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Budget, Medicaid Likely To Dominate Closing Weeks Of Oklahoma Legislature

May 2, 2016

It’s now the final month of the legislative session, and lawmakers have less than four weeks to pull off a budget deal to close a $1.3 billion shortfall for the fiscal year that begins July 1. Will they get it done?

“Yes,” state Sen. Mike Schulz, R-Altus, told reporters Thursday. “I want to go home.”

Oklahoma's constitution requires the legislature to adjourn on the final Friday in May. Lawmakers have discussed wrapping up their work a week early, which they’ve done every year since 2012.

“We always get to this time of year and everybody always wants to start speculating about a special session,” Schulz said. “I’m confident in the coming weeks we’ll be able to come together and get it done.”

But the chairman of the House Appropriations and Budget Committee says it’ll still be another week before lawmakers consider their first budget bills to try to minimize cuts to education and health care in the Fiscal Year 2017 budget.

State Rep. Earl Sears, R-Bartlesville, said the governor’s office and the GOP leadership in the House and Senate have agreed on a couple of ideas that could become legislation heard in the second week of May, The Oklahoman’s Rick Green reports:

"A number of approaches will develop funds to help us address the shortfall," Sears said. "We're close."

Health officials have warned they can't sustain major cuts without destabilizing the Medicaid system. Education leaders say reductions will cause programming cuts, teacher layoffs and four-day school weeks.

But House Minority Leader Scott Inman, D-Del City, says he’s worried about a repeat of last year, when the budget wasn’t introduced until the final day of the session.

“It was within a few hours they released it, suspended the rules, and made all of us vote on a $7 billion budget without having an opportunity to really review it,” Inman said Thursday. “That’s not the way this process should work. That’s not the way our constituents want it to work.”

Schulz says he sees a “glimmer of hope” in the oil and gas industry. But once production tax revenue recovers, he wants to see tax credits and one-time spending formulas changed to fix what he described as a “structural deficit” in the budget.

Last month Gov. Mary Fallin proposed using $450 million in bond money to help shore up the $1.3 billion gap. But state Sen. Clark Jolley, R-Edmond, who chairs the Senate Appropriations Committee, said Thursday bonding should be one of the last options because it’s a one-time source of funding.

“Bonding, in many ways, is no different than someone taking a cash advance to use it for money floating purposes,” Jolley said. “Our goal would be if we are going to do a bond, what I’ve advocated is no more than $150 million on a two-year commitment.”

Jolley also said transportation, education, and healthcare were priorities, but it’s too early to know what ideas would pass the House or the Senate, and if Fallin would sign them. Lawmakers are also trying to avoid significant slashing to Corrections and Department of Human Services funding.

“We’ve sustained a lot of cuts in core agencies because we’ve kept education harmless or increased funding to education over the last few years,” Jolley said. “And the growth of money that has had to go to our health care area has been dramatic.”

Taxing Tobacco

When she unveiled her executive budget during February’s State of the State address, Fallin also proposed raising more than $180 million through a new $1.50-per-pack cigarette tax. Jolley said he supports the idea in order to decrease Oklahoma’s smoking rates by pricing people out of the habit.

“What we are paying in healthcare costs – for what is going to happen because of behaviors today in 20 years – is significant,” Jolley said.

But Schulz is against the idea because it puts non-tribal retailers at a disadvantage, since the tribes have some of that tax money refunded. As a lawmaker representing a district along the Red River, he also says Oklahomans who want cheaper cigarettes will simply go to  Texas, Kansas, or Arkansas to buy them.

Medicaid Makeover

Lawmakers are starting to support a plan to shift coverage for some of Oklahoma's Medicaid recipients in order to trigger an infusion of federal funding, but the idea of funding it with the tobacco tax is facing an uphill battle.

State health officials unveiled the Medicaid Rebalancing Act of 2020 this spring as an alternative to a traditional expansion of Medicaid authorized under the Affordable Care Act. But Inman says he's against putting it on the ballot because of the clout of the tobacco industry.

“If we're going to try to help our hospitals by bringing in revenue through the cigarette tax, you are jeopardizing that by putting it to a vote of the people where big tobacco can come in and defeat it,” Inman said. “So if it is defeated, not only will the revenue not come in to help take care of the cuts that are currently facing the Health Care Authority, but it also takes the issue of any potential cigarette tax increase off the table for years, much like when the gasoline tax failed at the ballot."

Eighty-seven percent of voters disapproved of raising Oklahoma's motor fuel tax in 2005 to pay for road and bridge improvements – one of the most lopsided defeats of a state question in history. The Medicaid rebalancing plan would still require federal approval, but the biggest hurdle is the $100 million price tag.

"I don’t know if Medicaid rebalancing is a sure thing, but trying to mitigate of impact on provider rates is absolutely a priority,” Jolley said. “I’m not a big fan of apportionments. I’m not going to say that we will pass this if it’s directed to that. I think we would want to pass revenue measures or revenue changes to bring permanent change so we’re not using one-time funding and having a structural deficit.”

Schulz says the plan has merit, but his biggest concern is whether moving people from the state’s Medicaid program to the Insure Oklahoma plan for low-income residents would actually change their habits.

“Are they going to start going to the primary care doctor? Start making the wellness checks, appointments like they need to, to really change their health outcomes? Or are they still going to be dependent on the emergency rooms just like they are today?” Schulz said. “The behavior needs to change for the price of the healthcare delivery to really come down on that population.”

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