Senate Appropriations Chair gives update on budget

Sen. Roger Thompson

OKLAHOMA CITY –Senate Appropriations Chair Roger Thompson, R-Okemah, gave an update on Wednesday about key areas of the budget as negotiations between the Senate and House continue for Fiscal Year 2022.  Thompson touched on some of the items under discussion and his priorities for the budget.

EDUCATION FUNDING

“On the Senate side, one of the big items we’re looking at is providing additional funding for science textbooks,” Thompson said.  “We always have $33 million as a line-item, but we’ve added $27 million to that for a total of $60 million.”

Thompson said education received an additional $600 million in CARES funding, and an additional $1.49 billion under the American Rescue Plan.

“I think you’ll see some bills coming out trying to define how they can use some of that money, but education remains a top priority for us.  They’ll be well-funded.”

MEDICAID EXPANSION

Thompson said the projected cost for Medicaid expansion, which was approved by voters last year, is just over $164 million.  Discussions about how to cover that cost continue.

“We have several hundred million dollars coming in, much from the American Rescue Plan, but the critical point is this is one-time money.  There’s a thought out there that simply says let’s use that money for Medicaid expansion.  I am not for that,” Thompson said.  I don’t care how big the pot is, you don’t use one-time money to pay for an ongoing expense.  The people of Oklahoma voted that they wanted Medicaid expansion, but this will be an annual expense and it must be paid for, so we’re continuing to have discussions on that.”

PENSIONS

Thompson said in order to protect education funding last year, some of the apportionment directed to pension funds was redirected to education funding for two years.  After the redirection for two years, those pension systems would receive a slightly higher apportionment for the next five years to repay those funds.  Because revenue collections have come in much stronger than expected, the redirection is not needed.  Thompson said there are basically three options moving forward.

1. Stop the redirection for FY ’22, which would require a $133 million appropriation to education.  The pension systems would be paid back the amount redirected last year, which would be $128.7 million, with a total cost of $261.7 million.
2. Stop the redirection for FY ’22 and allow the redirection from FY ’21 to still be paid back over the next five years.  Total cost would be $133 million.
3. Allow the current plan to remain in place.  This would result in no cost to the FY ’22 budget.  Pensions would simply be made whole by the end of FY ’27.

“Again, discussions on this are ongoing,” Thompson said.

FILM REBATE PROGRAM

The Oklahoma Film Enhancement Rebate Program currently has an $8 million rolling cap per fiscal year. Rebate funds are pre-qualified for eligible applicants on a first-come, first-served basis.  The rebate offers a base percentage of 35% on qualified Oklahoma expenditures.  Thompson said he would like to see that cap raised to $50 million, while the House has proposed a $20 million cap.

“Thanks to this rebate, “Killers of the Flower Moon” is being filmed in Oklahoma now and represents a $120 million investment in our state.  This is an Oklahoma bill boosting the production of major motion pictures and streaming series, helping promote the creation of Oklahoma companies and jobs, and helping us diversify our economy,” Thompson said.  “Our investments are paying huge dividends for our state.”

TAX CUTS

Thompson said the House’s proposed corporate income tax cut would cost the state $32.3 million in the first year but would increase an additional $99 million yearly until it reached a total cost of $323 million.  They’ve also proposed a .25 percent cut in the income tax, which would cost the state $71 million the first year and $180.7 the second year.

The Senate passed legislation that would reinstate the full sales tax exemption on motor vehicles and trailers, which would have an annual cost of $148 million.

“Faced with declining revenues due to downturns in the energy industry, the Legislature voted in 2017 to remove 1.25 percent of that exemption, but it was always our intention that as soon as we could, we would restore the full amount,” Thompson said.  “I believe a promise made should be kept.”

SPECIAL SESSION

Due to the pandemic, the release of the final 2020 U.S. Census Data to the states has been delayed, which will result in a special session to be held in the fall.  Because the constitution mandates the completion of legislative redistricting by the end of the 2021 session, lawmakers have utilized the estimates provided by the U.S. Census Bureau to complete this task.

“Once we get the final numbers, we can make any adjustments that may be required in special session.  We’ll also complete congressional redistricting at that time,” Thompson said.  “At a minimum, the special session would run five days, at a cost on the Senate side of about $10,000 per day.  It is a small amount in comparison to the overall budget, but something I want people to be aware of in the interest of transparency.”

SAVINGS

“I’d like to see us save back $600 million to $700 million in this process,” Thompson said.  “The savings we had last year helped us to protect core services, and I want to make sure we have savings going forward.”

ROADS FUNDING

Apportioned revenues were redirected to education last year, with bonds used to backfill that amount to the ROADS (Rebuilding Oklahoma Access and Driver Safety) program.

“We’d planned on this being a two-year diversion, but this year we could restore the apportionment to the ROADS pre-FY ’21 levels at a cost of $180 million.”

McGIRT CASE

“Because there are attempts to apply the McGirt ruling in a broader area of law than originally anticipated, we propose allocating an additional $10 million to the attorney general for future litigation,” Thompson said.

CLOSING REMARKS

Thompson said meetings between himself, Appropriations Vice Chair Chuck Hall, R-Perry, and Senate Appropriations Subcommittee Chairs are occurring regularly, along with meetings with their House counterparts.

“I’ve just outlined some of the areas we’re still negotiating as we continue our work on the Fiscal Year 2022 budget.  Our discussions are ongoing and evolving as we prepare to finalize the framework and the details,” Thompson said.

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