The Business Advocate - May 27, 2021

View the 2021 Chamber Legislative Agenda

Business Advocate Newsletter

May 27, 2021

 
 
 

Introduction/FY 2022 Budget

The 2021 Legislative Session adjourned Sine Die on May 27. When the session began on Feb. 1, the state was facing grim uncertainty as the COVID-19 pandemic continued to threaten lives and the economy. As recently as December 2020, the projected state budget numbers were ominous. However, substantial monthly increases in economic activity combined with a sharp rise in oil prices led to a dramatic rebound of the state’s financial condition, leaving the state with a budget surplus at the end of session.

House and Senate leaders, along with Gov. Kevin Stitt, admirably navigated though the pandemic and ensured legislative business was conducted safely, effectively, and efficiently. The $8.8 billion FY 2022 appropriated budget represents a 14.3% increase over the $7.7 billion budget for FY 2021. The FY 2022 budget increases K-12 common education funding by $171 million to nearly $3.2 billion, a historic amount, and sets aside more than $800 million in savings to the general revenue fund. The budget agreement also includes $35 million in new economic development funding ($20 million into Quick Action Closing Fund, $15 million for business incubator program) and reductions in the state personal income tax from 5% to 4.75% and the corporate income tax from 6% to 4%.

Our final edition of the 2021 Business Advocate details legislative activity on several Chamber priorities including: 1) preserving key economic development incentive programs; 2) maintaining local control of the Oklahoma City-County Health Department; 3) achieving success on multiple transit fronts; 4) protecting the rights of business/property owners from harmful gun legislation; and 5) working against discriminatory legislation that could impact NCAA tournaments in the state. This report also addresses harmful data privacy legislation that did not advance, notable success on broadband initiatives, full funding for ODOT’s eight-year work plan, continued progress on criminal justice reform, enactment of legislation to fund Medicaid Expansion, and success on several education initiatives, including buildings and infrastructure funding for charter schools.

 

Critical economic development incentive programs protected

As session began, the Chamber anticipated legislators would closely examine the state’s top economic development incentive programs to ensure they were accomplishing their intended purpose and providing the state a positive return on its investment. In the end, all critical incentive programs used by the Chamber to recruit new businesses and help existing companies expand were protected. Following is a summary of legislative activity with respect to several incentive programs:  

  • Oklahoma Quality Jobs Program protected

    No program is more important in assisting the Chamber in achieving its economic development mission than Oklahoma Quality Jobs Act (QJA). We became concerned with legislation which was amended late in session that would have restricted the ability of new/expanding companies in Oklahoma County and Tulsa County to qualify for the QJA. SB 936 by Sen. James Leewright (R-Sapulpa) and Rep. Kevin Wallace (R-Wellston), was amended on the House floor to increase the average wage threshold by $20,000 for new/expanding companies in those counties to participate in the QJA.  The bill was then passed by the House 84-7 on April 22.

    Increasing the average wage requirement by $20,000 would have disqualified more than 50% of the projects in the Chamber’s recruiting pipeline from participating in the QJA. Because other states in our region, and nationally, offer some version of that incentive program, many of those projects (and jobs) would locate outside of Oklahoma had the onerous House amendments been enacted. 

    While we support efforts to improve both urban and rural economic development outcomes in Oklahoma, it is not in the state’s best interest to severely limit the ability of metropolitan area companies from participating in the QJA or other economic development programs. SB 936 was sent to a House/Senate conference committee, where Senate conferees were “unable to agree” with the House amendments. As a result, there will be no substantive changes to the Quality Jobs Act this year and potential changes to the program will be evaluated in the interim period between sessions.

  • Five-Year Ad Valorem Exemption for new and expanding manufacturing facilities modified

    As the session ended last year, the House and Senate passed legislation repealing the Five-Year Ad Valorem Exemption for new and expanding manufacturing facilities. At the request of the Greater OKC City Chamber, State Chamber and Tulsa Chamber, Gov. Stitt vetoed that legislation. We therefore anticipated an effort to modify this program would occur again this year.

