a bill is passed in the same form in both chambers, that it then goes to the governor to be signed. If it's not, they then have to work through those differences in the conference committee process.
Dick Pryor: It's always good to work in Schoolhouse Rock.
Shawn Ashley: I think so.
Dick Pryor: A bill that has advanced somewhat under the radar would potentially affect a lot of people, and also the state budget. It pertains to motor vehicle sales taxes.
Shawn Ashley: Yes. In 2017, lawmakers added a 1.5 percent sales tax to the purchase of automobiles to help generate revenue to pay for the state employees pay raise and teacher pay raises. One thing that bill did not take into account, however, was trade-ins. So, if you go in today and purchase a $10,000 car, even if you have a $2,000 trade in, you pay $125 in sales tax on top of all the other registration fees involved. Senate Bill 1619 by Senator Darcy Jech, a Republican from Kingfisher, would add to the calculation that trade-in value. So, if you purchase a $10,000 car with a $2,000 trade in, you would then pay tax on the $8,000 final purchase price or only $100, saving yourself $25. The thing is, when you save money on that motor vehicle purchase, that's money the state doesn't get. And what this would do would cost the state about $11 million in fiscal year 2021, the upcoming fiscal year for only about half the year. And then when you look at the pattern of auto sales over the course of a full year, it's a $16 million impact.
Dick Pryor: And the budget is flat this year, so that could further complicate matters.
Shawn Ashley: That was one of the issues raised by Democrats, particularly in the Senate, in opposing the measure.
Dick Pryor: The House passed an important bill that would help address investigations involving missing and murdered Native Americans. It's a troubling issue in the U.S., Canada and Oklahoma.
Shawn Ashley: That's correct. There is a disproportionate number of missing and murdered Native Americans, and a disproportionate number of those cases often remain unresolved. So, advocates have been looking for a way to address that issue, and they think they have found that in House Bill 3345 by Representatives Mickey Dollens and Chelsey Branham, and again, Senator Darcy Jech. What this does is create a liaison office within the Oklahoma State Bureau of Investigation. The federal government is making funding available for this, which would exist in as many states as who are interested in pursuing it, and the liaison office would work with tribal governments and police agencies, as well as local and state police agencies to help coordinate their efforts. Because many times you have jurisdictional questions that come into play. And that is often why some of these cases go ignored for a period of time, lawmakers were told during an interim study in the summer.
Dick Pryor: Gross Receipts to the Treasury fell again in February. Of particular concern is a drop of almost 20 percent in gross production taxes on oil and natural gas.
Shawn Ashley: Yes, that's right. Low oil and natural gas prices dragged down collections in those areas, in particular. But what you have to keep in mind is that oil and natural gas taxes have an impact greater than just the gross production tax. They extend into sales and use tax, as well as individual and corporate income tax and probably, for that matter, motor vehicle and other taxes. So when you begin to see drops like that in gross production taxes, you'll certainly see it in other areas. And in the month of February, that was true in sales taxes, which were down 3.4 percent. Keep in mind, the Board of Equalization was told in February that total collections for the current fiscal year were likely to finish below the estimate, but within the cushion that is included in the appropriations process. If that holds true, the state will avoid any across-the-board budget cuts. But if this accelerates because of the slow economy internationally, in part because of the coronavirus and general economic slowing, we could see that accelerate and maybe have a bigger impact.
Dick Pryor: Thanks, Shawn.
Shawn Ashley: You're very welcome.
Dick Pryor: And that's Capitol Insider. If you have questions, e-mail us at email@example.com or contact us on Twitter @kgounews. You can also find us online at KGOU.ORG and ECAPITOL.NET. Until next time with Shawn Ashley, I’m Dick Pryor.