The Business Advocate - May 30, 2019

View the 2019 Chamber Legislative Agenda

Business Advocate Newsletter

 

May 30, 2019
Inside this issue
 
  Introduction  
 

The 2019 Legislative Session began with a bang, with the Legislature immediately focusing its attention on passing legislation to authorize the carrying of firearms (open and concealed) without a permit in the Oklahoma. In 2018, similar legislation was passed by the Legislature, but vetoed by Gov. Fallin. With the election of Gov. Kevin Stitt (who campaigned in support of permitless carry), the Chamber worked to improve and expand the protections afforded business, event hosts, college campuses, as well as public parks and zoos to prohibit firearms and other weapons. That proved to be a successful strategy as permitless carry legislation was overwhelmingly passed by the House and Senate and, on Feb. 27, became the first bill signed into law by Gov. Stitt.

Compared to previous years, the 2019 session was less dramatic and more orderly. Much of that can be attributed to the optimism surrounding the election of a new governor and a surplus of money to spend. The $8.1 billion FY 2020 budget, a state record, was approximately $600 million more than the FY 2019 budget and addressed a number of important needs, including teacher pay raises, increased funding for the classroom, full funding for ODOT's eight-year work plan, increased funding for higher education, increased funding for criminal justice reform and a $19 million appropriation into the Governor's Quick Action Closing Fund - all Chamber priorities.

For the year, the Chamber was successful in achieving its legislative priorities, including the enactment of a new economic development incentive to address a severe statewide shortage of software/cyber security engineers. Two exceptions to that success are likely headed to the courts to face constitutional challenges: 1) the enactment of pharmacy benefit manager legislation which may be preempted by federal law (ERISA); and, 2) legislation changing the state's liquor distribution laws, which may violate the state Constitution, as amended by the voters in 2016 under SQ 792.  

This end-of-session edition of the Greater OKC Chamber Business Advocate will highlight the Chamber's performance during a memorable 2019 Legislative Session.

 

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  Legislation to incentivize development of software/cyber engineers signed into law  
 

The Greater OKC Chamber initiated legislation to address an extensive statewide shortage of qualified software and cyber-security engineers. HB 2759, which was passed by the House 87-5 on May 21 and the Senate 34-10 May 23, was signed into law by Gov. Stitt on May 28.  HB 2759 will provide a tax credit up to $2,200 annually for qualifying employees who have received a bachelor's degree (or higher) from an accredited institution, or $1,800 annually for qualifying employees who have been awarded a certificate from a technology center. To receive the credit, employees must meet strict educational requirements and obtain employment in a qualified industry for a qualified employer. The credit could be claimed no more than seven years and could not be claimed simultaneously by an individual claiming the tax credit for aerospace engineers.

One notable example of the statewide shortage of software and cybersecurity engineers is Tinker Air Force Base, the state's largest single site employer, which has an immediate need of 1,100 such employees. Recently, a Pentagon official stated it is imperative for Tinker AFB to immediately and proactively build software engineering capacity to meet the future needs of the U.S. Air Force. Apart from the critical need at Tinker and the state's other military installations, this new program will benefit businesses across the state in aerospace, energy, agribusiness, banking and other industries which require an immediate and sustained effort to incentivize and grow this critical, 21st century component of Oklahoma's workforce and economy. We are thankful for the support of the State and Tulsa Chambers in passing this legislation.

 

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  Chamber-led coalition obtains favorable amendments to permitless carry legislation  
 

For the third consecutive year, the Chamber led a broad coalition of approximately 50 businesses, associations, law enforcement groups and educational institutions to oppose or amend gun legislation which would: 1) negate the rights of business/property owners to prohibit weapons; 2) jeopardize the rights of event hosts to ban weapons at high economic impact events; 3) eliminate or reduce the ability of colleges and universities to regulate weapons on campus; or, 4) lessen the ability of law enforcement to protect the public's safety.

The session began with 46 bills to expand gun rights in Oklahoma, including HB 2597, legislation to authorize carrying a firearm in Oklahoma without a permit. Realizing there was overwhelming support among the Legislature and by the governor to enact this legislation, Oklahomans for Business and Property Owners Rights focused on amending the bill to improve and expand the protections for those business and property owners, event hosts, college campuses, public parks and zoos wanting to prohibit/control firearms. The coalition's efforts were successful.

Beginning Nov. 1, if an individual carrying a firearm is asked to leave a business or event with a firearm and refuses, he/she can be charged with a misdemeanor, fined up to $500 and serve up to six months in jail. In addition, separate legislation (HB 2010) was enacted to afford increased protections for the OKC Zoo, Scissortail Park, the Tulsa Zoo and the Gathering Place as well as all other public parks and zoos that are owned, leased, managed or operated by a public trust or non-profit entity. Under that legislation, the concealed carry of a firearm or other weapon will be allowed in those venues, but the open carry of such weapons will be prohibited.

Of the remaining 45 gun-rights bills, no bills harmful to the business community were enacted into law. The Chamber extends its appreciation to all members of the Oklahomans for Business and Property Owners Rights coalition in working together to stop harmful gun legislation.