    Senate Bill 609 by Sen. Bill Coleman (R-Ponca City) and Rep. Kyle Hilbert (R-Depew) will increase the qualifying investment amount for construction, acquisition or expansion from $250,000 to $500,000 of a project during calendar year 2022 and index that amount to inflation in subsequent years. An effort to link the average wage requirement to qualify for the ad valorem exemption to the much higher average wage threshold for projects in Oklahoma County and Tulsa County proposed by the House amendments to SB 936 (Quality Jobs Act) was avoided when that bill failed to be reported out of conference committee. SB 609, after being approved by a House/Senate conference committee, was passed by the House and Senate, and sent to Gov. Stitt.    

  • Oklahoma Quality Events Act extended to 2026

    In 2010, the Greater OKC Chamber led an effort to enact legislation creating the Oklahoma Quality Events Act (QEA), which was set to expire this year. The QEA allows a “host community” to capture a portion of the incremental sales tax revenue generated by high economic impact events (horse shows, sporting events, etc.) to recoup a limited portion of its investment in recruiting/hosting the event and in attracting future events. HB 1121 by Rep. Jeff Boatman (R-Tulsa) and Sen. Roger Thompson (R-Okemah), legislation to extend the QEA program to 2026, was signed into law by Gov. Stitt on April 19. Competition is fierce among cities/states for high economic impact events and the Chamber is pleased to see this innovative event recruitment tool extended.

  • Aerospace Engineer Tax Credit accreditation successfully adjusted

    The Aerospace Engineer Tax Credit has played an important role in growing the state’s aerospace industry, especially in the vicinity of Tinker AFB. However, there has been an ongoing concern on whether some recipients of the credit received proper accreditation under the program. SB 893, by Sen. Adam Pugh (R-Edmond) and Rep. Scott Fetgatter (R-Okmulgee) addressed that issue by allowing undergraduate and graduate programs of the same discipline of engineering at an educational institution to qualify for the aerospace tax credit if either program is ABET accredited. SB 893, after going to conference, was passed by the House and Senate, and sent to Gov. Stitt.

 

Oklahoma City-County Health Department protected from increased state control

HB 2504 by Rep. Chris Kannady (R-OKC) and Sen. Paul Rosino (R-OKC) proposed increasing state control over the Oklahoma City-County Health Department. The legislation was passed by the House 54-10 but was not heard in a Senate committee by the April 8 legislative deadline and failed to advance. HB 2504, while improved from its original form through negotiations, would have provided the state commissioner of health de facto appointment authority over the executive director of the Oklahoma-City County Health Department (and its equivalent in Tulsa).  Because HB 2504 was never voted down, it remains alive for consideration in 2022, the final year of the two-year session.

 

Success on multiple transit fronts: Regional transit legislation signed; Heartland Flyer funding protected; Amtrak expansion northward gains momentum

Many of our peer cities (Dallas/Fort Worth, Denver, Salt Lake City, Albuquerque) have commuter rail. For years, the Chamber has been engaged in discussions to consider/pursue development of commuter rail in central Oklahoma (Edmond-OKC-Norman, with future expansion opportunities). The Regional Transportation Authority of Central Oklahoma (RTA), chaired by former Gov. Brad Henry, approached the Chamber in 2019 and requested we take the lead on passing legislation to allow continuation of ongoing negotiations with class one railroads - which control access to the right-of-way. Railroads require the limited liability protections afforded under Oklahoma’s Governmental Tort Claims Act should they “step into the shoes of government” and operate a publicly funded commuter rail system.

Legislation to accomplish that result was introduced by Sen. Adam Pugh (R-Edmond) and Rep. Ryan Martinez (R-Edmond). Senate Bill 967 passed the Senate 45-0 and House 89-1 and was signed into law by Gov. Stitt on April 26. The Chamber extends its appreciation to the following partners who were committed to this effort: Sen. Pugh; Rep. Martinez; Gov. Henry and the RTA board; Kathryn Holmes, the RTA consultant; Scott Martin, president and CEO of the Norman Chamber; Mike Patterson, the former OK transportation secretary; the local chambers of commerce in Norman, Edmond, Moore, South OKC, and Del City; and Mark Nestlen of the OK Transit Association.

