The politics of revenue raising matters for health care and teachers (Capitol Update)

Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol.

There are couple of big issues starting their trek through the legislative process, and the way they ultimately get handled will affect the state’s long-range structural challenges. The first challenge concerns raising the cigarette tax and dedicating the proceeds to health care agencies. In the last several years, legislative and executive leaders have blamed the general revenue shortfall on too many revenue sources being taken “off the top” for some specific purpose, thus never reaching the general revenue fund.

The current cigarette tax proposal increases the tax by $1.50 per pack and specifically directs where the money must be spent. This is the same as taking it off the top. The only difference is the revenue goes to the general revenue fund, but it is required by law to be spent for a specific purpose. This limits the flexibility of future legislatures to appropriate the money where it may be more urgently needed without changing the law.

It’s understandable that the bill is written this way. Leaders need the enthusiastic support of the health care community to get the tax increase passed, and to get that they feel the need to earmark the revenue to the health care agencies. There’s nothing wrong with that, but remember it when leaders complain about the limitation on their ability to meet other state needs. After all, health care is not the only area that is short of funding this year. You couldn’t blame the health care folks if they disappear from the Capitol once they get their deal done. This may be the only way to get the cigarette tax done, but a better way might have been to come up with an overall tax proposal that would take care of all the state’s needs without tying legislators’ hands in the future.

The other tricky issue is teacher salaries. Some legislators propose an across-the-board teacher pay raise. Others propose increasing the minimum salary schedule, then appropriating enough money to give each teacher in the state a pay raise of a specific amount. Teachers, of course, like the across-the-board method, because then they don’t have to negotiate with school boards to make sure the new revenue goes to teacher salaries as intended.

This is the politics of revenue-raising. Some feel the need to guarantee each teacher a raise in a specific amount to earn their enthusiastic gratitude and support for the revenue increase. While this may be good politically, it distributes the money to the school districts for each teacher outside the state aid formula. This creates two problems. First, appropriating money outside the formula produces inequities in school funding between school districts. The money goes to the district based on the number of teachers rather than the number and needs of students as provided by the formula. Second, by getting extra money outside the formula, some districts that should voluntarily consolidate can struggle along and remain intact. Those who think fairness in the funding formula and school consolidation are important challenges should keep an eye on how teacher pay raises, if there are any, get distributed.