Capitol Insider: Bipartisan Budget Deal Likely Dead

A budget package that would fill the state’s $215 million budget shortfall and provide raises to teachers and some state employees was held up in a House committee Friday, and its future is now in doubt.

The budget bill tied with an 11 to 11 vote in the Joint Committee on Appropriations and Budget, or JCAB. Four of the five Democrats on the committee voted against the package, as well as seven Republicans.

In a statement, Gov. Mary Fallin said the state's "worst-case scenario will become reality" because the JCAB committee "failed so miserably."

“It appears that as a result of the House JCAB’s failure to pass the budget bill,  we will have to prepare a budget that will include drastic across-the-board cuts for all state agencies to deal with the loss of revenue," Fallin said.

In a statement, House Speaker Charles McCall, R-Atoka, indicated he is ready to look at alternatives to filling the budget hole because it is unlikely the current budget plan could garner the necessary 76 votes to pass.

The package that failed in JCAB was similar to a bill that didn't pass the House on Wednesday. The only difference was it included an increase in the gross production tax rate on oil and gas wells up to 4 percent for 36 months. Republican leaders added the oil and gas increase in an attempt to win over Democratic support.

The revenue package would still raise taxes on cigarettes, low point beer and fuel.

Committee chairman Rep. Kevin Wallace, R-Wellston, chose not to vote.

“What I can tell you, with the amount of Democratic support, or the lack thereof, that bill will not pass on the floor based on what I just saw in this room,” Wallace said.

Revenue-raising bills require a three-fourths majority to pass.

Currently, the gross production tax rate is set at 2 percent for the first 36 months of a well’s operation. After 36 months, the rate jumps to 7 percent. Democrats offered their support if the rate were set at 4 percent for the first 12 months, 4.5 percent for the first 18 months, or 5 percent for the first 36 months. The GOP offer of 4 percent at 36 months wasn’t enough to bring all Democrats on board.

Assistant minority leader Eric Proctor, D-Tulsa, said his party stands by its initial offer.

“We’re currently still in the position where we’ve submitted a letter to the Speaker, letting him know what we would work with him on. The bill failed today and so hopefully they’re willing to come back to the table and continue negotiating,” Proctor said.

eCapitol news director Shawn Ashley told KGOU that lawmakers want to complete work on the budget within the next week so that tax revenue can be collected by the beginning of February. Otherwise, agencies will begin to cut programs. The Oklahoma Department of Mental Health and Substance Abuse Services has indicated they will be out of money soon.

"If they don't have the money coming in very quickly they will literally begin running out of money and have to shut down programs," Ashley said. "The same is true for the Department of Human Services and the Oklahoma Healthcare Authority, although they have a couple more months that they can survive before they begin to begin shutting down programs. "

FULL TRANSCRIPT

Pryor: This is a special session edition of Capitol Insider, an insider's guide to Oklahoma politics and policy. I'm Dick Pryor with the Capitol News Director Shawn Ashley who is at the Capitol right now on a day that has seen a strange turn of events. Shawn, lawmakers are still trying to find a way to fill the state's $215 billion budget hole so a House committee considered a bill that would have raised money to fill the hole. What happened?

Ashley: Well this bill is very much like the proposal that was considered the other day on the House floor that included an increase in tobacco taxes an increase in the tax law of 3.2 beer and a fuel times. But it also included an increase in the gross production tax incentive rate, that rate that is 2 percent for the first 36 months. It would have moved it to 4 percent for the first thirty six months. It was assumed, after it was assumed that the bill would pass and we wanted the House floor for consideration this weekend but instead the bill failed on an eleven to eleven vote. That means it remains the property of the committee. But it also means that it could not move toward the floor. As a result the Senate Joint Committee on Appropriations and budget canceling its meeting this afternoon and did not take up the measure. So right now it's completely in limbo.

Pryor: A tie meant the bill failed, but the chair of the committee did not vote.

Ashley: That's what is very interesting in this case. The chair of the committee who is also author of the bill did not cast a vote as well as another member of the Republican caucus within the committee. That left it an 11 to 11 tie which means the bill does not pass. The bill could be reconsidered tomorrow. The committee has now adjourned but it is unclear where they plan to go with this.

Pryor: The speaker and the speaker pro-tem either one could have also voted. That's been done before.

Ashley: That's correct. House Speaker Charles McCall or Speaker pro-tem Harold Wright could have entered the meeting and could have cast a vote. They are ex-officio members of all House committees. And they have done so in the past to help move one discussion forward.

Pryor: So that's the revenue bill. What about the teacher pay raise bill in the bill that would have raised money for a state employee pay raise.

Ashley: Well that was rather interesting because those bills were considered first in advance of the proposal to raise those taxes and the teacher pay raise passed. And in the state employee though state employee pay rate rates passed, along with reestablishing the refundability of the Earned Income Tax Credit. However each one of these bills has specific language that ties them to the revenue measure. As a result without that revenue measure passing, they essentially don't have any impact because they wouldn't take it back.

Pryor: Will the House JCAB committee come back tomorrow?

Ashley: That's what we're waiting to see. We have yet to hear from House leaders to indicate what they plan to do. They could take that bill up again and give it another go. It could pass or if it fails if it passes it will be likely that the Senate Joint Committee on Appropriations and Budget would meet and take up that bill and the other measures and approve them and send them on the floor. They could then be considered in the House first.

Pryor: And when would they likely be considered on the floor?

Ashley: That move could term as early as tomorrow or it could come as early as Saturday or he could be pushed back to Sunday. The Senate has indicated that it plans to meet Saturday and Sunday. The House has indicated that it plans to meet at least on Saturday. They hope to get this work completed within the next week so that these tax revenues can be collected by the beginning of February.

Pryor: And that's critical for the health care agencies that are losing millions of dollars that a resolution be reached by November 1st or a couple of days after.

Ashley: That's exactly right. As Terri White told us just last week, if they don't have the money coming in very quickly they will literally begin running out of money and have to shut down programs. The same is true for the Department of Human Services and the Oklahoma Healthcare Authority although they have a couple more months that they can survive before they begin to begin shutting down programs.

Pryor: And very quickly if there is a plan B that would likely mean more cuts.

Ashley: That very likely would mean more cuts, tapping the rainy day fund as well.

Pryor: All right Sean Ashley thanks at the state capitol. That's Capitol insider. We'll be back again at 7:45 on Monday morning and if you'd like to contact us you can do it at news at kgou.org or on Twitter @kgounews. Until next time with Sean Ashley, I'm Dick Pryor. 

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