 

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  Key economic development incentive programs retained, extended, funded  
 

As an economic development organization, the Chamber relies on a number of specific economic and community development programs to recruit companies to Oklahoma and promote the growth of our existing companies. All key programs were protected this year.

  • Quality Jobs Act, 21st Century QJA, Small Employer QJA and the Prime Contractor QJA
  • Aerospace Engineer Tax Credit
  • Investment/New Jobs Tax Credit
  • Historical Building Rehabilitation Tax Credit
  • Freeport (Inventory) Exemption
  • Five-year ad valorem abatement and sales tax exemption for manufacturing
  • Oklahoma Regional Home Office Insurance Premium Tax Credit

In addition, this year the Chamber supported extending and improving the Oklahoma Local Development and Enterprise Zone Incentive Leverage Act, which has been involved in several major economic development projects in the OKC area, including the current renovation of the First National Center. This program provides state funding for local units of government to match local tax revenue dedicated to a project located in an enterprise zone or a major tourism destination if certain conditions are met. SB 473, authored by Sen. Dave Rader (R-Tulsa) and Rep. Scott Fetgatter (R-Okmulgee), extends that program for 15 years. Finally, the FY 2020 Budget Agreement resulted in an appropriation of $19 million into the Governor's Quick Action Closing Fund, which can be used by the governor to recruit companies to locate in Oklahoma.

 

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  Businesses protected in medical marijuana "unity bill"  
 

A top Chamber priority was to obtain employer protections related to the passage of SQ 788, which legalized medical marijuana in Oklahoma. HB 2612, often called the "unity bill", authored by House Majority Floor Leader Jon Echols (R-OKC) and Sen. Greg McCortney (R-Ada), contains those protections and was signed into law on by Gov. Stitt on March 14.

HB 2612 creates a legal and regulatory framework for the state's emerging medical marijuana industry. Under the new law, businesses will continue to maintain and enforce a drug-free workplace. Although medical marijuana is now legal in Oklahoma, a business can still: 1) discharge an employee (or not consider a job applicant) if they test positive for marijuana and don't have a medical marijuana license; 2) take action against an employee for possessing or consuming medical marijuana while at work or while fulfilling employment obligations; and, 3) take action against an employee who tests positive for marijuana and works in a safety sensitive position (heavy equipment operator, school bus operator, etc.).

 

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  ODOT eight-year plan fully funded, major OKC-area projects protected  
 

Over the past 15 years, the state has made significant progress in rebuilding the state's infrastructure. This year, that progress continued as lawmakers fully funded ODOT's eight-year work plan. The FY 2020 budget includes $575 million for the ROADS (Rebuilding Oklahoma Access and Driver Safety) Fund which is allocated to ODOT's eight-year plan, which includes major OKC area projects such as I-235/I-44, I-40 and I-240 (Crossroads), and SH 77 - all of which require consistent funding levels.

The Heartland Flyer, passenger rail service connecting Oklahoma City to Fort Worth, is an important component of Oklahoma City's effort to provide transportation options to its citizens. Once eliminated, it's extremely difficult to restore passenger rail service, as evidenced by the forty year discontinuation (1979-2019) of the Heartland Flyer's northern route to Newton, KS. The Chamber has been successful over the past few sessions in protecting passenger rail funding. The FY 2020 budget agreement includes funding for The Heartland Flyer, which is related to efforts to establish a regional commuter rail system in central Oklahoma (OKC - Edmond -Norman) and protect Oklahoma City's $30 million investment in an Intermodal Hub. This also allows for future planning to re-connect Oklahoma City with Newton, Kansas City, Chicago and all locations on Amtrak's national network.

 

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  Chamber supported government reform priorities enacted  
 

The Chamber supported a package of major state government reforms that have now been signed into law. These reforms targeted three areas: 1) providing the governor direct hiring and firing authority over the heads of the Department of Transportation, Health Care Authority, Department of Corrections, Department of Mental Health and Substance Abuse Services and Office of Juvenile Affairs; 2) creation of a Legislative Office of Fiscal Transparency (LOFT) to more effectively monitor agency spending and performance; and, 3) board and commission reform under which appointees will serve at the pleasure of the appointing authority (generally governor, senate president pro tempore or speaker of the house).

 

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  Important legislation enacted, but more work remains on criminal justice reform  
 

The final bill passed by the Legislature was HB 1269, which will make the provisions of SQ 780 (reclassification of some drug possession and property crimes as misdemeanors) retroactive. It will do so by establishing an expedited commutation process for those serving felony sentences for crimes that are now misdemeanors. Additionally, the bill creates a simplified process for expungement of criminal records for those with old drug possession and low level property crimes. It is estimated 500-800 low level, non-violent inmates will be released from jail/prison as a result of this legislation.  HB 1269 was signed into law by Gov. Stitt on May 28.

In addition, the FY 2020 budget will provide $20 million to reform funding for district attorneys (to make it less dependent on the fines, fees and costs of offenders), $10 million for mental health and substance abuse programs, $1.5 million for the Women in Recovery diversion program and $1.7 million to expand drug court options for non-violent offenders.

