Last week, the OBA held its Annual Convention and Trade show at the Omni in Oklahoma City, and it was a great couple of days.
We had record number of golfers playing in the rain, we had over 300 registrants and a sold-out exhibit hall full of great OBA Strategic Members.
This year’s convention had a feel unlike any other year – there was a buzz in the hotel that truly made it special. The theme of this year’s convention was “Where everybody knows your name.” While everyone at the convention had lot of friends in attendance, it was the first time in over a year we had the opportunity to see those friends in person. Thank you to all of our convention sponsors, the event wouldn’t have been possible without you.
The Oklahoma legislature wrapped up its business for this year’s legislative session. The OBA introduced two bills this year and they were both signed by the governor.
This was my 21st legislative session and it wasn’t the craziest I’ve seen, but it was still exciting and a lot of fun. Every year there seems to be what I would call a “hot topic” for the session and this year we had two hot topics. There were several bills dealing with the gender of an individual – those bills were mainly focused on two areas: education and athletics.
The other hot topic was a massive amount of bills dealing with the protests/riots of last year and in response to the 2020 presidential election.
While the OBA wasn’t directly involved in any of these issues, we still pay close attention to all bills as they sometimes evolve in bizarre ways that may affect our industry.
The cornerstone of every legislation session is the budget, as this is the only thing the legislature is constitutionally required to do.
In my opinion, the legislature and the governor did a great job with this year’s budget, there weren’t any cuts to state agencies and there were some important programs that received more money and some that were put back in place, which had been completely cut in prior year’s.
Below are some highlights from this year’s budget:
- Increases common education funding by $171.8 million, or 6%. This is an all-time high in funding at $3.2 billion.
- Increases the amount in the Rainy-Day Fund from $300 million to over $1 billion.
- Reduces the top personal income tax rate from 5% to 4.75% and the corporate income tax rate from 6% to 4%.
- Recruits more film industry projects, creating a new film tax incentive with a $30 million cap.
- Expands broadband in underserved areas statewide through a $42 million tax incentive for providers.
- Restores the Earned Income Tax Credit.
- Funds expanded Medicaid for low-income Oklahomans.
Let’s go back to June 30, 2020, when State Question 802 was on the ballot. SQ 802 was the Oklahoma Medicaid Expansion Initiative, which would expand Medicaid to cover low-income adults in Oklahoma. The issued barely passed, receiving 50.45% of the vote. Fast forward to June 1, 2021, and there were two things that happened on this date vitally important to this program. On this day, the application process in the program started – after only two days, 30,000 Oklahomans have been approved for SoonerCare benefits via Medicaid expansion. The Oklahoma Health Care Authority estimates that 200,00 Oklahomans will apply for the program.
On Tuesday, the Oklahoma State Supreme Court’s decision that the Oklahoma Health Care Authority didn’t have legislative approval to implement its Medicaid managed-care plan was laid down. During this past legislative session, the governor pushed for a managed-care option to implement the Medicaid expansion. Managed-care isn’t something that all Republicans in both the state House and state Senate agree on, but they were able to pass SB 131, which many thought did give legislative authority to the Oklahoma Health Care Authority.
With the court’s decision on Tuesday, control of managing the program is up in the air – at the time of press there are a lot of attorneys from both sides making legal arguments as to who’s right and who’s wrong. There’s always the chance the legislature will have to come back in a special session to address the issue.
Things have been quiet on the Federal level for a couple of weeks, but we anticipate it ramping up pretty quickly. I wanted to provide you with a couple updates on what we are tracking right now.
H.R. 1996 the SAFE Banking Act — This piece of legislation will provide a safe harbor for financial institutions that provide services to legitimate cannabis-related businesses and service providers for such businesses.
The bill passed the House on April 19 by a vote of 321-101. After securing passage in the House, the bill has been assigned to the Senate Banking Committee, which is chaired by Sen. Sherrod Brown (D-Ohio). On April 22, only three days after passing the House, Brown publicly stated the bill hasn’t won his support just yet, “because I think we need to look at a number of things.”
Senate Leader Chuck Schumer also said right after the bill was passed that he doesn’t think it’s wise for the Senate to pass cannabis banking legislation before tackling more comprehensive reform as this bill would likely attract Republican members and undermine efforts to get support for the broader legalization legislation he’s currently working on.
It looks like the Senate Democrats are going to try to use this bill as a vehicle for criminal justice reform tied to cannabis. If it’s the case, they most likely lose any Republican support the bill currently has.
Climate control and banking? — Three weeks ago, President Biden signed an executive order on climate-related financial risk that, among other things, directs financial regulators to take steps to ensure the appropriate measurement and mitigation of these risks. Last week, Sen. Brian Schatz (D-Hi.) and Rep. Sean Casten (D-Ill.) introduced the Climate Change Financial Risk Act of 2021. Below are a few bullets as to what this bill in its current form will do:
- Establish an advisory group of climate scientists and climate economists to help develop climate change scenarios for financial stress tests.
- The Fed will create three stress test scenarios: a 1.5-degree Celsius warming scenario; a 2-degree scenario and a business-as-usual scenario, which assumes a higher level of warming if there are no climate policies in place.
- Based on these scenarios, the Fed will conduct nonbinding stress tests every two years on the same large financial institutions that are currently subject to the Comprehensive Capital Analysis and review stress tests. Institutions with more than $250 billion in total consolidated assets, and possibly some with assets over $100 billion, would be affected.
We’ll monitor this bill closely as it’s in the infant stage and will most likely see some significant changes along the way.
Thanks again to all of you who made it to convention, it was great to see you in person. We’ve resumed full capacity at our activities here at the OBA for education events, and have started looking at dates for the fall Bankers’ Night Out programs.
I’ll be hitting the road a lot this summer and look forward to seeing you at your bank. As always, should you ever need anything please don’t hesitate to contact myself or the staff at the OBA.