Revenue talks collapse again
House and Senate leadership called lawmakers to the Oklahoma Capitol on Saturday with hopes a revenue deal could be struck in time to avoid a special session.
Saturday came and went. No deal.
What stands between Democrats and Republicans is a single percentage point of the gross production tax.
The gross production tax is the rate charged on oil and gas produced in Oklahoma. The industry now pays 2 percent for the first three years of operation, and then 7 percent for the remaining life of the well.
House Democrats are unwilling to agree to a tax rate of less than 5 percent unless the length of time at that rate is shortened. GOP negotiators, which include House Speaker Charles McCall, Senate President Pro Tem Mike Schulz and Gov. Mary Fallin, won’t go higher than 4 percent.
That 1 percent doesn’t mean much for next year’s budget, however. An increase to 4 percent
would bring in about $13 million in the first year but grow as more new wells are completed. Democratic House Minority Leader Scott Inman said his caucus is willing to reject other revenue measures, including a higher cigarette tax, to ensure a higher oil and gas production tax rate.
“Going to 5 percent on new wells instead of 4 percent brings in an additional $70 to $100 million a year,” Inman said. “That one percentage point could amount to, over a decade, between $700 to $1 billion in additional revenue for our schools, and that’s what we’re fighting for.”
The impasse all but guarantees a special session, which gives lawmakers more time to find revenue and avoid massive budget cuts.
Fallin is expected to call a special session that runs concurrently with the ordinary session that ends Friday.
On the oil and gas production tax, Republicans have agreed to raise the 2-percent rate to 4 percent as Democrats came down from 7 percent. Inman has accused Republicans of offering 5 percent but then withdrawing the deal, a charge that McCall said isn’t true.
In midday news conferences Saturday, Inman and McCall each said the two sides hadn’t reached an agreement after days of closed-door talks. While both leaders said they are still willing to negotiate, both are waiting for the other side to budge.
McCall said the middle ground is 4 percent at 36 months, a number that he said isn’t what Republicans want.
“But we’re willing to go there to compromise,” he said. “We will have doubled the rate; that is a big jump in one year.”
The situation at the Oklahoma Capitol can be described in an exchange that spans both time and social media. After Inman met with reporters at noon, the House speaker called his own news conference.
“He’s not communicating with me today,” McCall said of Inman. “The only communication I’ve had with him today is through his press conference.”
Inman later came back to the Capitol press corps office and showed reporters his phone call log, which didn’t reveal any calls from the speaker.
A little while later, a member of the speaker’s staff wrote on Twitter that McCall actually texted Inman before the first news conference of the day, but had yet to get a reply.
If a deal isn’t reached to fill the shortfall in Oklahoma’s budget year that begins July 1, McCall said lawmakers will have to piece together a budget. Discussions on a spending package have been on hold for about two weeks as revenue came to the forefront.
Even though negotiations have broken down and there isn’t time left in session to advance revenue bills, McCall said he still hopes to find the money.
“If that’s not going to happen, then the majority will just have to put forth the measures they can pass,” he said.
When asked what that budget would look like, he was quick to reply: “It will be significant cuts.”