Oklahoma Governor Mary Fallin
This legislative session certainly lived up to its billing as being challenging. Lawmakers faced a $1.3 billion budget gap, the largest budget hole in state history.
I am pleased that lawmakers were able to make targeted spending cuts and free up revenues through tax reform and structural budget changes to close the gap. Those reforms included making some money in the Cash Flow Reserve Fund available for legislative appropriation, improving revenue stability of the General Revenue Fund by passing legislation creating the Revenue Stabilization Fund to deal with fluctuations in energy prices, and apportionment reform. We also ended the double deduction on income tax, capped a tax credit for at-risk wells and adjusted a coal credit.
We worked hard to protect key core services – common education, health and human services, corrections and the Oklahoma Health Care Authority – while keeping our eight-year transportation infrastructure plan intact. Whether it’s improving public safety, fixing our roads and bridges, boosting education or raising our health outcomes and indicators, the successes of this session to protect core services in the midst of an energy crisis will help to make Oklahoma a better place to live, work and raise a family.
I’m glad that legislators approved a $125 million bond issue to complete vital repairs at the state Capitol and also passed historic criminal justice reform bills. The criminal justice reform bills will help reduce Oklahoma’s prison population without jeopardizing public safety. We’re making the Capitol, which has been literally crumbling around us for far too long, safe to visit and work in again. We’re finally on a path to taking care of our Capitol, which is the seat of Oklahoma government.
But in the midst of a crisis, we missed an opportunity to do more to reform our budget process and consolidate agencies. We still need to do more to address structural imbalances in the state’s budget, fix problematic tax policies and make available more recurring, stable revenue.
At the beginning of session, I presented many proposals to develop recurring revenue, and resist the temptation to rely on using one-time revenue, such as the state’s savings in the Rainy Day Fund.
I appreciate lawmakers discussing and approving some of these proposals, such as eliminating the personal income tax double deduction and reforming the Cash Flow Reserve Fund. Those two changes alone mean more than $210 million in additional revenue is available for allocation in the upcoming fiscal year and subsequent years.
But several other practical fiscal proposals were not adopted by lawmakers.
Lawmakers also did not address an important health improvement measure by failing to approve a personal consumption tax on cigarettes. Smoking is Oklahoma’s leading cause of preventable death. Lawmakers approving an additional $1.50 per pack would have been the most important thing we could have done to improve Oklahoma’s health ranking.
The Legislature missed a great opportunity when I proposed addressing low-performing school districts by consolidating the administrative costs of the state’s underperforming K-8 dependent school districts by putting them into existing preK-12 school districts. It’s important to note this does not mean closing rural schools. This could have freed up some money for teacher pay raises, which I proposed in my executive budget in February.
Tough decisions still are in store for us next year, and it will be even more vital for us to roll up our sleeves and do the hard work to approve true, meaningful fiscal reforms the state needs.