Right now most Oklahomans are worried about how our lawmakers will fill a huge budget shortfall following years of cuts that have contributed to teachers fleeing Oklahoma classrooms, left Oklahomans with severe disabilities and children in the child welfare system at risk of losing basic protections, and created an extremely dangerous environment in prisons for both inmates and staff, among other damaging effects. State agencies large and small report having overstretched staff with stagnant wages and low morale; inability to maintain buildings and equipment; and serious struggles to maintain quality services or perform their core mission. These cuts are rippling out to threaten entire communities, especially in areas of small town and rural Oklahoma where residents have fewer local resources to make up for disinvestment by the state.
Amid all of this turmoil, the Oklahoma Council of Public Affairs is working hard to convince lawmakers that our budget problems don’t exist. In a series they’re calling the “bogus budget”, they add up all of the spending by various state agencies and argue that if the total hasn’t plummeted, we don’t need to worry about their funding.
They start with the “Space Development Industry Authority”, a small agency where OCPA says spending has “rocketed skyward.” What they don’t say is that the agency gets 90 percent of its funding from contracts with the U.S. Air Force and Boeing to test a new tanker plane. They criticize OETA for not dramatically cutting spending, without mentioning that the network is spending down its private foundation to make up for state funding no longer covering basic operating expenses. They complain about common education spending that was driven by bond measures approved by a supermajority of voters in each district — a clear sign that local communities endorse those investments in schools — as well as an increase in carryover funds by school districts that are understandably cautious due to the very real threat of midyear cuts and other funding turmoil.
With such a distorted reading of Oklahoma’s budget problems, it’s no surprise that the solutions OCPA is pushing also miss the mark. The latest of these to appear in the Legislature is a bill (HB 2404) to end the sales tax deduction for purchases by state agencies and higher education. This bill appeared Monday in House committee and barely passed 14-13, and even then only after House Speaker Charles McCall joined the committee to provide the final yes vote.
The problem with HB 2404 as a revenue measure should be obvious. The Tax Commission may score the bill as generating $106 million in additional revenue, but by having government tax itself, the bill creates a dollar of new costs to agencies for every dollar it creates in revenues. Perhaps that fixes the problem as OCPA likes to conceive it, where “government spending” is the metric we should be concerned about, no matter what is the source of that spending or how it is being used. But regular Oklahomans are concerned about outcomes that actually affect them — like having a qualified teacher in their kid’s classroom, having safe streets and neighborhoods, and having well-functioning public services. A measure like HB 2404 does nothing to address these problems.
It’s troubling to see legislative leadership put so much energy into a bill like HB 2404, when they clearly have a lot of work to do to build a coalition that can pass real revenue increases. This vote and others by the committee inspired House Minority Leader Scott Inman to say, “These gimmicks, these cockamamie ideas, all because we won’t raise the Gross Production Tax? At some point you guys got to give in and say, ‘uncle,’ and put the dadgum thing on the board and we can end this madness.”
In fact, HB 2404 would disrupt agency budgets at a time when they are least prepared to handle it. Agencies are already scrambling to keep down administrative and other costs to cope with years of falling appropriations. HB 2404 would force them to redo all of their budget planning around this new unexpected cost. The impact would also vary dramatically between agencies with very different missions, depending on how much of their budget goes to taxable purchases. There may be an argument for reorienting agency budgets around that cost, but now is an especially bad time to do it.
OCPA’s other argument for ending this sales tax exemption is that it distorts comparisons between public agencies and private contractors. Debates about the cost-effectiveness of privatization may be worth having, but if that’s the real motivation for this bill, it should go through the normal process for policy bills that allows plenty of time for scrutiny and debate. It’s enough of a problem that lawmakers are pushing revenue and budget bills through at the last minute with little oversight — but at least those have the excuse that they need to pass a budget before the deadline. Lawmakers should not be adding policy changes with far-reaching but little understood impact to this mix.