State Budget Passes; No Income Tax Cuts

Post date: May 25, 2012 3:44:02 AM

No income tax cuts this session!

Happily, there will be NO reduction in the income tax this legislative session. In a major defeat for Governor Fallin, who had championed this senseless cut in state funding, the House rejected the tax restructuring compromise she had reached with leaders in the House and Senate. Enough Republicans in the state House of Representatives, unhappy about how 24 percent of Oklahomans would see an increase in their income tax, or a reduction in their refund, under the compromise plan, joined with Democrats to defeat it. The House leadership then floated a different plan, with income tax cuts tied to revenue growth triggers, which would have led to even more drastic cuts in state revenue from the income tax, but it was flatly rejected by the Senate leadership. On May 24 the governor conceded that there would be no income tax cut since the session had to end a day later and she felt it was unlikely the Senate and House could agree on a plan in a special session. So she will not be wasting taxpayers funds on a special session.

State budget passes...barely

The House also initially rejected the state budget plan developed by the legislative leadership and Governor Fallin, which had already passed the Senate. Later the budget was passed by the House, but with only one vote to spare despite a sizable Republican majority. Democrats decried its utter lack of increased school funding and some Republicans were unhappy with various specifics about the budget and that it represented a net $200 milllion increase in state spending over the prior year.

State superintendent warns of textbook funding cut

The way the budget bill was structured, many line items were specified to guarantee funding for the flexible benefit allowance, National Board bonuses, and more. No doubt this return to line item funding was driven in part by past controversies created by the state department in failing to properly fund state retirement offsets and flexible health benefits.

However, notably there was no line item for textbook funding, and a bill passed to again allow districts to avoid accreditation penalties if they failed to adopt new texts for 2012-2013 or 2013-2014. The Tulsa World has reported that State Superintendent Barresi has proposed only allocating $21.5 million of the $33 million usually allotted for textbooks, holding back $11.5 million for other departmental activities, including funding for remediation for students failing to meet ACE graduation requirements and funding for Advanced Placement programs. She also said that if the increase in the flexible benefit allowance is below 1.5 percent then the remainder would go for textbooks.

Locally our district may move ahead with the expected textbook purchases for the 2012-2013 school year, which will negatively impact the fund balance, or it could try to trim the amount to be spent on textbooks accordingly.

6/4/2012 UPDATE

6/4/2012 UPDATE:

Senate Bill 1816 designated $30 million for textbooks, and Senate Bill 1535 restored an additional $3 million, bringing the textbook allocation back to the previous level. However, districts are still allowed to divert their textbook allotment to other purposes. Bartlesville does not intend to do that for 2012-2013. The changes leave State Superintendent Barresi with greatly reduced funding for various initiatives, meaning that we might expect significant cuts in state support for ACE remediation and Advanced Placement programs.

National Board moratorium extended

A bill has passed to extend by one year to 2013 the moratorium on scholarships to join the National Board Certification program and on stipends for anyone who was not already in the program as of June 30, 2010. However, funding was budgeted in a line item in the newly passed state budget to ensure bonuses would be paid to those in the program prior to that date.

No cuts expected locally; budget may have some increases

The local board of education will consider the initial budget for the 2012-2013 school year at a 3 p.m. meeting on Thursday, May 31. The Superintendent's Budget Development Committee will be presenting its recommendation to the board at that time. Unlike many Tulsa area districts, which will be making drastic personnel cuts, our district already made enough sacrifices in recent years to keep its fund balance healthy enough to tide it over for awhile.

After several years of significant cuts, including reducing the district's operational costs by over $600,000 annually by closing Oak Park Elementary, our district fund balance remains healthy even though it took a $500,000 hit in the 2011-2012 school year. The initial budget had predicted a $1,000,000 reduction in the fund balance, but that was ameliorated by supplemental funding early in the 2012 legislative session for flexible benefits and increases in other revenue streams such as ad valorem, school land office funding, and gross production taxes.

6/4/2012 UPDATE

At the board of education meeting on May 31 Tim Green reported that the fund balance overall only fell $87,000 in 2011-2012 and thus remains near the legal limit of 15%. This prompted the board to adopt a budget that was projected to reduce the fund balance by half a million dollars. See later post.

Although the local budget picture is not as dreadful as in Tulsa, it is notable that the fund balance will likely continue to be reduced. So if state funding for the district does not pick up in future years, additional cuts will be needed. That is why any reductions in the state income tax are extremely unwise: we need growth revenue from the recovering economy to be put back into our schools.