GOP's $345 million tax bill falls well short of passage in House

The defeat came despite an impassioned plea from Appropriations and Budget Chairman Leslie Osborn, R-Mustang, who entered the Legislature nine years ago as a true believer in slashing taxes but Tuesday night said she had been wrong.

“I’ll own it,” she said in debate. “I made a mistake. We lowered the our base too low.”

In a debate that no doubt shocked both sides of the aisle, Osborn blasted Republican anti-taxers who she said come here secretly for “line-items and supplementals” for local agencies, and Democrats she said are more interested in playing politics than solving the state’s problems.

“Let’s go the way of Kansas and Sam Brownback,” said Osborn, a Kansas native. “How’s that’s working? No matter what you hear, things are falling apart there.”

She said people will die, colleges and universities will close and a generation of troubled youth will be lost if state revenue isn’t boosted.

Bills normally take several days to wind their way through the legislative process, but House Bill 2414 needed only a few hours to go from a concept announced at a mid-afternoon news conference to published bill, through two budget committees and onto the House floor.

“I have served nine years,” Osborn said, “and I have never been more disgusted.”

The bill had as many as 56 yes votes, all Republican, before falling back to 51 when the vote was closed. All 26 House Democrats and 20 Republicans voted against the measure, and two Republicans did not vote.

The rush job, apparently, was intended to spur a sense of urgency and beat an approaching procedural deadline. HB 2414’s failure increases the likelihood of a special session, either concurrent with the regular session or after its constitutionally mandated adjournment on May 26.

The bill would have raised the cigarette tax $1.50 per pack, fuel taxes by 6 cents per gallon, and reduces the gross production tax discount period from 36 months to 18 months on wells drilled July 1 or later.

The bill was considered a long-shot from the start, since the cigarette tax had already failed once on the House floor as a stand-alone bill, and House Democrats were united in opposition to the fuel tax. Fifteen to 20 Republicans are committed to voting against more or less any and all tax increases.

But with an $878 million general revenue loss from the current budget year and close to a $1 billion budget hole overall, proponents of the bill argued that something had to be done. Revenue from the cigarette and fuel tax increases are projected at $215 million and $127.8 million, respectively. The change to the gross protection tax will have no impact in FY 2018 and is expected to bring in an additional $32 million when fully implemented in two years, according to Oklahoma Tax Commission estimates. Democrats argued all discounts should end June 30, and include all wells. They claim that would raise an additional $300 million a year, a figure strenuously contested by the oil and gas industry.

Revenue bills such as HB 2414 require 76 votes in the House. The GOP majority reached 73 after the swearing in Tuesday night of newly elected Rep. Zack Taylor of Seminole. But with a large portion of its caucus steadfast against tax increases, GOP leadership has focused its efforts on the 26 House Democrats.

House Democrats say they will support the cigarette tax and not oppose the fuel tax if they are part revenue package that includes a bump in the gross production tax or, alternately, a rise in the top personal income tax rate.

Republicans, though, portray the House Democrats as hypocritical obstructionists acting on behalf of Minority Leader Scott Inman, D-Del City, who is running for governor in 2018. The point of the Tuesday afternoon news conference called by Gov. Mary Fallin, Senate Pro Tem Mike Schulz, R-Altus, and Speaker Charles McCall, R-Atoka, to announce what Fallin called a “baseline revenue bill,” seemed to be to harangue the House Democrats and Inman.

McCall committed to getting 75 percent of his caucus to vote for the bill, and challenged Inman and House Democrats to do the same.

He said the change in the gross production tax meets House Democrats’ demand for a bigger bite out of the oil and gas industry in exchange for their votes on the cigarette and fuel tax increases. To do otherwise, Fallin said, amounted to going back on Inman’s word.

In a strange turn of events, Democratic state Rep. Regina Goodwin of Tulsa momentarily took over the news conference, jumping to her feet from a seat in the audience and unleashing a string of questions and statements to the Republicans. As the GOP entourage left the Capitol’s second-floor press room, Inman took the podium for an impromptu news conference. He said the Republicans misrepresented his caucus’ position, and called the Republican plan a $400 million middle-class tax increase that gets zero from the oil and gas industry.