State of the State: Doin’ fine, just OK, or not so good?
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Published: 05-Feb-2013

OKLAHOMA CITY -- As Oklahoma Gov. Mary Fallin delivered her State of the State address on February 4, Oklahoma City had the lowest unemployment rate of any major metro area in the nation. The economic growth rate is good, and statewide unemployment is far below the national average. 

In her speech, Fallin recounted the state’s progress since she took office in January 2011, pointing to the creation of 62,400 new net jobs, the fourth highest growth rate in the nation. State unemployment has declined from 7 percent to 5.1 percent, while median household income rose last year by $4,000, the nation’s best per capita income growth for families. 

The state Constitutional Reserve, better known as the Rainy Day Fund, has reached $600 million today, from a low, 25 months ago, of $2.03. She pointed to a mix of economic good news and concluded the Sooner State “has now finally restored the state’s economy to 2008, pre-recession job levels.”

Gov. Fallin asked legislators to reduce the state’s top income tax rate (reached after the first $8,700 of income) from 5.25 percent to 5.0 percent. She called attention to a cluster of modest consolidation proposals, including new information technology changes to sustain savings of several million dollars, and elimination or combinations of advisory boards to save several hundred thousand dollars. 

She also gave a generic endorsement to workers’ compensation reform – without, however, specifically stating agreement with legislative Republican efforts to shift the state compensation insurance system from a litigation-oriented structure to a new administrative structure. 

In a tip of the hat to new House Speaker T.W. Shannon, Fallin endorsed efforts to clarify state holdings and study possible sale of some assets. She pressed for a $10 million program to begin repair of the state Capitol. 

As the chief executive endorsed sticking with the eight-year Department of Transportation plan for road and bridge funding, she also called for around $22 million in state common education (K-12) funding.

About 25 percent of the governor’s speech was devoted to health care policy or public welfare in one form another, as she simultaneously repeated her opposition to the Medicaid expansion envisioned in the Affordable Care Act and pressed a variety of policy initiatives to improve the state’s standing in various measures of public health. 

Fallin backed several spending increases, including the anticipated $46 million for implementation of the Pinnacle Plan for the Department of Human Services.   

She endorsed legislation to give local governments greater authority to place limits on tobacco use, rolling back current state law that sets a state ceiling on tobacco restrictions, beyond which municipalities presently cannot extend. Gov. Fallin also asked for a $40 million increase for the state Health Care Authority to help cope with rising Medicaid costs anticipated with or without “ObamaCare.”  

Fallin also asked for $16 million in additional funding for the Department of Mental Health and Substance Abuse Services, as well as support for two new Crisis Centers envisioned under the Justice Reinvestment Act (to provide beds to divert the mentally ill from ineffective incarceration in jails). The governor also encouraged new funds for suicide prevention programs, and pressed for greater awareness of drug abuse, particularly of prescription drugs.

Despite Oklahoma’s strong economy, some Republicans are restive after last year’s “epic fail” for income tax reduction, and a $330 million jump in government expenditures. While some of Fallin’s allies tack to the governor’s right, Democrats fret over funding for public education, implementation of ObamaCare and other issues. 

Both Senate President Pro Temp Brian Bingman of Sapulpa and Speaker of the House T.W. Shannon said they supported the governor’s overall vision, although Shannon was mildly more critical of the governor’s content. 

The Speaker and many members of the state House expressed support for the governor’s income tax proposal, with Shannon indicating he would use state Rep. David Dank’s critical analyses of business tax credits and exemptions as “a starting point” for possible  reforms to help finance tax reduction.

Shannon was mildly critical of the governor’s push for new anti-smoking powers for municipal governments, avoiding a statement of outright opposition. 

Republicans have overwhelming majorities in both Houses of the Legislature: 36-12 in the Senate, and 72-29 in the House. However, Democrats proved themselves effective in the 2011-12 cycle by working with dissident Republicans on key votes, particularly in the House. 

On Monday, after the governor’s address, House Democrats battled with the Republican majority over a range of rules proposals most of the afternoon before Minority Leader Scott Inman met with the press corps late in the work day, to assail much of Fallin’s statement of priorities in her speech.

Joined by nearly two dozen of his colleagues, Rep. Inman judged the governor’s speech “long on ideas and short on details. Her math just doesn’t add up.” 

Inman said the proposed income tax cut – worth about $120 million annually upon implementation – was irresponsible at a time he put government spending requirements “at least at $180 million.” 

Inman focused much of his critique on the governor’s refusal to engage the state in Medicaid expansion along the lines envisioned in the federal Affordable Care Act, saying that was “not a policy decision, but a political decision that will harm thousands of our citizens.” 

As for the health-related expenditures, Inman and his caucus expressed support for some of the governor’s envisioned spending, but said a tax cut would make it impossible to finance those proposals. He said Democrats would unite to oppose any income tax reduction in light of current state needs. 

Senate Minority Leader Sean Burrage, a Claremore Democrat, was also critical of many parts of the governor’s speech. He said he hopes support for an income tax reduction fades as Republican leaders grapple with state funding pressures in the next four months. 

You may contact Patrick B. McGuigan at Patrick@capitolbeatok.com and follow us on Twitter: @capitolbeatok.

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