State Board of Equalization

The Legislature may consider the following policy changes:

Finding 1: The revenue estimation process results in inefficiency of agency resources and time, and insufficient communication of actions and data.

Enable the Governor and the Legislature to work from the same and final BOE estimates.

• 62 O.S. § 34.37 - adjust by removing the word “immediately”; this would enable the Executive Budget to be submitted based on the February BOE certification, and make sure both branches utilize the same estimates for budget planning.

Consolidate OMES budget planning operations with the Oklahoma Tax Commission to achieve vertical integration through efficiencies of time, effort, and information.

• 62 O.S. § 34.49 and 68 O.S. § 102.3 - merging statutes would allow for moving the state’s budget functions to OTC, which already is responsible for reporting revenue declines
• 68 O.S. § 102.3 - change to provide OTC with greater flexibility in reporting revenue declines
• 62 O.S. § 34.2 - change to make sure that BOE packets are inclusive of all economic outlook data, gross OTC estimates, and that packets are distributed sooner to its designated recipients

Facilitate sharing of information about estimates with the Legislature.

• 68 O.S. § 118:
  • Facilitate making the BOE packet available to BOE members and the Legislature within 48 hours of the regular and special (advisory) meetings
  • Change existing statutory requirement that makes information available “upon request” to language that requires BOE estimates to be accompanied with a list of all estimates considered, justification for selections made, and the economic outlooks received from consultants

Empower the OTC Commissioners.

• 68 O.S. § 102.3 - add a requirement that gross revenue estimates provided to OMES for regular and special BOE meetings must be approved by the Commission, and define the timing of such Commission approval meetings before BOE meetings

Codify processes leading to the declaration of a revenue failure.

• 62 O.S. § 34.2 - create new policy to identify responsibilities for preparing packets for special BOE meetings according to O.C. Article X, § 23,6-8
• O.C. Article X, Section 23 - modify to enable adjustment of the February estimates in the event of a revenue gap

Create policies providing communication parameters.

• 62 O.S. § 34.2 - create new policy to establish when OTC is required to provide estimates to OMES
• 62 O.S. § 34.2 - create new policy under to direct when OMES is required to provide packets before the regular and special BOE meetings
• O.C. Article X, Section 23 - modify to align BOE’s December and February meeting dates with agencies’ budgeting deadlines and provide state leadership with the ability to maximize outcomes of state programs

Finding 2: Volatility in revenue sources negatively impacts estimate accuracy.

Reduce reliance on the GPT in a present budget cycle to focus on long-term stability.

• 68 O.S. § 1004 - review the apportionment for gross production revenue
• 62 O.S. § 34.103 – lift the cap on total deposits possible to the Stabilization Fund
• O.C. Article X, § 23.5:
  • increase or remove maximum balance limit, and / or,
  • change the reference form the balance to yearly deposit, and/or,
  • change the reference from the preceding fiscal year to current.
  • build a constitutionally protected trust fund, the proceeds of which appropriations would be made with limited impact of economy fluctuations; (see Appendix F. Volatility of the Gross Production, page 49)

Finding 3: Shifting tax dynamics highlight need for more inclusive estimation process.

Change the composition of BOE.

• O.C. Article X, Section 21
  • expand the composition of the BOE with the Legislature appointing experts in the volatile revenue sources, or
  • replace BOE with body consisting of members appointed by the Executive and Legislative branch and inclusive of the volatile industry experts