While these were certainly positive steps, much work remains on criminal justice reform and our efforts will continue next year for significant, incarceration-rate reducing legislation. Key areas of reform that remain include: 1) supervision reform/revocation caps; 2) revision of possession with intent to distribute laws; and, 3) reduction of sentence enhancements for low level, non-violent offenders.

 

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  2013 workers' compensation reforms protected in legislation sent to Gov. Stitt  
 

In 2013, Oklahoma enacted a number of comprehensive reforms to its workers' compensation system, including changing from an adversarial/judicial system to an administrative system. As a result, Oklahoma businesses have saved hundreds of millions of dollars and injured employees have been spending less time away from work. In its original form, HB 2367 would have negatively impacted many of those reforms and increased system costs by approximately $100 million.

Through months of negotiations with the business community, led by the State Chamber, the bill's authors - Rep. Chris Kannady, (R-OKC) and Sen. Julie Daniels (R-Tulsa), and other stakeholders - the 2013 reforms will remain intact. In the end, HB 2367 developed into a positive piece of legislation which addresses funding for the Multiple Injury Trust Fund, contains a viable transition plan for the Court of Existing Claims and brings benefit payments for injured workers in line with the regional average. It was signed into law by Gov. Stitt on May 28.

 

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  Pharmacy benefit manager legislation enacted, may face court challenge  
 

Although Gov. Stitt vetoed one bill relating to pharmacy benefit managers (PBM's), he subsequently signed similar legislation into law. The Chamber opposed both bills, as interfering with an employer's ability to offer affordable health benefits due to a reduced ability to control benefit plans relating to prescription drugs. It is our belief that much of the subject matter of HB 2632, which was signed by Gov. Stitt on May 21, may be pre-empted by federal law, specifically the Employment Retirement Income Security Act of 1974 (ERISA). As a result, we expect HB 2632 will face a constitutional challenge in court.

 

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  Legislation to change alcohol distribution enacted, may also face court challenge  
 

SQ 792, which amended the Oklahoma Constitution when it was overwhelmingly approved by voters in 2016, provided that alcohol manufacturers (distillers, wineries) could choose to distribute their products in Oklahoma through the wholesaler(s) of their choice. However, SB 608, which was signed into law by Gov. Stitt on May 13, would dismantle this voter-approved distribution system by forcing manufacturers to sell their top 25 brands to all wholesalers wanting to purchase those brands. It appears SB 608 will be challenged in court as being in direct conflict with the Oklahoma Constitution, as amended by SQ 792.

 

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  Teacher pay raise achieved for second consecutive year  
 

For the second year in a row, the Chamber supported efforts to increase teacher pay. The final budget included $58.9 million for a $1,200 teacher pay raise. When coupled with the 2018 pay increase, Oklahoma educators will be become the highest paid in the region. However, Texas and other states are also likely to increase teacher pay so the "highest paid" label may change.

The Legislature also provided increased funding for other education programs expenses: $74.4 million in new funding will be provided for the classroom that will be added to the school funding formula, $18.9 million will be provided for funding teacher health care and $5.5 million will be provided to increase the focus on reading (Reading Sufficiency Act). In total, there is a $157.9 million increase in funding for K-12 education, making the FY 2020 budget a successful one for common education.

 

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  Additional education reforms enacted  
 

The Chamber also supported other important education reforms, including increasing the number of instruction days. In recent years, some school districts began operating schools only four days per week. This tarnishes the state's reputation and reduces the opportunity for children to learn. It also makes it difficult to recruit employers who place a high value on education. SB 441 will reduce the number of school districts which operate only 4 days a week by requiring schools to provide 1,080 hours of instruction and be open at least 165 days.

The business community, including the Chamber, successfully supported the development and implementation of a new pre-K to 20 longitudinal data system. SB 70 authorizes the State Department of Education to define the requirements of what data schools must submit in order to be in compliance with state and federal requirements.

The Chamber has been increasingly concerned about the many violence-related challenges faced by our teachers and students. We supported the passage of HB 1905 to require teachers to have "trauma informed responsive instruction," which was signed into law by Gov. Stitt on April 30.

 

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  Higher education receives additional funds for research and concurrent enrollment  
 

The Chamber believes students should be encouraged to begin pursuit of a college degree or other certification while still in high school and supported the $13 million appropriation, including $3.3 million in new funds, for expansion of concurrent enrollment programs for high school students. The Legislature also provided $28 million for higher education to fund professor pay raises and targeted research programs.

 

 

For more information about the 2019 legislative session or any of the Chamber's government relations activities, please contact a member of the Chamber's government relations team:

 

Mark VanLandingham
Senior Vice President of
Government Relations
405-297-8925
mvanlandingham@okcchamber.com

 

Drew Dugan
Vice President of
Education
405-297-8940
ddugan@okcchamber.com

 

Derek Sparks
Government Relations Manager
405-297-8933
dsparks@okcchamber.com

 

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