In an interview with CapitolBeatOK, Oklahoma Speaker of the House Kris Steele this week discussed key policy discussions unfolding at the state Capitol during this last week before Christmas.
The interview focused on this cycle’s legislative task forces and interim studies, possible reforms of tax credits and business incentive programs, and alternatives to incarceration, such as Tulsa’s acclaimed Women in Recovery program.
Steele contended the Interim Studies conducted since adjournment in late May have been more substantive than usual. He agrees that momentum for income tax reductions is significant, and expects some further cuts in the next session to continue the state’s shift away from the income levy.
Turning to corrections policy, Steele said the Tulsa-based program Women in Recovery is one of the best available models for effective programs that hold offenders accountable and under supervision while reserving prison beds for violent offenders. This report focuses on the first two-thirds of the conversation with Steele, prior to the discussion of the women in recovery program.
The Shawnee Republican said he was “very pleased with the work that we’ve done in reference to the policy studies and research, over the interim. We’ve taken a very serious look at DHS reform, for instance, corrections reform, pension reform.
“We’ve delved into our state’s tax code. That committee has been very serious and diligent in trying to develop objective criteria by which to measure each and every tax credit is currently on the books in Oklahoma.
“We have a water committee that has been very persistent in their work in trying to lay the foundation, this next legislative session, for a new comprehensive water plan for the state of Oklahoma.
“We continually monitor our budget and other various issues. I’m pleased with the leadership within the body, and the seriousness of our various members in terms of the responsibility they have taken with relation to these and other policy issues.”
Much of the interview focused on budget issues and other fiscal policy decisions coming over the horizon.
Steele discussed at some length tax policy, studies of tax credits and business incentives, and possible reductions in the state income tax.
Speaker Steele made a point of blending discussion of possible tax credit reform with his hopes for a new round of cuts in state personal income tax rates. Concerning the budget, he took note of the Board of Equalization’s “preliminary indication of what the state certification as far as appropriations will be for this session. … They’ll come back in February to certify the actual amount.”
Steele reflected, “By all indications, Oklahoma’s economy is faring well compared to the rest of the nation.” He expressed hopes state revenues will increase 7-10 percent over last year. The trends amount to what he deemed “a positive sign.”
All that said, “we’ve utilized a lot of one-time monies in the past two years to balance our state budget. There were some federal stimulus dollars that were involved in the appropriations that will not be there anymore, some cash reserves that will not be there this go-round.
“So I think when it’s all said and done, separate from any tax reform — significant tax reform — we’re looking at probably a stand-still budget. But, the House of Representatives is fully committed, really committed, to cleaning up the tax code.”
Turning to tax policy, he continued, “What’s happened over the course of time is that Legislature has implemented various tax incentives and tax credits and things of that nature, many of which were set to expire at a date certain.
“I think it was Ronald Reagan who said that the closest thing to eternal life is a government program. I think he was probably onto something there, because none of these tax credits have gone away.
“We suspect many of them have lived their life, expired their usefulness, they’ve served their purpose, or they may even have been misused or abused.
“Chairman [David] Dank and his committee have diligently worked to establish some objective criteria based on our state’s Constitution, that each and every tax credit will have to meet, in order to stay on the books.
“Certainly, we want Oklahoma to be competitive with … other states, but also want to be extremely responsible with the resources, the taxpayers’ money, that we have been entrusted with.
“So, we will take a close look at our state’s tax codes. I suspect we will begin to clean up and probably eliminate some of the tax credits either have lived their life and served their purpose, or which need to expire.”
Steele expressed his belief that further income tax rate reductions are possible. He told CapitolBeatOK, “We are having some very significant discussions on how we can systematically and methodically begin to reduce our personal income tax in the state of Oklahoma. We think it’s very important. It’s really the next major policy issue that needs to be addressed to really help Oklahoma reach its potential in the area of creating an environment within our state that is conducive to job growth and job creation and job enhancement.
“I hope that at the end of the day we’ll see some very intelligent policy move forward and be enacted into law.”
Saying he believed new steps to reduce income taxes are possible, Steele noted, “I think that the important thing is that, really the two issues we’re talking about – cleaning up the tax code, and subsequently reducing our state income tax — go hand in hand.
“I think as we free up some dollars that are tied up in some tax credits or some tax programs that are no longer necessary, that’s going to give us the opportunity to begin that process.”
He cautioned, “I don’t think that you’re going to see in one fell swoop, necessarily, just an automatic drop in our income tax rate. I do think you’re going to see a plan that will be phased in over the course of years, as we phase down, and our economy grows. We want to make sure that we are funding core services of government, but more importantly we want to make sure that the people of Oklahoma are able to keep the money that rightfully belongs to them.”