It used to be hard to raise taxes in Oklahoma.
It’s not anymore.
Oil and natural gas are commodities, which means their prices are subject to the whims of the market. Recently, Mike Oxley, owner of New Prospect Company, said that Saudi Arabia is manipulating the world oil market to essentially stop America’s drive to energy independence. That is why the price of a barrel of oil nosedived from more than $100 a barrel less than two years ago to as low as $27 a barrel (now around $50 a barrel).
The Saudis know what they are doing.
By flooding the market with oil and with the emergence of Iranian oil thanks to the nuclear deal Obama struck with that Muslim nation, the American oil and gas industry was dealt a terrible blow.
And that goes double in Oklahoma, where energy is a major industry.
There have been massive layoffs in the oil and gas business as exploration has slowed or stopped and production has plummeted. Why pump oil for half of the price it might bring in the near future? When the Saudis have done sufficient damage, you can bet they will restriction production and hike the price of their oil.
As a direct consequence of the decline in exploration and production of oil and natural gas, state revenues took a nosedive. The Oklahoma Board of Equalization has calculated that the state will be $1.3 billion short during the next fiscal year. That’s for a budget of around $7 billion (in discretionary spending).
How did lawmakers respond?
A fiscal conservative would respond with a re-evaluation of agency spending. In fact, it would have been a perfect time to eliminate some agencies that have a long history but no real purpose. (One minor agency was cut last session).
But fiscal conservatism doesn’t prevail at the Capitol anymore.
Americans and now Oklahomans have an entitlement mentality. Even though tax collections have dropped, they want more money for public education and for health services. All of the politicians running for re-election and their challengers are hearing screams for higher teacher salaries and more funds for education.
There is a case for higher teacher salaries. But the media is lying about the causes of why state teacher salaries are so low.
The liberal media would have you believe that conservative Republican lawmakers have cut teacher salaries low. That is a lie. State law sets the minimum salary for teachers but it is the local school board and superintendent who determines how much will be spent in the classroom and how much will be spent on administrative salaries.
The Tulsa Board of Education, populated by dyed-in-the-wool liberals, gave new Superintendent Deborah Gist an annual $25,000 bonus. To her credit, Gist immediately announced she would donate it to the Foundation for Tulsa Public Schools.
But Gist has a compensation package worth more than $372,000.00 for the 2015-16 school year. That jumps to $431,000.00 in 2017-18. In three years, her total package will be about $1,156,600.00.
Multiply that overspending by the 516 school districts statewide and you get a clue that paying administrators too much is more important to school boards than paying teachers a living wage.
So lawmakers had to save common education from any cuts to ensure a shot at re-election. They did cut higher education.
How did they pay for this deficit?
First, they borrowed $325,000,000.00. Despite a former ruling by the liberal Oklahoma Supreme Court, this violates the Oklahoma Constitution. The state is required to have a balanced budget and this is not a balanced budget.
The governor and legislative leaders took money from the Unclaimed Property Fund. This, too, is on shaky legal grounds.
Then they raised taxes.
They cleverly don’t call these steps tax increases, just like Mayor Dewey Bartlett and the nine city councilors, didn’t call an $884,100,000.00 sales tax vote a tax increase.
But state legislators eliminating the personal income tax double-deduction ($87,300,000.00 in new taxation) and made the “earned income tax credit nonrefundable ($25,900,000.00 in new taxes). Both measures mean that people pay more in taxes.
Given the opportunity to make state government smaller and more efficient, the Republican-led House and Senate and our “not-so-pro-life” governor, chose to borrow and spend their way to re-election.
And they did it without an up-and-down vote on new taxation, another slippery legal maneuver.
People may think that Oklahoma is the “reddest of the red states” but actions speak louder than words. Social and fiscal conservatism in this state is on the ropes and the GOP is leading the way.