The Oklahoma legislature wraps up today, as lawmakers pass a final budget deal that will fill a nearly $900 million shortfall. Legislators passed several bills that will have an impact on business in the state. Journal Record editor Ted Streuli and KGOU’s Jacob McCleland reviewed some of the business-related bills.
Jacob McCleland: Ted, among the bills that passed, which ones do you believe are going to have the most significant impact on business here?
Ted Streuli: Well, I think clearly the two biggest ones are going to affect the energy industry. The bill most producers really loved was one that will allow them to drill horizontal wells up to two miles long in any kind of rock, not just shale. This was an amendment to a 2011 law. There were a few marginal producers who didn’t like that, but most of the industry is very happy about that one because they say it’s going to allow drilling technology to kind of catch up with the times. They’re not as happy, however, about the changes to the gross production taxes. The official 7 percent rate on gross production didn’t change at all, but a lot of the discounts that have been in place for quite a while did change and that’s going to raise their effective tax rate on a lot of production.
McCleland: Governor Fallin, one of her big proposals was to expand sales taxes on services that aren’t currently taxed in Oklahoma, but they are in other states. She listed over a hundred different taxes. But she met a lot of resistance. Was she able to get any of these taxes passed?
Streuli: Not a single one, and the proposals included everything from accounting services to manicures to advertising and subscriptions, and not one of those was able to get off the ground.
McCleland: Let’s talk a little about incentives and tax credits. The legislature will sunset credits for the wind industry. What other incentives and credits got the ax this year?
Streuli: Well there was a lot of talk about those business incentives and tax incentives, and which ones should go away, lots of study about that. And the only one, other than the wind power incentives to get hurt, was the film industry. There was a reduction in the incentives to make movies in Oklahoma. That’s the only other one that the legislature addressed.
McCleland: So which particular incentives were spared this session?
Streuli: The two big ones that were under discussion but did not get the ax were incentives for solar power. They were spared, where wind power wasn’t. And the other ones that was really important to the aerospace industry were some credits for hiring aerospace engineers. That was a very important incentive to them to get talent into the state. That one was also spared.
McCleland: We’ve been talking about bills that have passed session. Which significant business measures didn’t pass this session. Which ones failed?
Streuli: There was a bill that would raised the cap and loosened the repayment terms for payday loans. It would have allowed payday lenders to act a little bit more like banks in terms of how loans are repaid and how much they can lend out. And then there was a proposal to charge a statewide rate on ad valorem tax on oilfield equipment. The thing is it would have prevented counties from charging different rates. It would have made things a little simpler for the oil industry. That did not get off the ground. And then one other bill that could eliminate an exemption for use tax on the sale of airplanes that could be voted on today. What that says is they’d have to pay the use tax, just like they do in most states. There’s some fixed base operators that are really opposed to that change because a lot of people come to Oklahoma to buy and sell airplanes to avoid paying that tax.
McCleland: Well thank you so much Ted for this update on all of these bills that could affect business here in Oklahoma. Thank you so much for your time.
Streuli: My pleasure.
The Business Intelligence Report is a collaborative news project between KGOU and The Journal Record.
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