On February 1, Governor Fallin gave her State of the State Address to the state legislature. Her speech largely focused on the budget deficit this year and potential solutions to it.
Partly because of low oil prices, Oklahoma is about $900 million short for its budget this year. For perspective, in FY 2015 (which lasted from July 1, 2014 to June 30, 2015), Fallin proposed spending about $7 billion.
To deal with the shortfall, Fallin proposed several solutions. One of her proposals is a tax on cigarettes that is expected to raise $181.6 million. Fallin proposed an additional roughly $309.7 million in various budgetary changes.
Fallin also called for review of the state’s sales tax exemptions to raise an additional $200 million. She said that currently $8 billion is exempted every year from sales taxes. Some changes could be “eliminating outdated exemptions.”
Others could be to apply the sales tax to new categories. Currently Texas’s sales tax covers 60 more categories, and New Mexico’s covers 130 more categories, than Oklahoma’s does.
Fallin said that “if structured properly,” expanding the amount of things the sales tax covers could ultimately lead to a cut in the sales tax rate. She also called on Congress to create a system for online sales taxes.
Under her budget, most agencies would receive a six percent cut, but some would only have a three percent cut, while others would actually see their budget increase. She says that the six percent cut is preferable to needing to cut 13.5 percent next year or cutting ten percent now along with tapping into the “rainy day” fund.
The Department of Human Services, the Health Department, the Health Care Authority, the Mental Health and Substance Abuse Services, the Department of Public Safety, Oklahoma School of Science and Mathematics and the Office of Juvenile Affairs would all receive a three percent cut. These budgets are all related to reducing incarceration rates, improving health or improving education.
Under her budget, the Department of Corrections would receive an additional $20 million this year and $30 next year. She also proposed reforming sentencing.
She said “Oklahoma’s drug possession sentences haven’t deterred substance abuse…. These sentences, while well-intentioned, tend to send some nonviolent offenders into prison for years and years, where they live alongside violent offenders whose bad influences can make nonviolent offenders worse.”
Specifically, she proposed allowing district attorneys to file a first-time drug offender with a misdemeanor and lowering the mandatory sentence of first offenders from two to ten years to zero to five.
Second felony offences would go from two years to life to zero to ten. Third felony offenses would go from six years to life with no probation to zero to 15 years.
Also, Fallin wanted to raise the value of a felony crime from $500 to $1000.
She said that if these proposals were fully implemented, they “could prevent thousands of people annually from being a felon for life, which makes it harder for them to get a job and many times leads to the breakup of their family. State prisons are at 119 percent capacity. We just can’t keep doing what we’ve been doing. It’s not working.”
The Department of Human Services would also receive additional funding under Fallin’s budget. Fallin talked briefly about Oklahoma’s foster care system.
Fallin talked about several aspects of education. She mentioned how her budget appropriates $178 million for a $3,000 pay increase for all Oklahoma teachers. She also talked about consolidating school districts.
This would not close actual schools, but would rather combine administrative positions from different areas together.
She also wanted to give schools more flexibility in using their funds, specifically by allowing them “to use their building funds for teacher pay and benefits if local officials determine it is prudent and meets their most pressing needs.”
She also praised the Oklahoma Works initiative, which creates a partnership between schools and local businesses.
Finally, she called for the passage of a bill for Education Savings Accounts, which are essentially a type of voucher system.
She concluded with calling for continued construction on the State capitol and praise for what she sees as accomplishments, including reducing Oklahoma’s unfunded pension liability by nearly a half, tort reform, fixing bridges, an A-to-F grading system for schools and more funding for mental health.