The Chamber supports protecting state funding for the Heartland Flyer, which operates between the Santa Fe Intermodal Hub in downtown Oklahoma City and Fort Worth. This route, which was disconnected between 1979-1999, provides another transportation option for Oklahomans with passenger rail service to metro and rural communities along the route. Oklahoma’s FY 2022 budget included full funding for the Heartland Flyer, which is operated under a joint cost-sharing agreement between ODOT and TXDOT.

Should service on the southern route be eliminated, then another long-standing Chamber priority of reconnecting Oklahoma City to the north with Newton, Kansas, would become almost impossible. Reestablishing the northern route, disconnected since 1979, would link Oklahoma City to communities in northern Oklahoma, Kansas City, St. Louis, Chicago, and points all along the national network. The president’s transportation proposal includes $80 billion for Amtrak, and this specific route has been identified as a priority to receive federal funding. To that end, the Chamber applauds the leadership of Rep. Ken Luttrell (R-Ponca City) who formed a passenger rail caucus of legislators who support the Heartland Flyer and introduced HCR1003, calling for federal funds to be used for the northern route extension of the Heartland Flyer to Newton, Kansas. HCR 1003 was adopted by both the House and Senate.

 

Session concludes with favorable outcomes on gun legislation

Oklahomans for Business and Property Owner Rights, a Chamber-led group of approximately 50 business associations, individual businesses, law enforcement organizations and educational institutions was formed in 2017 to push back against gun-rights expansion legislation that would negate the property rights of business owners and event hosts to prohibit firearms if they so choose. This year, no legislation was enacted that would interfere or negate those rights.

Additionally, there was favorable legislation signed into law to allow the City of OKC to host concerts (and prohibit firearms) at Scissortail Park and other venues if certain conditions are met. HB 2645, by Rep. Echols and Sen. Bergstrom, will allow a city to host concerts in public parks that are secured with “minimum security provisions”, including: 1) a metallic-style security fence at least eight feet in height that is secured to deter unauthorized entry; 2) controlled access points staffed by uniformed, commissioned peace officers; and 3) a metal detector whereby concert attendees are screened for entry. This legislation, which was approved by the governor on April 13, is significant, as the current law allows individuals to carry firearms into most public parks, recreational areas and fairgrounds. The Chamber commends the City of OKC and OK2A for their work on this legislation.

 

NCAA tournaments protected for 2021

The Chamber and the OKC Convention and Visitors Bureau—which plays a leading role in bringing major sporting events to the metro area—opposed legislation (SB 2) to prohibit transgender athletes who were assigned male at birth from playing on athletic teams designated for females, women or girls. On April 12, in response to SB 2 and similar legislation introduced in at least 30 states across the country, the NCAA issued a statement it would only consider locations for future sporting events where all athletes, including transgender athletes, could compete without discrimination. SB 2 was then overwhelmingly passed by the House (73-19) on April 19. SB 2 was not brought up for a vote in the Senate; however, because it never failed a vote in the Senate, it will remain alive for consideration during the 2022 session.

The NCAA has adopted and implemented thorough policies, based on science, which have been in place since 2011 to ensure transgender women are able to participate without a competitive advantage in women’s sports. The same holds true of the OSSAA at the high school and lower levels. Instances of this being a legitimate issue are extremely rare, if not non-existent—during House floor debate, not one example of it occurring in Oklahoma was identified.

The NCAA has a history of pulling major sporting events from states which enact discriminatory legislation (North Carolina – 2017). OKC has been selected as the host city of the NCAA Softball Women’s College World Series (WCWS) through 2035. That event alone generates an annual economic impact of $24 million in the metro area.  Additionally, Oklahoma City voters recently passed a $27.5 million bond to expand seating capacity at Hall of Fame Stadium by 40% to obtain the NCAA’s commitment to OKC for the next 14 years. Other locations in Oklahoma have been selected to host NCAA basketball, baseball, wrestling and tennis championships over the next several years, all of which could be jeopardized should SB 2 be enacted.

