Hamilton: Rich play while the poor pay

By Arnold Hamilton

The day of reckoning hath arrived.

The Legislature’s self-proclaimed fiscal conservatives may have little choice in the session’s final weeks but to declare a fiscal emergency in order to keep already starving state services on life support.

What does that mean? Dipping into the Republican majority’s sacrosanct Rainy Day Fund to soften a $611 million budget hole of their own making.

Sadly – no, frustratingly – the legislative majority repeatedly failed to heed a simple economic principle: When you’re in a hole, quit digging.

For much of the last decade, lawmakers treated the state budget like a game of Monopoly, rolling the dice that soaring oil prices would indefinitely mask the impact of politically pleasing income tax cuts.

When the national economy soured, they relied on short-term federal stimulus spending to keep the Good Ship Oklahoma afloat – and kept cutting taxes.

Now, with the latest energy boom over and federal stimulus dollars dried up, the long-term damage to Oklahoma’s budget infrastructure is painfully clear: Vital state services are in peril – from public schools to corrections to roads.

And yet, lawmakers keep digging.

Just this week, the House voted to extend the state’s Quality Jobs Act to chicken egg producers, potentially giving away more tax dollars in dubious corporate welfare.

Legislative leaders also remain resistant to delaying or canceling the 0.25-percent income tax cut scheduled to kick in next fiscal year, costing the state treasury more than $200 million in FYs 2016 and 2017.

Moreover, they refuse to consider expanding Medicaid for Oklahoma’s working poor because it’s a federal program – and the GOP’s Tea Party base loathes the federal government, except when they don’t.

Recall the signs at Tea Party protests a few years ago: “Get the government’s hands off my Medicare.” Would someone who can speak slowly enough explain to them Medicare is a federal program?

Gov. Mary Fallin’s own study, produced by the Leavitt Group, projected the state would save $450 million in health care costs over a decade by expanding Medicaid – 100 percent federally financed in the first years and 90 percent thereafter.

The shrink-government crowd, of course, bays incessantly that state budgets are larger now than six years ago. It’s a basic tenet of the discredited supply-side economics crowd that tax cuts generate more tax revenue.

Here are the facts: When adjusted for inflation, this year’s budget is $680 million smaller (smaller!) than six years ago, according to the Oklahoma Policy Institute.

These three points – expanding business tax incentives, cutting income tax cuts and rejecting Medicaid expansion – tell you everything you need to know about who’s in charge at NE 23rd and Lincoln.

Who benefits most from tax breaks? The state’s largest corporations. From tax cuts? The state’s wealthiest residents. From Medicaid expansion? The state’s working poor and rural hospitals, buckling under the mounting costs of uncompensated care.

There is no doubt who carries the biggest megaphone at the Capitol – it’s the state’s wealthy business execs who are among the biggest campaign donors to lawmakers setting public policy.

The working class gets the scraps. This year’s income tax cut? According to the Oklahoma Policy Institute, the median household will realize $31, while two-fifths of Oklahomans won’t see anything.

Given that 87 percent of Oklahomans responding to a recent survey want teacher pay increased – it’s $3,200 below the regional average – you can bet most would just as soon the state keep the $31 and do something for common good.

In fact, I bet they’d prefer skipping the tax cut to raiding the state’s Rainy Day Fund. After all, with sluggish energy prices, the worst may be yet to come for Oklahoma’s budget.



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