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View Overview of State Issues OKLAHOMA SENATE OVERVIEW OF STATE ISSUES REPORT BY SENATE STAFF OCTOBER 2012 OKLAHOMA SENATE Overview of State Issues October 2012 State Senate Staff State Capitol Building Suite 309 Oklahoma City, OK 73105 (405) 521-5692 INTRODUCTION Oklahoma Senate Overview of State Issues is designed to provide a convenient summary of policy, budget and taxation issues that face Oklahoma's Legislature. Though full of factual groundwork, this book’s goal is also to put issues in context. Discussion begins with a brief overview of the state’s economic conditions and population trends, since these dynamics so often serve as catalysts for change. The state's tax structure is examined closely, beginning with an analysis of total taxation and how it compares with other states. Each major tax type is then presented in detail – how it is assessed, collected and spent under the law. Regional and national rate analyses are provided for each major tax type. Overall expenditures are presented in a chapter that details the emergence of broad shifts in spending priorities. Recent bond issues for capital improvements are also highlighted. Next is a series of chapters, each of which is dedicated to a major policy area that has been the subject of recent legislative deliberation and action. Subjects discussed include the programs and budgets of almost all major state agencies. Where relevant, descriptions of issues include historical context and state-by- state comparisons. Programs and policies that at first may seem perplexing are more easily understood when viewed in historical context. The information is by no means comprehensive. More information on a particular topic can be obtained by contacting the Senate staff analysts listed on the dividing page of each chapter. STAFF CONTACTS Randy Dowell (405) 521-5769 [email protected] Director, Fiscal Staff State Budget Elizabeth Park-Capron (405) 521-5763 [email protected] Director, Support Services Editing Compiling Graphics Lori Block (405) 521-5773 [email protected] Appropriations Attorney Editing Jason Deal (405) 521-5766 [email protected] Fiscal Analyst State Personnel Issues Transportation Bonds Quinten Dilbeck (405) 521-5384 [email protected] Fiscal Analyst Agriculture Energy and Environment State Economy and Demographics Tourism Sean Wallace (405) 521-5619 [email protected] Fiscal Analyst Education Greg Lockhart (405) 521-5715 [email protected] Legislative Analyst State Personnel Issues Joanie Raff (405) 521-5677 [email protected] Legislative Analyst Oklahoma Taxes Anthony Sammons (405) 521-5696 [email protected] Fiscal Analyst Health and Social Services Human Services Jose Salinas (405) 521-5670 [email protected] Fiscal Analyst Public Safety and Corrections Amy Dunaway Fiscal Assistant/Education (405) 521-5775 [email protected] Andrew Messer Staff Attorney (405) 521-5765 [email protected] Bonds TABLE OF CONTENTS Overview State Economy and Demographics ............................................................... 1 State Budget .................................................................................................. 7 Bonds .......................................................................................................... 17 Oklahoma Taxes ......................................................................................... 23 Agriculture ......................................................................................................... 57 Education Common Education .................................................................................... 65 Career and Technology Education .............................................................. 93 Postsecondary Education .......................................................................... 101 Energy and Environment ................................................................................. 121 Health and Social Services State Department of Health ....................................................................... 129 Medicaid ................................................................................................... 137 Mental Health and Substance Abuse Services .......................................... 147 Human Services Department of Human Services ................................................................ 159 Juvenile Justice ......................................................................................... 193 State Personnel Issues ...................................................................................... 205 Public Safety and Corrections .......................................................................... 213 Tourism ............................................................................................................ 