Oklahoma is grappling with a $1.3 billion shortfall for next year’s budget. Following two mid-year revenue failures on top of years of shrinking budgets, every state agency has been forced to dig deep and cut anything that could be seen as “extra” — the easy savings are already squeezed out. Without new revenue to close the shortfall, state agencies and school districts face massive budget cuts that will inflict long-lasting harm on Oklahoma families, businesses, and communities.
We can and must do something to solve the budget emergency. OK Policy has compiled a long list of options [PDF]to boost state revenues that should be considered as part of a fair and sustainable budget. The 16 options mostly fall into four broad categories:
- Roll back tax cuts: The first thing to do is to repeal or delay the most recent cut to the top income tax rate that was never intended to take effect in the midst of massive shortfalls ($147M). We could also return to the top income tax rates from before the tax cuts of the past dozen years by assessing a temporary surcharge on high incomes ($130M – $160M).
- End costly tax breaks and tax loopholes. The easiest and most obvious tax break to eliminate is the “double deduction” that can be claimed for state income taxes on state tax returns by those who claim itemized deductions ($85M). We should also look at curbing costly tax breaks for oil and gas producers and wind producers ($25M – $300M). We could also increase tax collections by adopting combined corporate reporting and taking steps to collect more taxes owed on Internet sales (revenue unknown).
- Selective tax increases. Faced with the looming crisis to our health care system, the proposals put forth by Governor Fallin and the Oklahoma Health Care Authority to raise cigarette taxes by up to $1.50 per package must be considered ($182M). We could also peg a higher fuel tax to lower gas prices ($135M) and broaden the sales tax to include more services (revenue unknown). Some critics of subsidies to the wind industry are also calling for a tax on wind production ($74 million).
- Careful use of one-time funds. One-time funds will need to be part of the solution, but they must be used cautiously to avoid perpetuating massive budget holes. Tapping the Rainy Day Fund (up to $242M), deferring increases to the ROADS Fund ($58M), and issuing bonds for transportation projects to free up revenue for other purposes (up to $700M) are among the sensible options that should be part of a comprehensive solution.
Oklahoma legislators need to hear from their constituents that doing nothing is not an acceptable option. We urge you to contact your Representative and Senator and tell them to create a better budget that limits cuts and puts us on a sustainable path. You can see our budget emergency advocacy alert and visit Together Oklahoma’s DoSomethingOK website to learn more about what you can do.