Oklahoma

Economy, Energy, Natural Resources: Policy to People

How Fee Increases Are Outpacing Tax Cuts In Oklahoma

StateImpact reported in April on how difficult practically impossible it is to raise taxes in Oklahoma, and the 1992 state question responsible.

State agencies still have to operate, and with tax revenue so hard to come by — especially during the most recent budget crisis —many turned more and more to user fees as a funding source, like the fee you pay when you get a new driver’s license or lose in court.

But fees went up by close to $200 million just last fiscal year, and as The Oklahoman’s Randy Ellis reports, that’s more than taxpayers would save from a proposed decrease in the state income tax.

The $194 million increase outpaces the $136 million a year that tax officials have projected taxpayers will save if the House-approved one-quarter percent cut in the state’s highest income tax rate is implemented.

The paper goes on to say the issue is a bit more complicated than that, and most of the recent spike can be attributed to hospital provider fees:

Oklahoma is required to provide matching funds to obtain certain federal Medicaid reimbursement payments for hospital care. Rather than pay money from the state’s general fund, the state worked out an arrangement where some hospitals in the state pay hospital provider fees.

Those fees are used to attract federal matching funds, and then both the fees, and matching funds essentially are returned to the hospitals to pay for treatment of Medicaid patients.

Fiscal analysts told lawmakers the provider fees were expected to attract about $269 million in federal matching dollars. The arrangement saves the state budget money, but taxpayers still end up paying through federal taxes.

Versions of a bill that would place a moratorium on fee increases have passed both the state House and Senate. The effort is being pushed by House Speaker T.W. Shannon, R-Lawton.

 


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