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View Overview of State Issues OPE OKLAHOMA SENATE Overview of State Issues October 2016 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 Caroline Dennis Director, Committee Staff (405) 521-5685 [email protected] Elizabeth Park-Capron (405) 521-5763 [email protected] Director, Support Services Editing Compiling Graphics Jason Deal (405) 521-5766 [email protected] Fiscal Analyst Bonds State Personnel Issues Transportation Quinten Dilbeck (405) 530-2384 [email protected] Fiscal Analyst State Economy and Demographics Agriculture Energy and Enviroment Tourism and Oklahoma Historical Society Erin Boeckman (405) 521-5671 [email protected] Legislative Analyst Common Education Career and Technology Education Postsecondary Education Leigh Garrison (405) 521-5778 [email protected] Fiscal Analyst Common Education Career and Technology Education Post-Secondary Education Joanie Raff (405) 521-5677 [email protected] Legislative Analyst Oklahoma Taxes Anthony Sammons (405) 521-5696 [email protected] Assistant Director, Fiscal Staff State Department of Health Medicaid Mental Health and Substance Abuse Services Department of Human Services Juvenile Justice Will Robinson (405) 521-5670 [email protected] Fiscal Analyst Public Safety and Corrections Amy Dunaway Special Projects (405) 521-5775 [email protected] State Budget TABLE OF CONTENTS Overview State Economy and Demographics ............................................................... 1 State Budget .................................................................................................. 7 Bonds .......................................................................................................... 19 Oklahoma Taxes ......................................................................................... 25 Agriculture ......................................................................................................... 59 Education Common Education .................................................................................... 67 Career and Technology Education .............................................................. 93 Post-Secondary Education ........................................................................ 101 Energy and Environment ................................................................................. 119 Health and Social Services State Department of Health ....................................................................... 131 Medicaid ................................................................................................... 141 Mental Health and Substance Abuse Services .......................................... 151 Human Services Department of Human Services ................................................................ 163 Juvenile Justice ......................................................................................... 201 State Personnel Issues ...................................................................................... 213 Public Safety and Corrections .......................................................................... 223 Tourism and Oklahoma Historical Society ...................................................... 231 Transportation .................................................................................................. 245 OVERVIEW State Economy and Demographics Section Information Prepared By: Quinten Dilbeck Fiscal Analyst (405) 530-2384 [email protected] State Budget Section Information Prepared By: Amy Dunaway Special Projects (405) 521-5775 [email protected] Bonds Section Information Prepared By: 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 Oklahoma’s economy continues to struggle with the downturn in the oil and gas sector. In 2015, Oklahoma had a real GDP growth rate of only 1.3%, after several consecutive years of being one of the national leaders in economic growth. Oklahoma has greatly diversified its economy since the 1986 oil bust, but it is still heavily dependent on the oil and gas industry. A previous study by OERB, in conjunction with Oklahoma City University, states that 1 out of every 5 jobs and 1 out of every 3 dollars of gross state product (GSP) is, directly and indirectly, supported by the oil and gas sector. Components of the 2015 Oklahoma Economy 2015 Dollar Amount Percent in Millions of Total Services $39,306 21.79% Government $28,606 15.85% Mining $20,083 11.14% F.I.R.E. $24,679 13.68% Trade $21,974 12.18% Manufacturing $17,797 9.86% Transport & Warehousing $7,836 4.34% Utilities $4,686 2.60% Information $4,152 2.30% Construction $8,413 4.66% Agriculture $2,893 1.60% Total GDP $179,090 100.00% Source: Bureau of Economic Analysis Oklahoma Senate Overview of State Issues 1 State Economy and Demographics The Finance, Insurance and Real Estate sector (F.I.R.E.), mining sector, and the services sector are the largest private components of the Oklahoma economy. Together they comprise 46.61 percent of total state output. 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 2008 Through 2015 (In Billions; 2009 Dollars) Source: BEA The Real GSP, which is adjusted for price changes and is considered the most appropriate measure of state output, increased by 1.34% percent in the year 2015, which is the 34th highest in the nation. The Real GSP increased 4.5 percent in the year 2012, which was the 6th highest in the nation. 2 Oklahoma Senate Overview of State Issues State Economy and Demographics Oklahoma Real Gross State Product Growth Rate 2003 Through 2015 Source: BEA POPULATION Oklahoma Population Trend and Projections 1990 Through 2030 (In Thousands) Source: US Census Bureau 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, with 3.75 million residents. 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 that period. Instead, the ranking drop is due to the fact that certain states that were smaller than Oklahoma are growing faster. The most recent American Community Survey estimates Oklahoma’s current population is 3.91 million. Projected Growth in Population The latest U.S. Census Bureau report projects that Oklahoma’s population will increase by 162,000 people or 4.32 percent between 2010 and 2030. It must be noted that the Census Bureau has not released updated state population projections since 2005, and those projections seem to have underestimated Oklahoma’s population growth. The current population estimate of Oklahoma citizens aged 65 years and older is 576,250 or 14.7 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 2010, Oklahoma ranked 24th as a state for the proportion of the population aged 65 years and older. That ranking is expected to drop to 33rd
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