Thursday, May 23, 2024

Executive News: OBA casts wary eye as state legislative session starts

Here we go, it’s time for another legislative session in Oklahoma City.

The 1st Session of the 59th Oklahoma Legislature convened at noon on Monday, Feb. 6. Gov. Kevin Stitt kicked off the start of session by delivering his State of the State address. We’ll breakdown the governor’s speech and what he wants to accomplish this upcoming session later in this article.

The OBA is going to be busy this session, as we are currently tracking 383 bills that could have an impact one way or another on your bank. We have several bills we are pushing, and numerous bills that we feel are incredibly problematic on which we will either work to amend to our benefit or we’ll do our best to kill.

Adrian Beverage, OBA President and CEO

On the opening day of session, Gov. Stitt delivered his fifth State of the State address. Every year when the governor gives his or her address, they lay out their legislative agenda for the upcoming session. They also use this time to remind everyone of their past legislative victories that set the stage for more change.

This year’s address wasn’t any different: It was full of optimism, bold thoughts and a desire to make Oklahoma an even better state. Stitt laid out the framework for three legislative accomplishments he hopes to achieve: drive excellence in education, continue to make Oklahoma the most business-friendly state in the nation and protect Oklahomans and promote freedom.

Gov. Stitt talked about achievements his administration made last year to better education: removing zip code barriers, modernizing our funding formula, and raising teacher pay.

“Parents spoke loud and clear at the ballot box last November in support of our vision to create more options for kids,” he said.

The governor is proposing the following education initiatives in his executive budget:
Performance-based pay for teachers.

The Innovation School Fund to help start more schools, like the Aviation Academy in Norman.
The most expansive reading initiative in the nation to get students reading at grade level.
Expanding concurrent enrollment so high schoolers can more easily earn college credits.

Stitt challenged the University of Oklahoma and Oklahoma State University to grow and deliver a quality education to 40,000 students by the year 2030.

Business development
“Since 2019, over 23,000 new jobs have been created, and today, Oklahoma now has the third fastest-growing economy in the nation,” Stitt said during his address.

Gov. Stitt wants to continue focusing on key areas: energy, infrastructure, workforce development and tax policy.

Investments in infrastructure will focus on, roads and bridges, rails and runways and broadband. Oklahoma ranks fifth in the nation for natural gas production, sixth for oil production and 10th for renewables.

Oklahoma is home to over 340,000 veterans – that’s almost 9% of the state’s population.
Oklahoma currently has $4 billion in the state’s savings account, and we are going into session with a $1.85 billion surplus.

The governor is proposing to eliminate Oklahoma’s state grocery tax and reduce the personal income tax rate to 3.99%.

The governor has also budgeted for an additional $700 million for rural hospitals and expansion of primary care across Oklahoma.

While the governor always introduces his or her own budget, it must go through the legislative process like any other bill. It will be interesting to watch the process and see how it all plays out. There are going to be a lot of issues over the next couple of months, and it remains to be seen if the House, Senate and the governor will all get along.

State issues
As of today, we know of two bills we will be supporting, and one currently up for discussion as to whether we support or just stay neutral.

S.B. 836, authored by Chuck Hall (R-Perry), looks to address an issue I’m sure you are familiar with. On July 1, 2022, Oklahoma became a title-holding state. Oklahoma’s version of a title-holding state is a little different than other title-holding states, though. The legislation that passed in 2021 allowed Oklahoma to be a dual title-holding state, which allowed the title of a vehicle to either stay physically with the lienholder or it could be stored digitally by the state.

Here’s the problem: While everyone I talked with was cautiously optimistic about the digital aspect, the state didn’t fulfill its end of the bargain. As of today, the state still hasn’t approved a vendor to manage and operate the digital side of the equation.

S.B. 836 will hopefully address this problem. This bill does several things: It moves the Electronic Lien & Title program from the Oklahoma Tax Commission to Service Oklahoma. Service Oklahoma is the agency tasked with handling everything digital on the state side of government. The bill requires the state have a program ready to implement on July 1, 2023. This bill will only apply to application for certificates of title and liens filed after June 30, 2022.

H.B. 2776 is a bill by Speaker of the House Charles McCall (R-Atoka) and it’s not controversial and will pass easily. Every couple of years, the Uniform Laws Commission come out with their Uniform Commercial Code update, and it’s our year to run the legislation. The 2022 amendments accommodate emerged and emerging technologies such as distributed ledger technology and artificial intelligence. The amendments bring the UCC into the digital age by providing commercial law rules for a new category of transactions: The transfer and leveraging of virtual currencies and certain other digital assets.

