Welcome to the Oklahoma House of Representatives

Rep. Nick Archer, R-Elk City, has been elected chair of The Energy Council, an international nonpartisan organization focused on energy policy. He was elected chair during the Council's annual meeting in Albuquerque, New Mexico, last week. Archer, who served as vice chair of the Council's Executive Committee last year, joined the Executive Committee last February and has been a member of the Council since 2022. "I am honored to have been named chair of the Energy Council by my colleagues," Archer said. "This organization plays an important role in bringing policymakers together to address the opportunities and challenges facing the energy industry. I am committed to continuing conversations to support a strong, stable energy future as Oklahoma powers our country and world."  Archer is the chair of the Oklahoma House Energy Committee and is a member of the House Energy and Natural Resources Oversight Committee. He has represented House District 55 in western Oklahoma since 2022 and previously served as mayor of Elk City.

Rep. Mark Chapman, R-Broken Arrow, this week led an interim study examining the benefits, costs and long-term impacts of data center development in Oklahoma. The study was held before the House Energy and Natural Resources Oversight Committee's Utilities Subcommittee, where Chapman serves as vice chair. During his opening remarks, Chapman said he wanted the discussion to move beyond some of the strong opinions surrounding data centers and give lawmakers an opportunity to look at the issue from multiple perspectives. He encouraged committee members to consider both the potential benefits and costs and allow the information presented during the study to guide future discussions. "For the past year, I've heard a lot of discussions and concerns about data centers, and I felt it was time to lay the cards on the table and look at this issue as objectively as we can," Chapman said. "There are potential opportunities, but there are also legitimate questions about infrastructure, resources and the effects on communities. We need to understand what communities may be saying yes to, what they may be saying no to and what safeguards need to be in place." Much of the study focused on how data centers affect utility planning and local resources. Speakers discussed the large power needs of newer facilities, safeguards intended to keep project costs with the customers creating them and how water use can vary depending on a facility’s design and cooling technology. The discussion also covered permitting and community impacts, including infrastructure needs and potential economic and workforce opportunities. Speakers noted that oversight can involve different state and local authorities depending on the project. They also discussed ways to better connect existing resources so communities can more easily evaluate proposed projects and understand potential impacts. Chapman said he will continue reviewing information gathered during the study to determine whether additional legislative action is warranted.

OKLAHOMA CITY – Rep. Mark Lepak, R-Claremore, hosted an interim study examining how Oklahoma taxes Software as a Service, digital memberships and whether Oklahoma's tax code should be updated to reflect the growing shift toward digital products and services, including software subscriptions, music, audiobooks and streaming services. Interim Study 26-068 , titled Software as a Service (SaaS) and Digital Memberships, considered the potential impact of taxing such products on state and local revenue, and also reviewed approaches taken by other states. "Many who'd like to eliminate the state income tax are cautious and ask a question. 'How do you replace the revenue those taxes fund?'," Lepak stated when he began the meeting. "It's fair question with layers of answers that we seem debated during the current election cycle. This study does not attempt to address that question, although one answer is to transition to more of a consumption-based tax system. This study is narrowly focused on taxing one set of services, software as a service and digital services. But I would add, this policy shift deserves consideration, even if decoupled from the idea of eliminating the income tax." Lepak said Oklahoma's economy has changed significantly while the state's tax structure has largely remained rooted in an economy built around the sale of tangible goods. "We have a 21st century economy we're living in that was built on an economy from 100 years ago. Perhaps we should consider making some changes to better align the reality of an economy to the day we're living in," Lepak said. The Oklahoma Municipal League requested the study to examine how changing consumer spending habits could affect local revenue. Dave Andren, director of research for the league, discussed municipalities’ reliance on sales and use taxes as consumers increasingly spend money on digital and subscription-based services. "The economy has changed, but our policy has not," Andren stated. "Oklahoma's sales tax was built around those physical retail, tangible goods and as we have those local storefronts. They have shifted over into what's called the SaaS model, and that's Software as a Service. We are no longer going and we're no longer purchasing those tangible goods from the store. We're now paying for subscription-based services, online, and in the current statutes of Oklahoma, those subscriptions are no longer taxed and because of that we are losing revenue." Andren pointed to several examples of the shift, including consumers moving from purchasing CDs to using music streaming services, from DVDs to video streaming platforms and from boxed computer software to cloud-based programs. "Now everything is cloud based, digital services. This is where we are," Andren said. "We have gone from a tangible society into a digital society, and we need to move forward." Andren said sales and use taxes account for 68% of local government budgets in Oklahoma, making changes in consumer spending particularly significant for municipalities. "We are ranked number one in the reliance on sales tax in the nation," Andren said. "The next highest sales tax reliance is 50% and that's the state of Alabama. So, when you look at a pie chart and you see how municipalities are funded, sales tax is the largest chunk by far. Cities still have to fund public services like police, fire streets, water parks." The study also examined South Dakota’s approach, which applies sales tax to certain digital products and vendor-hosted software. Corey Jager, tax policy manager with the Oklahoma Tax Commission, discussed how Oklahoma could administer a tax on digital products if lawmakers chose to pursue legislation. Jager said lawmakers first would need to clearly define which products would be taxable. Potential categories discussed included digital audio and visual products, streaming and television services, digital books and audiobooks, video games, periodicals, information services and software. Lawmakers also would need to determine applicable exemptions and establish sourcing rules to determine where sales tax revenue is collected. Lawmakers would also need to establish sourcing rules, such as those outlined in the Streamlined Sales and Use Tax Agreement, of which Oklahoma is already a member. Under these rules, sales tax on a digital product would generally be based on where the purchaser receives the product. This means the tax revenue would be directed to the purchaser's location rather than the location of the business selling the product. Jager also emphasized that after legislation is passed, the need to give the Tax Commission sufficient time to develop administrative rules and educate businesses and taxpayers before any new tax requirements take effect. "I will say 30 days is not enough time to get emergency rules in place and so just a consideration for the legislature. If you're going to make this change, we would like a little bit more time," Jager stated. "We also try to provide vendors and taxpayers with guidance, so they know how to follow the law, and they know how to report and collect sales tax appropriately. There's also the other pieces, the taxpayer and the vendor piece." The Tax Commission estimated taxing digital products could generate approximately $40 million annually in additional state sales tax revenue. "The main things to consider are defining is exactly what you want to tax and putting that into statute, applying our streamline definitions and sourcing rules to maintain compliance, maintain a user-friendly atmosphere for the businesses that sell to Oklahoma," Jager said. "Allow lead time for rules registration and system changes and then potentially see a revenue generated to the state of about $40 million." After the presentations concluded, the discussion broadened to Oklahoma's overall tax structure and whether comprehensive tax reform would be more effective than making individual changes to the tax code. The study can be viewed on the House website, https://www.okhouse.gov/ , under live proceedings. Search by calendar day, Sept. 28, then for study IS 26-068 Software as a Service and Digital Memberships starting at 9 am.