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Capitol Insider: Capitol Closed For Renovations While OK Health Agencies Consider Cuts To Services

Oct 13, 2017

Three agencies that serve many of the state’s most vulnerable residents are facing additional budget cuts. The Office of Management and Enterprise Services (OMES) has notified the Oklahoma Health Care Authority (OHCA), Oklahoma Department of Human Services (OKDHS) and Oklahoma Department of Mental Health and Substance Abuse Services (ODMHSAS) they must make cuts to fill the state’s $215 million budget hole. 

The move is required because legislators have been unable to agree on a fix during Oklahoma’s special legislative session, which is currently in recess.

OHCA says it was notified Oct. 2 by the Office of Management and Enterprise Services (OMES) that its revised budget must account for $70 million in lost revenue as a result of a Supreme Court decision striking down a bill containing a smoking cessation fee earlier this year

Among the agency’s list of proposed cuts are provider rate reductions which, if approved by the OHCA board, would be effective Dec. 1.

The other health-related agencies face a similar dilemma since the Oklahoma Supreme Court decision.

“That bill created a special fund—the Health Care Enhancement Fund—into which money from the tobacco cessation fee would flow,” says eCapitol news director Shawn Ashley. “The legislature in Senate Bill 860—the general appropriations bill—then appropriated the money from that fund to those three agencies. When the court found Senate Bill 845 unconstitutional, it cut off the flow of revenue into that fund. So, there's no money there now to go out. They were the only three agencies (along with the Alcoholic Beverage Law Enforcement Commission, which was to receive $1 million off the top) that got any of that money… Unless that money is replaced in whole, or partially, they simply don't have the money to spend.”

Complicating matters for lawmakers—the state Capitol building is closed until Oct. 23 for electrical work during the ongoing restoration project.

Full Transcript

Dick Pryor: This is Capital Insider, an insider's guide to Oklahoma politics and policy. I'm Dick Pryor with eCapitol News Director Shawn Ashley. Shawn, the special session is still in limbo and three agencies that lost money when the tobacco cessation fee was ruled unconstitutional have been told to cut their budgets to make up the budget hole - $214 million. How are they going to do that?

Shawn Ashley: Well, there's really only one way they can do that and that is to cut money that they put into services. The Oklahoma Health Care Authority is going to hold a public hearing in a couple of weeks to look at reducing some of its provider rates - the money it pays to doctors nurses nursing homes and others to provide the services that they provide on behalf of the Health Care Authority. We also expect that there'll be similar discussions at the Department of Human Services and at the Department of Mental Health and Substance Abuse Services, because unless that money is replaced in whole, or partially, they simply don't have the money to spend.

Pryor: Those three agencies serve many of the state's most vulnerable residents and they were already reeling from previous appropriations cuts. The optics of cutting those agencies are not good for the state’s image. Why are they the only three agencies facing cuts?

Ashley: Well, you really have to go back to the spring and back to Senate Bill 845 - the tobacco cessation fee. That bill created a special fund - the Health Care Enhancement Fund - into which money from the tobacco cessation fee would flow. The legislature in Senate Bill 860 - the general appropriations bill - then appropriated the money from that fund to those three agencies. When the court found Senate Bill 845 unconstitutional, it cut off the flow of revenue into that fund. So, there's no money there now to go out. They were the only three agencies (along with the Alcoholic Beverage Law Enforcement Commission, which was to receive $1 million off the top) that got any of that money. Since they were the only ones that got any of the money, they’re the only ones affected.

Pryor: Governor Fallin has asked those agencies to try to protect programs that receive federal matching dollars. Is that possible?

Ashley: It does not seem that it's entirely possible. When Governor Fallin has talked about the impact of the situation to these agencies. She's talked about the state losing hundreds of millions of federal dollars from those programs as a result of not having the state funds.

Pryor: But, the legislature could redo the budget and impose across-the-board cuts to most agencies to fill the hole.

Ashley: That is one way to do it. And that's one of the things being discussed. How much revenue can the legislature raise in the special session and whatever the difference is, is what we will see in terms of cuts. Since they haven't come up with a plan as to how much revenue they're going to generate, we don't know how big the cuts might be.

Pryor: What is the political back story to this stalled special session? Big question.

Ashley: It really is. And again, we can go back to the spring… In fact, we could go back to a legislative session ago, back to 2016, when the tobacco tax was first proposed and we saw that it did not pass. What you have on one hand, within the House Republican caucus, is a number of factions, at least two and possibly more, a large group that does not want any additional tax increases in any form or fashion, as a result. That means that House Speaker Charles McCall and his leadership team need to put together a coalition of members within their own caucus that could pass some sort of measure that would increase revenue. They need 51 of their 72 members to do that. They haven't been able to come up with those numbers. Now, you would say, “Well, what about the Democrats in the House of Representatives?” The Democrats are led by Scott Inman, who is a candidate for governor, and he's also a very aggressive negotiator and has made it clear that the caucus is not going to move to support tax increases, unless they get something in return. In particular, (Inman/Democrats may require) an increase in the gross production tax and possibly an increase in the income tax on higher earners.

Pryor: It's a lot of political intrigue involved. Adding to the intrigue is the fact the Capitol is closed until October 23rd due to the restoration project.

Ashley: That's right. They will be switching over the electrical system. It's a major project. So, there'll be no power in the Capitol for the better part of a week. A House Joint Committee on Appropriations and Budget meeting is scheduled for October 23rd, the day they return. But, there are no bills on that agenda and it possibly could be canceled if no agreement is reached while the Capitol is closed next week.

Pryor: Thanks Shawn. Next time on Capitol Insider Shawn and I are going to take you on a tour of the state capitol building and learn more about the restoration project. Until next time, with Shawn Ashley, I'm Dick Pryor.

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