 

Costly data privacy bill fails to advance in the Senate

Burdensome data privacy legislation, which would have placed costly regulations/fines on many Oklahoma companies through the enactment of regulations exceeding the federal requirements, stalled in the Senate this session. HB 1602, “The Oklahoma Computer Data Privacy Act” by Rep. Josh West (R-Grove) and Rep. Collin Walke (D-Oklahoma City), would have contributed to a patchwork state-by-state regulatory approach to this issue rather than a federal solution. However, after passing the House 85-11 on March 4, HB 1602 failed to receive a hearing in a Senate committee by the April 8 deadline. HB 1602 is still available to be considered next year.

 

Broadband expansion incentive enacted

The definition of “critical infrastructure” has expanded in the 21st century to include broadband technology, a category in which Oklahoma ranks among the worst in terms of access to high-speed internet. To address this shortcoming, the Legislature made broadband expansion a priority this session. The FY 22 budget includes a $42 million tax incentive for providers of broadband in unserved and underserved parts of the state. As Speaker Charles McCall (R-Atoka) emphasized during the budget press conference, broadband is a statewide issue because many urban areas, in addition to rural parts of the state, suffer from poor access.

The Chamber applauds this action and will continue to support broadband expansion in the future.

 

Oklahoma Department of Transportation 8-Year Plan fully funded

Transportation investment is a critical driver of economic development activity and commerce. With many OKC-area projects on the Oklahoma Department of Transportation’s (ODOT) 8-Year Construction Work Plan (including major interchanges at I-235/I-44, I-35/I-240), the Chamber consistently supports full funding for this plan which seeks to calibrate state resources with the state’s transportation needs.

We are pleased to note that FY 2022 budget includes full funding for the 8-Year Plan after approximately $180 million in ODOT funding that was used to balance last year’s budget has been fully restored. This will ensure key projects in the OKC metro area and across the state will continue to move forward.

 

Continued progress on criminal justice reform

There were several successes this year on criminal justice reform. The most noteworthy was an appropriation of $12.5 million to the Department of Mental Health and Substance Abuse Services from the Oklahoma Medical Marijuana Authority Revolving Fund to be used on county/local programs for drug rehabilitation, mental health treatment, job training and education. These programs work and have been a driving force behind the dramatic 35% reduction in the jail population in Oklahoma County over the last five years. This appropriation was actively supported by the Chamber and the Oklahoma County Criminal Justice Advisory Council.

Another success was legislation introduced by Rep. Nicole Miller (R-OKC) and Sen. Kim David (R-Wagoner). HB 1795 will facilitate reentry into society for certain offenders released from incarceration by making it easier to have their driver’s license reinstated. This will provide those offenders the opportunity to drive to/from their places of employment and become productive members of the workforce. HB 1795 was passed by the House 68-5, by the Senate 43-1, and signed by Gov. Stitt on May 21.

 

Medicaid Expansion Funded

The Chamber supported passage of SQ 802 (Medicaid Expansion) in June 2020. SQ 802 will increase health insurance coverage by expanding Medicaid to cover approximately 200,000 more Oklahomans under the Affordable Care Act (ACA).  This includes certain low-income adults between the ages of 18-65 with incomes at or below 133% of the federal poverty level. Under the ACA, Oklahoma is responsible for 10% of costs while the federal government will pay 90%.

The FY 2022 budget includes funding Medicaid expansion through a combination of federal funds (including additional funds to states which expanded Medicaid) and an incremental increase in the state’s SHOPP (Supplemental Hospital Offset Payment Program) from 2.5% to 4% over three years.

 

Redbud School Funding Act addresses charter school challenges

The Chamber has been a steadfast supporter of charter schools and has worked to create a mechanism to provide charter schools with funding to improve buildings and infrastructure.

