Oklahoma leaders who are dismissive of the role tax cuts have played in the ongoing state budget crisis here are ignoring the facts and hope residents here simply accept their simplistic narrative about the situation.
Their narrative, which is presented most forcefully and consistently by Gov. Mary Fallin and her Secretary of Finance Preston Doerflinger, is that the world oil glut caused by the hydraulic fracturing boom here and elsewhere in this country has substantially lowered the amount of gross production taxes collected by the state. This, they maintain, has created what is likely to be a more than $1 billion budget shortfall for next fiscal year and a current revenue shortfall, which might lead to upcoming 2 to 4 percent across-the-board cuts for state agencies.
It’s a false story manufactured for simpletons that goes like this: Oklahomans can only hope that oil prices rebound and the oil and gas frackers increase production. Fracking is what’s going to save the state. Of course, Fallin and Doerflinger never stress that more fracking will just lead to more environmental problems, such as more earthquakes. So Oklahomans, essentially, are getting told they have to trade off their basic personal and property safety for—now get this—only major cuts to education not, say, totally severe and devastating cuts to education. This is because that even without the downturn in the oil patch, Oklahoma was well on its way to budget problems because of a lack of executive leadership and conservative ideology.
— Center on Budget (@CenterOnBudget) December 11, 2015
While there’s no doubt a decline in fossil fuel prices has slowed production and dropped state revenue from lower gross production taxes, there are at least three other leadership errors that contributed greatly to the crisis.
(1) The state has lowered its top income tax rate from 7 to 5 percent since 2004. The 5 percent rate goes into effect Jan. 1. The tax cuts, as I and many others have argued through statistical facts and studies, primarily benefit the wealthiest among us, and it has taken hundreds of millions of dollars out of the budget. Estimates vary, but the upcoming Jan. 1 tax cut alone—5.25 to 5 percent or just a quarter of a point—is estimated at $147 million. Do the overall math on the tax cuts since 2004.
(2) In 2014, Gov Mary Fallin pushed for and signed into law a measure that lowered gross production taxes from an overall rate of 7 percent to 2 percent on the first 36 months of production. Many people don’t realize that many tracked wells only produce substantially for the first two to three years. This is estimated to cost the state $300 million a year.
(3) A 2014 story in Oklahoma Watch pointed out that tax cuts and credits for businesses in the state are now costing it $760 million annually in revenue. There have been some attempts to look at the state’s various tax credits and incentives, but they have been thwarted by a lack of political will.
Meanwhile the most telling result of this morass is that the state has cut education the most of any state in the nation since the recession in 2008.
The Oklahoman/NewsOK.com editorial board, the propaganda ministry for the Republican Party and tax-cut ideology, recently snorted in a commentary that the “shortfall means no more business as usual,” but, of course, it failed to outline in any meaningful way how the tax cuts have hurt the state, except to say “raising taxes is one of the worst things you can do in a downturn.”
The Oklahoman and its Republican counterparts’ recent “bold” suggestion is to use more adjunct teachers in our schools because of our teacher shortage so we don’t have to hire as many full-time teachers. In other words, they want schools to rely on uncertified teachers, pay them part-time wages without health benefits and then, well, everything will be fine. This is nothing more than another ploy to undermine teacher unions.
It’s a cliche now to refer to the Republican “starve the beast” strategy, which is to systemically cut taxes and force draconian cuts to state services, especially to education, but there’s no other way to view that obvious connection between tax cuts and a decline in state revenue here in Oklahoma.
As I’ve noted before and will undoubtedly note again: Tax cuts don’t bring about prosperity. Sensible, adequate taxation and critical investment in education, health, social services and infrastructure DO create a climate for prosperity. Diversifying the economy DOES create a climate for prosperity.
The $80 billion we spend each year on incarcerations could double the salary of every high school teacher in America.
— President Obama (@POTUS) July 14, 2015