The Oklahoma Senate

• Acting on the recommendation of the Joint Task Force on Oil Industry Stabilization, Governor Keating called the Legislature into special session to consider relief measures for Oklahoma crude producers.

  The panel recommended:

  1. Create a "three step" tiered system of gross production tax collection :
     -Greater than $17 per barrel...................7% tax rate (current)
     -$14 to $17 per barrel..............................4%
     -Less than $14 per barrel.......................1%
     
     
  2. Advance the date of the gross production tax refunds for "at risk" oil leases from July 1 to April 1;

  Because the proposed tax cut affects the current fiscal year budget, lawmakers must also cut agency appropriations accordingly.

• The tax cut bill, HB 1003X, and the accompanying budget cut bill were initiated in the House where they underwent their first reading on the opening day of the special session. The Senate recessed until Monday, allowing Senate budget subcommittees to continue their work toward an agreement on spending cuts.
  
  
• State agency directors appeared before legislative budget committees to explain how they would sustain budget reductions ranging from 1.2 percent to approximately 8 percent. Prison officials testified they would have to delay some planned hirings; transportation authorities claimed lake access and industrial road projects would be shelved; and mental health leaders expressed fear that some institutions may have to be shut down. Lawmakers and the Governor will have to carve $29 million from the current budget to make the oil relief package fly.

• The House approved the oil tax cut legislation 85-11, sending it to the Senate for consideration. It also approved a "shell" bill that will ultimately carry the accompanying budget cuts.

• The Senate reconvened the special session to take up the two pieces of legislation approved by the House on Friday. Both bills were given their first reading in the Senate. HB 1003X, the oil tax cut bill, was assigned to the Senate Finance Committee for action. The budget cut bill, HB 1001X, was assigned directly to the Senate calendar for consideration.
  
  
• The House approved a concurrent resolution calling for the U.S. Congress and the President to take action to protect the domestic oil industry.
  
  
• The Senate Finance Committee heard testimony from energy industry experts who attempted to justify the need for the proposed tax cut. They argued that without tax relief, the state would lose thousands of jobs. One industry analyst said the tax cut was just a temporary relief mechanism and that any long term relief would have to come in the form of higher prices.

• The Senate Finance Committee unanimously approved a slightly revised version of HB 1003X, the oil tax cut bill. The main change in the legislation would create a special revolving fund that would receive oil tax revenues when the price of oil reached $14 a barrel. The bulk of that money currently goes to the general revenue fund, but under the new proposal, the revolving fund cash would be divided between common education and higher education to finance capital improvement projects. The next stop for the bill is the full Senate.

• The Senate and House agreed to recess the special session. The Legislature will most likely return on Monday, February 1st, the date which also marks the beginning of the regular session for 1999. Lawmakers cannot take final action on the proposed oil tax cut legislation until they reach agreement on an accompanying budget cut bill.