Economic uncertainty calls for fiscal responsibility from Oklahoma leaders, not tax cuts (Capitol Update)

This week legislators will arrive at the Capitol to respond to Governor Stitt’s call for a special session. It is a safe bet that his proposal for a law to trigger an automatic repeal of any tax held by a court to be exempt from payment because of the race, heritage or political classification of an individual will receive short shrift. I don’t see the legislature wanting to join the governor in taking a slap at the Tribes over something that has yet to become an issue.

The same can be said of his proposal to change the legislative appropriations process by statute. The legislature has its own rules about how to conduct its business. While the governor—and even some legislators—may not like all the rules, it’s unlikely they will want to change them by statute. Legislators adopt new rules at the beginning of each new legislature with no requirement for the governor’s approval. If the governor doesn’t agree with the appropriations process, he can veto any resulting bill.

However, the way legislators will react to the governor’s call for a tax cut that puts the state on a pathway to zero personal income taxes is more unpredictable. It’s difficult for elected legislators to fight calls for lowering taxes, especially when the governor is using his megaphone to say the state doesn’t need the revenue.

Last week marked the anniversary of the death of Republican governor, Henry Bellmon, who died on September 29, 2009.

I can’t help recalling when Gov. Bellmon called a special session in 1989 to increase funding for education. His call came toward the end of the state’s worst economic calamity that was brought on by a historic drop in oil prices. On July 5, 1982, Penn Square Bank failed, starting a chain reaction that, by the time it was over, resulted in 139 Oklahoma bank failures. Banks had lent money for drilling, farming, real estate, and various business ventures based on the high oil prices.

When the banks failed, numerous farms and businesses failed, and bankruptcies skyrocketed. From the economic elite down, many Oklahomans were in danger of losing everything, and tragically, some did. The hard times unleashed considerable creative activity in both the private and public sectors in hopes of sparking an Oklahoma recovery, and improving public education became the center piece in the effort. But it wasn’t easy.

By 1989 the shell-shocked legislature, led by Democrats, had already enacted major tax increases during three sessions (two signed by former Governor George Nigh, and one by Bellmon) just to keep the ship of state afloat. Gasoline, cigarette, liquor, beer, car tag, general sales, insurance premium and corporate income tax rates all increased along with many state fees. But although tax rates went up, the anticipated new revenues failed to materialize because of the continued steep decline in the economy.

Bellmon’s initial funding proposal consisted of a restructuring of taxes resulting in an overall increase of $280 million for education. The plan called for eliminating local property taxes as a source for school funding and replacing it with a 2 percent “gross receipts” tax and a 15% surcharge on state income taxes. Later, as various groups began opposing the plan, he proposed extending the sales tax to services, except some related to health care. After nine months in and out of special session, extending into the 1990 regular session, the legislature passed HB 1017 that raised $230 million in new revenue through a combination of increases in the state sales, personal and corporate income taxes. Gov. Bellmon called the signing of HB 1017 “the most pleasurable moment of my political career.” 

In the decade immediately before Gov. Stitt was elected, Oklahoma went through a difficult downturn. Now that the state is in a period of recovery, at least for the time being, many, both in and out of the legislature would like to make sure the state doesn’t set itself up for long term mediocrity or another crisis in the future. Leaders like Henry Bellmon are hard to find when you need them.


Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.

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