FOR IMMEDIATE RELEASE
September 27, 2007
For more information contact:
David Blatt, Public Policy Director
Community Action Project
918.382.3228

OKLAHOMA CITY – If the fiscal policies of reducing revenue continue, state government will lack the resources necessary to properly fund vital programs on which Oklahomans rely. According to members of the Alliance for Oklahoma’s Future, dramatic funding cuts in state services such as education, public safety, and state pension programs are inevitable if further reductions in state revenue occur this coming legislative session.

“Because of recent decisions enacted by the Legislature, Oklahoma’s revenue growth has slowed dramatically and we are facing long term budget shortfalls,” said David Blatt, Alliance chairman. “Costs for the state’s existing programs are increasing faster than revenues and this situation will further put the squeeze on those priorities that matter most to Oklahomans.”

The Alliance was called today to speak to members of the House Revenue and Tax Committee regarding changes to Oklahoma’s tax structure. The Committee chair posed the question, “Should Oklahoma cut taxes and if so, which ones?”

“With a grossly underfunded education system, increasing poverty rates among Oklahoma’s children, crumbling roads and bridges, and a crowded prison system, we believe these are the wrong questions for the committee to be asking,” said Blatt. “First and foremost, we need to guarantee that we are meeting our goals as a state to achieve an adequate tax system that provides every Oklahoman opportunity, prosperity and security.”

The Alliance proposed the following recommendations to the Committee:

• Take a breather from further tax cuts;
• Evaluate the current tax structure’s capacity to adequately fund the state’s goals;
• Develop long-term budget forecasts;
• Modernize Oklahoma’s tax system;
• Maintain a balanced tax structure; and
• Preserve and ensure equity in the state income tax.

Further testimony by Elizabeth Hudgins, Senior Policy Analyst for the Center on Budget and Policy Priorities, a national nonpartisan policy research organization, pointed out that Oklahoma’s taxes are already among the lowest in the nation. “Oklahomans pay among the least in the country in state and local taxes, ranking 43rd nationwide,” said Hudgins. “Policymakers should consider their state’s goals and priorities and ensure a tax system that works for all Oklahomans.”

Another doom and gloom economic forecast from the Community Action Project.


By David Blatt
Director of Public Policy, Community Action Project

Oklahoma enters a new fiscal year amidst signs that state revenue collections may be entering a slowdown. As legislators grapple to address new responsibilities, rising costs and unmet needs, this revenue slowdown sends a signal of budget challenges on the imminent horizon.

I. Revenue Trends

The most recent state fiscal year, FY ‘07, marked the fourth consecutive year of revenue growth in Oklahoma. General Revenue (GR) tax collections, which represent approximately 72% of all state tax revenues, increased by 4.2% in FY ‘07 compared to FY ‘06. Since emerging from the steep downturn of 2002-2004, GR has grown at a robust annual rate of 9.2%. Also for the fourth consecutive year, actual GR collections came in well above certified estimates, allowing for a substantial end-of-year deposit to the state’s Rainy Day Fund, which has now reached $571.6 million. Read more…

The Alliance for Oklahoma’s Future today lauded as a “major step forward in promoting fiscal responsibility and sound public policy” the passage of legislation that would, for the first time, provide for a long-term state budget forecast. The Alliance is a broad-based, non-partisan coalition of nearly 40 organizations representing Oklahomans from across the state.

SB 368, which passed on the last day of the recently completed legislative session, includes language instructing the Office of State Finance to develop a multi-year trend analysis of the state’s budget outlook that would take into account the best available information on economic activity, population change and others factors affecting the state budget. The forecast would be developed and published annually by November 1st.

“We especially applaud Senator Jim Wilson for promoting this measure and Senator Owen Laughlin for agreeing to include the budget forecasting language in SB 368”, said David Blatt, Chair of the Alliance for Oklahoma’s Future. SB 368 also sets up a process to have the Oklahoma Tax Commission conduct dynamic estimates of the revenue impact of tax cut bills.

“For too long, legislators have made budget and tax decisions that have long-term impacts in the absence of even basic information on the budget outlook beyond the next twelve months”, said Blatt. “We can hope that having access to realistic projections about long-term trends will raise awareness about approaching budget challenges and encourage prudent policy decisions that help keep revenues and spending in alignment”.

