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State fee increases offset Oklahoma income tax cut

A 48 percent increase in money the state raked in from fees, licenses and permits last fiscal year far exceeds the savings tax officials say Oklahomans can expect to receive from a legislatively approved one-quarter percent cut in the state's highest income tax rate.
by Randy Ellis Published: May 13, 2013
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The office has data that show how much fee income comes in each year, but can't tell from the data whether the increased income is the result of a new fee, fee hike or more people using a particular service, he said. More information would make financial planning easier, he said.

Last fiscal year's 48 percent increase in state fee, license and permit revenue appears to be largely attributable to some financial gimmickry by the Oklahoma Legislature working in concert with state hospitals.

Records show that more than three-fourths — or about $153.7 million — of the $194 million increase came from a hospital provider fees approved by the Legislature in 2011.

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.


Sometimes fee hikes have been controversial — such as when the Consumer Credit Department hiked the fees and fines it charges lenders it regulates so it would no longer have to rely on state-appropriated funds. The department then handed out nearly $100,000 in raises in a single year that were distributed among at least six employees.

Another effort to increase fees is pending before the governor.

The state Senate sent Gov. Mary Fallin a bill last week that would raise the fee for obtaining or renewing a four-year driver's license by $12, bringing the total cost to $33.50.

The fee increase is projected to produce an additional $8.7 million a year. Officials say that would enable the Public Safety Department to hire more people so that long lines for driver's license examinations could be reduced.

by Randy Ellis
Investigative Reporter
For the past 30 years, staff writer Randy Ellis has exposed public corruption and government mismanagement in news articles. Ellis has investigated problems in Oklahoma's higher education institutions and wrote stories that ultimately led to two...
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