227 Transportation .................................................................................................. 237 OVERVIEW State Economy and Demographics Section Information Prepared By: Quinten Dilbeck Fiscal Analyst (405) 521-57384 [email protected] State Budget Section Information Prepared By: Randy Dowell Director, Fiscal Staff (405) 521-5769 [email protected] Bonds Section Information Prepared By: Andrew Messer Staff Attorney (405) 521-5765 [email protected] Jason Deal Fiscal Analyst (405) 521-5766 [email protected] Oklahoma Taxes Section Information Prepared By: Joanie Raff Legislative Analyst (405) 521-5677 [email protected] STATE ECONOMY AND DEMOGRAPHICS Changes in the state marketplace and population are at the root of much of the Legislature’s policy discussions. Shifts in these measures are often the catalyst for efforts to change state policies relating to social services, economic development, taxes and other areas. THE OKLAHOMA ECONOMY The effects of the national economic recession have been somewhat muted in Oklahoma. This is because Oklahoma’s economy has diversified in the past decade. In 2011, mining and agriculture – once the backbone of Oklahoma’s economy – accounted for 11.89 percent of the state’s total economic output. This was significantly lower than the 18 percent share of gross state product (GSP) they comprised in 1985. Components of the 2011 Oklahoma Economy Dollar Amount Percent in Millions of Total Services $34,382 22.19% Government $26,390 17.03% Mining $15,868 10.24% F.I.R.E. $21,615 13.95% Trade $17,738 11.45% Manufacturing $18,632 12.02% Trans., Comm., & Util. $8,375 5.40% Information $4,050 2.61% Construction $5,357 3.46% Agriculture $2,560 1.65% Total Gross Domestic Product $154,967 100.00% Source: Bureau of Economic Analysis Oklahoma Senate Overview of State Issues 1 State Economy and Demographics Despite the diversification of the economy, however, mining (which includes oil extraction) is more important to Oklahoma’s economy than to the average state’s economy. The Finance, Insurance and Real Estate sector (F.I.R.E.), manufacturing sector, and the services sector are the largest private components of the Oklahoma economy. Together they comprise 48.16 percent of total state output. Oklahoma’s manufacturing growth has frequently outpaced the nations over the past several years. While the services sector is often perceived as paying low wages, it includes many of the high wage and new economy jobs such as software consulting, management and health professionals. ECONOMIC OUTPUT The state economy’s production – the gross state product or GSP – is the total amount of goods and services produced by all industries within a state. Oklahoma Real Gross State Product 2004 Through Projected 2011 (In Billions; 2005 Dollars) $134.4 $134.1 $132.7 $129.8 $130.2 $126.9 $119.7 $120.5 2004 2005 2006 2007 2008 2009 2010 2011 Source: BEA The Real GSP, which is adjusted for price changes and is considered the most appropriate measure of state output, is forecast to increase by 1.8 percent in the year 2012, following an increase of 1.06 percent in 2010. Oklahoma is expected to surpass pre-recession employment levels in 2013. 2 Oklahoma Senate Overview of State Issues State Economy and Demographics Oklahoma Real Gross State Product Growth Rate 1999 Through 2011 Source: BEA POPULATION Oklahoma Population Trend and Projections 1990 Through 2030 (In Thousands) 4,192 3,964 3,751 3,450 3,145 1990 2000 2010 2020 2030 Source: Oklahoma Department of Commerce Oklahoma Senate Overview of State Issues 3 State Economy and Demographics Census data for the year 2010 place Oklahoma as the 28th most populous state in the nation. This compares to 1995, when Oklahoma’s 3.27 million residents made it the 27th most populous state. The decline in ranking between 1995 and 2010 is not due to a loss of population, because the state gained over 521,000 residents over the past 16 years. Instead, the ranking drop is due to the fact that states that were smaller than Oklahoma are growing faster. Projected Growth in Population The latest U.S. Census Bureau projects that Oklahoma’s population will increase by 441,000 people or 11.8 percent between 2010 and 2030. The current population of Oklahoma citizens aged 65 years and older is 506,714 or 13.51 percent of the population. That number is expected to increase to 19.4 percent of the population by 2030, significantly higher than the expected state population growth as a whole, but less than the national projection of 19.7 percent. In 2008, Oklahoma ranked 19th as a state for the proportion of the population aged 65 years and older. That ranking is expected to drop to 33rd by 2030. Working-Age Population The percentage of Oklahoma’s population that is in the prime
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