We will work to pass these amendments to facilitate modern commercial transaction involving these technologies and these assets, thus avoiding the obstacles and lack of clarity under the current law that inhibit transactions or increase their costs.

The third bill we have asked to be involved in deals with driver’s licenses. S.B. 669 would expand driver’s license eligibility for individuals who pay state income tax with an individual tax ID number. As of 2022, there are 33,000 Oklahomans who file their taxes with ITIN.

The supporters of this bill say providing an opportunity for a non-resident to obtain a valid driver’s license would be life changing. Having the ability to drive to work or anywhere knowing they are legal can open so many doors. If a non-resident isn’t current on his or her taxes, they won’t be eligible for the program. Below are some truths and myths related to the bill:

Myth: This bill would allow undocumented immigrants the right to vote.
Truth: This bill contains multiple provisions that prohibit these cards from being used for voter registration purposes.

Myth: This bill doesn’t guarantee they will pay their taxes.
Truth: Because of this bill, if ITIN applicants want the privilege to drive, they will have to show proof of recent tax payments when they apply for their licenses.

Myth: This rewards people who broke the law.
Truth: Immigration is a matter of federal law, not state law. This bill will reduce lawlessness in Oklahoma because it will lessen the number of uninsured motorists on Oklahoma roads.

Myth: This is not something that our law enforcement supports.
Truth: S.B. 669 has been endorsed by the Oklahoma State Troopers Association, Oklahoma Sheriff’s Association and the Fraternal Order of Police.

Myth: This bill just makes it more appealing for people to immigrate illegally.
Truth: There are currently 16 states that grant driving privileges to non-residents. S.B. 669 has the most stringent standards of any state that has passed similar legislation.That means that Oklahoma would have the strictest non-resident driver’s license program in the nation.

Myth: There is no guarantee that these drivers will be insured.
Truth: Just as people with traditional drivers’ licenses are required to carry insurance policies, so will people who hold these new drivers’ licenses.

Myth: This weakens our national security.
Truth: Driver’s license restrictions are what actually weakens national security, having a large number of people out there without legitimate proof of identity makes it harder for law enforcement to do its job.

The OBA hasn’t taken a position on this bill – our board and Government Relations Council has asked we gather more information and research what other associations and trade groups are supporting this bill. We will hopefully have an official position by the time you receive this February edition of the OBA newspaper.

• • •

When it comes to bills we are opposing this session, we are looking at close to 15. Every year when I read through the filed legislation, it’s pretty easy to see what industry is under attack – whether it’s wind or energy or education, there is always one. This year, it is pretty clear YOUR industry is the one being targeted.

We started to see this trend last year with a handful of bills, but there are clearly some in the legislature who campaign on free enterprise, less regulation, being supporters of small businesses – the problem is, when they get to Oklahoma City, they don’t govern like they campaign.

We are tracking close to 15 bills all introduced by Republicans that specifically target your industry. All of these bills have one thing in common: they are all considered forced access bills or ESG bills. ESG stands for environmental, social and governance. There are certain companies that use ESG to determine who they do business with and who they don’t do business with. Depending on what your environmental stance is, you may not want to do business with the energy industry. If a company takes different political stances than what you believe, you may choose to not provide that company your services.

All of these ESG bills are filed in response to certain stances the Biden Administration has taken on particular industries. For example, there has been a push in Washington to ban fossil fuels and gun-related industries to make life more difficult for them. The bills filed in the Oklahoma legislature are aimed at your business and not allowing you to have certain policies in place.

We have taken the same stance as we did last year: government has no place in the board room – if a company makes a policy that is in their best interest, it’s not government’s place to punish them for that decision. The one arrow we have in our quiver this year that we didn’t in 2022 is hard numbers and proof of the economic devastation these bills are causing elsewhere.

The Houston Chronicle on Jan. 23, 2023 clearly explains the cost that is being passed on to taxpayers for legislation trying to solve a problem that doesn’t exist in other states. The article explained how economists found that Texas cities incurred an additional $300 million to $500 million in interest on bonds issues during the first eight months after the law took effect, following five major underwriters leaving the state’s municipal bond market after the laws passed.

It’s estimated the ESG legislation in Oklahoma could cost the tax payers of this state a minimum of $50 million.

We have been directed by our Government Relations Council as well as our board to oppose all of these measures. We have already started talking to the authors of these bills and we feel good about where the discussions are going.

We’ll know a lot more in a couple of weeks and will report back to you with an update.