Policy Challenges We Face

Oklahoma governments have achieved a great deal. Taxes and other revenues have helped us invest in education for young people, health care for those who are most in need, safe streets and neighborhoods, and sufficient public infrastructure to support a growing economy. In some areas we have continued to make progress in recent years, but in others we have fallen behind and in all areas we still have much to do. This section addresses three important long-range fiscal issues: the fiscal gap (the growing gap between the cost to maintain our current level of public services and the revenues we generate under current law), the fairness gap (a tax system that puts more responsibility for funding services on those who can afford it least); and the performance gap (our failure to thrive as a state).

This section reaches several major conclusions.

• Oklahomans’ child and adult health continues to lag well beyond other Americans’, though there has been progress in vaccinating children, reducing smoking, and some other health measures.In too many measures of public safety, incarceration, environmental quality, contribution to climate change, and condition of our transportation system, we continue to fare poorly compared to other states.
• Oklahoma state and local governments face a long-term structural deficit in which ongoing revenues will not be enough to pay ongoing spending commitments, in spite of progress made in the last few years.
• This structural deficit results from a variety of factors, including increasing health care costs, an aging population, commitments for government employee and retiree benefits, a tax system that does not keep up with the economy, and tax cuts and exemptions.
• The state will need either to raise revenues or cut services to restore and maintain long-term fiscal balance.
• Oklahoma’s tax system is inequitable. The lowest one-fifth of income earners pays 13.2 percent of their income in state and local taxes while the highest pays 8.2 percent. This “regressivity” results from relying on sales and excise taxes as the largest source of government revenue.
• Oklahoma has shifted responsibility for paying for services from those that can most afford it to those that can least afford it. Since 2009, the share of income paid in state and local taxes by the lowest 20 percent by income has grown by 10 percent, compared to a 13 percent decline for the wealthiest 20 percent.
• Oklahoma’s tax system also treats those with similar incomes differently by providing tax reductions for homeowners and not renters, by treating retirement and earned income differently, and by providing tax benefits to specific industries, among other ways.
• Oklahoma can make its tax system fairer by increasing income tax credits for low-and moderate income residents, increasing income taxes for higher income families, and treating taxpayers based on their ability to pay and not on their membership in a favored class.
• Oklahoma falls behind most states in too many measures of success, and in many cases we are going in the wrong direction.
• While we continue to lead in providing early childhood education, our outcomes in common education are below average, in part because our expenditures are low. This pattern continues through higher education as well.
• Oklahomans’ child and adult health continues to lag well beyond other Americans’, though there has been progress in vaccinating children, reducing smoking, and some other health measures.
• In too many measures of public safety, incarceration, environmental quality, contribution to climate change, and condition of our transportation system, we continue to fare poorly compared to other states.
• In all of these areas, outcomes for people of color are dramatically worse than for whites. Black, Native American, and Latinx Oklahomans are much more likely to be poor, to fall behind in school, and to be incarcerated. These differences come from a combination of long-standing structural racism and continuing current policy choices, and can be reduced only through affirmative anti-racist policies.

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