Analysis: Dave Blatt cheers death of tax cut, Jon Small questions source of revenue for budget increases
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Published: 25-May-2012

The collapse of hopes for a significant income tax reduction for all income tax payers could be the most significant story of the 2012 legislative session.

Closely allied to that is the practical result on the spending side: the Republican-controlled Legislature is sending Governor Mary Fallin a budget that boosts state spending more than $300 million.

The results will please some, and disappoint others.

David Blatt, director of the Oklahoma Policy Institute, has opposed all income tax reduction proposals, and made the case for increased state appropriations for a variety of agencies. In a statement sent to CapitolBeatOK and other news organizations, Blatt reflects: 

“The failure of every tax cut proposal that was debated this session is a victory for Oklahoma. The Legislature heeded Oklahomans from all walks of life who have spoken out against income tax cuts. After three straight years of budget cuts that have seriously weakened core services, Oklahomans have stated clearly that their top priorities are restoring funding for education, fixing the child welfare system, repairing our roads and bridges, and making other critical investments that will promote our prosperity and security.

“We have not made sufficient progress towards these goals, but preserving our largest revenue source leaves us in much better position to tackle our challenges in the years ahead.

“The decision to reject tax cuts this year was especially responsible given the uncertainties in the energy industry and the broader state economy. We applaud those leaders who insisted that tax cuts must be paid for and who rejected efforts to tie the hands of future legislators with automatic triggers.

“ We know, however, that this is just a brief intermission in a long battle over the right tax policy for Oklahoma. Going forward, we must have a more honest and well-informed debate about what we expect from state government, how much our obligations will cost, and how we will pay for them. We need to look with renewed seriousness at our outdated tax system and do away with unnecessary tax preferences.

“And we must improve tax fairness and not allow middle- and low-income families to shoulder a larger share of the load.”

On the other side of this year’s clash of visions for Oklahoma’s future, budget analyst Jonathan Small of the Oklahoma Council of Public Affairs is deeply disappointed in the lack of progress for promised income tax reduction.

He is also concerned, however, about what he deems a lack of required transparency in the source of funding for this year’s spending increases. 

He wrote in a late Thursday (May 25) essay
“With Oklahoma government spending at an all-time high, the time has come to set priorities and to exercise spending discipline. Unfortunately, that doesn’t appear to be happening. Last week, the governor and legislative leaders announced what they called a ‘fiscally conservative’ budget agreement. Indeed, in their press release they managed to use the word ‘conservative’ a record-breaking six times in the first six paragraphs alone. 

“This adjectival onslaught notwithstanding, they actually agreed to spend virtually all new available revenue. Make no mistake: Despite all the other activity taking place during the last week of the legislative session, there’s only one thing that matters right now. Plain and simple, it’s the spending.

“Though policymakers released information about the appropriations each agency will receive, they failed to provide details about the source of the funds that will facilitate this increase in appropriations of more than $331 million.

“You may recall that last year policymakers played a similar game with the appropriations process, when appropriations exceeded certified revenues by approximately $300 million. Appropriating money in excess of certified revenues is often facilitated by raiding revolving funds, using fees in a manner not consistent with their original intent, and a host of other less-than-transparent games.

“Is that happening right now? It appears that our policymakers don’t want us to know. I have requested information from the Oklahoma Office of State Finance (OSF), the Oklahoma House of Representatives, and the Oklahoma Senate regarding the source of funds for FY-2013 appropriations. My initial request for this public information received no response from any of the recipients in the first 24 hours.

“My follow-up requests received a response from the Office of State Finance and the Oklahoma Senate. OSF said they would try to provide the information (I’m still waiting), and the Senate helpfully informed me that I could get the information after the June Board of Equalization meeting. The House has not responded to my initial request or to my follow-up request.

“As someone who used to work in the Office of State Finance and in the House of Representatives, I can assure you that this delay is unjustified. The information is there. It is impossible to draft bills and budgets without it. One has to wonder: What are these policymakers trying to hide?” 

In Oklahoma, every legislative session there are winners and losers, sinners and choosers. Some of those are obvious, others require more subtle discernment of outcomes. 

In the end – with a few notable sessions, such as the historic justice reinvestment initiative, the 2012 regular session is going to wind up in the “win” column for defenders of the status quo, and for those who might not defend the status quo, but who find they are able to live with it. 

That’s this year’s result, in a nutshell. But there’s always next year. And then, there’s the possibility of “extra time” (a special session) if Governor Mary Fallin ultimately deems that appropriate.

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