“Long-term budgeting forecasting is long-term fiscal stewardship of the highest order. Future generations of Oklahomans should benefit greatly from this legislation,” stated Kent Olson, Professor of Economics at Oklahoma State University. A recent study by Prof. Olson revealed that, as a result of demographic changes, mounting spending pressures, and an outdated tax system, Oklahoma faces an approaching long-term structural deficit in which projected state expenditures will exceed projected revenues by large and accelerating amounts. This situation will force hard choices between future tax increases, spending cuts and alternative ways to pay for and ration public services.

SB 368 awaits the Governor’s signature to become law.

Oklahoma City – One day after the enactment of a bipartisan tax relief package, legislative leaders and the governor on Tuesday announced the outlines of a $7.1 billion state budget agreement that speeds up tax cuts for working Oklahomans, boosts teacher pay and includes important funds for critical state services such as public safety and state prisons.

“This budget agreement is the result of hard work and bipartisan cooperation, and I thank legislative leaders of both parties for finding consensus on important issues. It hasn’t always been an easy process, but lawmakers ultimately came together to do significant things for Oklahoma, such as strengthening higher education, establishing a state bioenergy center and increasing teacher pay. This bipartisan budget addresses a number of other priorities, as well as ensuring tax relief. In all, it marks a win-win for Oklahoma,” stated Governor Brad Henry

“We said very early on that the hallmark of this legislative session would be fiscal restraint and restored accountability from government. This is the first time ever in the history of our state that a Legislature cut government spending when there was the opportunity to spend more,” said Speaker Lance Cargill, R-Harrah. “We delivered a responsible state budget that makes record investments in core services while putting in place reforms that make clear we expect in return quality performance and results. At the same time, we have achieved real tax relief for Oklahoma’s working families – the very people whose productivity has helped fuel our economic growth. Important reforms include taking a first step toward a merit-based pay system for Oklahoma teachers and motivating our OHLAP scholars to earn better grades while in college. And for the first time, we will take a major step toward fixing our state’s prison problem by conducting a top-to-bottom review of the Department of Corrections.”

“This budget agreement focuses on protecting middle class families and provides a fiscally-responsible framework for Oklahoma’s future by opening the door to educational opportunities for the next generation. It includes important funding to keep tuition increases to a minimum at our colleges and universities and establishes a permanent funding source to ensure the long-term stability of the Oklahoma’s Promise Scholarship Program,” said Senate President Pro Tempore Mike Morgan, D-Stillwater.

“This fiscally-responsible agreement builds on the bipartisan budget and tax relief plan passed by the Legislature earlier this session, and represents a common sense compromise that Oklahomans can all be proud of – especially the tax cuts for working families and the long-term fix for the Teacher Retirement System,” stated Senate Co-President Pro Tempore Glenn Coffee, R-Oklahoma City. “The Senate’s power-sharing agreement has resulted in a spirit of cooperation in the Legislature’s upper chamber, and this bipartisanship is evident in today’s agreement. The stage is now set for an orderly and on-time adjournment of the 2007 legislative session.”

Community Action Project urges using proven fiscal tools over tax cuts to grow Oklahoma’s economy

Economic research shows that policymakers who want to grow Oklahoma’s economy should invest more in education, health and infrastructure rather than cut taxes, according to an issue brief released today by Community Action Project (CAP).

The issue brief according to CAP, is based on a thorough review of economic research, historical data and comparative studies with other states and nations. The brief considers a broad array of fiscal policy tools available to state policymakers for growing Oklahoma’s economy. It finds that public investment in education, health and infrastructure are the most effective ways to spur economic growth. Such investments stimulate the economy by lowering business costs and raising labor productivity.

“This brief clearly demonstrates that we can encourage stable, long-term economic growth in the state by investing in the priorities needed to support Oklahoma’s families, businesses and communities,” said David Blatt, Director of Public Policy for CAP, a Tulsa-area anti-poverty agency.

“Investing in public services helps those who run businesses that depend on a skilled workforce and functioning infrastructure. By helping to decrease significant business costs and improve the environment for revenue generation, