Weekly Opinion Editorial
SPEND IN THE GOOD TIMES
TAX IN THE BAD TIMES!
by Steve Fair
How did Oklahoma state government get to the point where there is a $250 million dollar budget hole with seemingly no money to fill it? Was it past legislature’s zeal in cutting the state income tax? Was it the tax credits accorded wind, oil and gas companies? Many think the budget crisis was created when the legislature cut the gross production tax.
The fact is the fundamental problem is Oklahoma state government is far too dependent on the oil and gas industry and gross production tax, so when the price of oil and gas declines, state revenue declines. Every legislative session, there is talk of moving state government to a more stable source of tax revenue, but little is done about it because when revenue bounces back, what the hurry? Remember just four years ago; when the price of oil was near $100 a barrel and state government was flush with money? Oklahoma was praised as having the lowest unemployment in the nation, but then oil dropped to under $30 a barrel and the energy sector started layoffs and suddenly the Sooner state is struggling. Three observations:
First, the long term solution to the budget issue may require some conservatives holding their nose and voting for tax increases, but they should insist on an iron clad written agreement in the revenue bill that funds comprehensive performance audits on every entity that gets a penny of state taxpayer money. The audits should be conducted by the duly elected constitutional official- the State Auditor, not an appointed pseudo state auditor that reports directly to the legislature or Governor. The circumventing of the Auditor’s office and creating shadow state agencies that ‘manage’ elected officials, have huge budgets and report only to the Governor or the legislature is wrong. The state already has a statewide elected official whose duty is to audit government. Use the office. Don’t create one to circumvent it because you don’t like the duly elected official.
Second, the legislature can’t be blamed for the price of oil going down, but they must bear responsibility for not planning for the drop. Oil price fluctuation is not new. Oklahoma government has been doing this for years- spend in the good times- tax in the bad times. When times were good, they should have been searching for and eliminating waste. Rightsizing government should be more than a campaign theme.
Third, the Democrats in the State House must bear some of the responsibility for the current stalemate. It seems bizarre that Democrats are not supporting tax increases, but the reason they aren’t supporting the GOP plan is they want more taxes, not less. Their unwillingness to support the cigarette tax unless gross production tax is raised is ridiculous. Get what you can and move on.
The price of crude oil will come back. It has already risen over $20 a barrel to near $60 in the past year. The important lesson the Oklahoma legislature must learn is another budget crisis looms in the state’s future if waste is not ultimately identified and eliminated.