Although the business community has supported charter schools, we were surprised in March when the State Board of Education (SBE) passed a resolution to potentially provide charter schools a path to receive millions of dollars in infrastructure funding. The SBE resolution, passed by a 4-3 vote, stated charter schools should be funded at a level equal to other public-school districts. State Superintendent Joy Hoffmeister (R-Tulsa) and more than 200 local districts, including OKCPS, filed legal challenges to stop the transfer of millions of dollars to charter schools.

To reverse the SBE decision and still address the needs of charter schools, legislative leaders drafted SB 229 by Sen. John Michael Montgomery (R-Lawton) and Rep. Kyle Hilbert (R-Depew). The revised legislation was included as a part of the final budget agreement.

The legislation provides infrastructure revenue for both brick-and-mortar charter schools and traditional schools with below average property valuations. The critical feature of the bill is to place approximately $38 million from medical marijuana taxes into the Common School Building Equalization Fund. Charter schools and other districts will be able to apply for grants from the fund to improve school sites, acquire equipment or address other needs.

After SB 229 was sent to the governor, the State Board of Education unanimously voted to rescind the March decision to grant charter schools local revenue. This decision is contingent on the bill being signed and the charter school association withdrawing its lawsuit against the SBE.

 

Higher education funding for in-demand degrees

The final budget included $42 million in new funding for higher education. Most of the new revenue will be used to increase the number of graduates with degrees in high demand occupations including health care workers and teachers.

Equally important, the budget fulfills the Oklahoma State Regents for Higher Education request for $10.5 million to accelerate the production and growth of highly qualified engineers. The funds will provide $5 million to both Oklahoma State University and the University of Oklahoma and $500,000 to the University of Central Oklahoma. The Chamber has been calling for increasing the number of engineering graduates to meet the local demand for at least 3,000 engineers annually for the next decade.

Another key item funded by the increased appropriation is $10.5 million for debt service on bonds to pay the $161 million backlog for the endowed chairs program. The Chamber has been a steadfast supporter of the endowed chairs program and many members provided initial private funding that the state has not matched.

 

Increased programs to address student mental health needs

Unfortunately, Oklahoma ranks as the one of the worst states in the country for the number of adverse childhood experiences (ACEs). Our children have high demand for mental health services and the COVID-19 pandemic only increased those demands. The Chamber and the Oklahoma City Schools Compact created a program called Embrace OKC to help OKCPS address these needs. We supported multiple pieces of legislation to help OKCPS efforts and expand those efforts statewide.

A few of the new laws (all signed by the governor) to address mental health needs in schools to include:

  • Oklahoma Prevention Needs Assessment (HB 1103) by Rep. Mark Vancuren (R-Owasso) and Sen. John Haste (R-Broken Arrow) will enable more districts to conduct the Oklahoma Prevention Needs Assessment every two years to measure the behavioral and mental health needs of students in grades 6-12.
  • Maria’s Law (HB 1568) by Rep. Mark Vancuren (R-Owasso) and Sen. John Haste (R-Broken Arrow) will require the State Board of Education to create curriculum and instruction on causes and effects of mental health problems. It also authorizes districts to enter into agreements with nonprofits and community partners to provide instruction.
  • HB 1773 by Rep. Sherrie Conley (R-Newcastle) and Sen. Jessica Garvin (R-Duncan) created a critical new program to help the large number of students facing trauma. The new law requires implementation of a multi-tiered system of support (MTSS) to address the core academic and non-academic needs of students.
 

Learn more about Chamber priorities

Earlier this year, the Chamber released its 2021 Public Policy Guide, an annual publication that includes a full listing of the pro-business priorities that the Chamber will pursue at the Capitol. The guide also includes contact information for elected officials at the federal, state and local level. Read the guide at www.okcchamber.com/ppg.

For more information, please contact Mark VanLandingham.

Visit the Business Advocacy Center to sign up to receive updates.