Legislative Endgame 2012, OCPA’s analysis: “It’s the spending, … ”

Wednesday afternoon (May 23), analysts from the Oklahoma Council of Public Affairs said in a press release that the key problem with this year’s state legislative endgame has been that policy makers “have been unwilling to make reductions in wasteful or inefficient areas of state spending.”

Over several months, the free market think tank’s budget and spending analyses have pointed to a wide range of potential budget cuts that could provide means to pass a major income tax this year. 

Additionally, the group has been sympathetic to efforts to eliminate or reform the Sooner State’s provision of various business incentives, creating a way to take major steps toward eventual elimination of the unpopular personal income tax levy.

In comments provided to CapitolBeatOK, OCPA President Michael Carnuccio said, “While working Oklahoma families still struggle to make ends meet, state lawmakers are planning to use nearly every bit of excess revenue from the state’s growing economy to maintain spending in nonessential areas of state government like rodeos and golf courses and aquariums, even increasing spending in many instances.”

OCPA’s fiscal analyst Jonathan Small has laid out a range of possible spending reductions, ranging from more than $800 million to just over $500 million. The latter figure was a springboard to the efforts of state Rep. Leslie Osborn and other conservative House Republicans to start the state on a glide path to actual elimination of the income tax. 

As this year’s “endgame” accelerated in mid-May, in interviews with CapitolBeatOK, OCPA fiscal analyst Jonathan Small winnowed his suggestions down to a “top 10” list that could, if enacted, trim state government spending by around $190 million.

However, most tax credits and exemptions viewed as economic development tools have stayed in place.

The tax cut plan envisioned by Governor Mary Fallin and legislative leaders, as laid out last week, would finance tax reduction by eliminating some popular individual deductions or credits. While most taxpayers would get a tax cut, a significant number of lower middle-income and upper-middle income people would actually see their income tax liability increase. 

As analysis made that clear in recent days, many House Republicans shifted against the proposal, despite lobbying by Governor Mary Fallin. House Speaker Kris Steele of Shawnee on Wednesdasy re-intensified his advocacy of broader tax cuts, while Senate President Pro Temp Brian Bingman of Sapulpa and members of his caucus want a vote on the deal announced last week. 

Carnuccio said on Wednesday, “Plain and simple, it’s the spending. Until our state policymakers show an earnest and resolute desire to cut out any and all unnecessary spending of taxpayer dollars and let Oklahomans keep more of the fruits of their labor, we will continue to limit our state’s ability to attract jobs and capital.”

OCPA’s analysts are concerned about appropriations increases envisioned at roughly $300 million, and another several hundred million dollars worth of new bond projects. 

Carnuccio continued, “Our elected officials have pledged time and again that they want to take the state in the opposite direction from that which the Obama White House is taking our nation. 

“Yet they are on the verge of increasing overall state spending once again. And they are preparing to potentially increase state taxpayers’ future indebtedness by over half a billion dollars.”  

State leaders have said they want to cut taxes, and the intensity of those pronouncements heightened last week, as the Kansas Legislature moved to enact historic income tax and sales tax cuts. 

This week, Governor Sam Brownback signed legislation that cuts his state’s top marginal tax rates by more than one percent. 

OCPA’s policy vice president, Brandon Dutcher, said in comments to CapitolBeatOK, “In Kansas, they have made it clear they are more interested in letting hardworking citizens and job creators keep more of the fruits of their labor than they are in keeping state spending at current levels.”

Brownback’s budget director Steven Anderson (a veteran of Oklahoma state finance policy work) said in recent days, “It’s amazing what you can accomplish when you’re willing to cut spending.”

Dutcher praised that mindset, saying, “That mindset is what has allowed Kansas to take a dramatic leap forward toward becoming one of the best states in America for economic growth.”

Carnuccio concluded his reflections after a Capitol press conference yesterday by saying, “State policymakers across America are waking up to the fact that, if they want to be the premier destinations for business growth and job creation, they have to lower their tax burdens and make their regulatory environments friendlier.

“In Oklahoma, that means responsible tax cuts, focusing spending on priorities only, and taking our state’s workers’ compensation system out of the hands of the trial bar.”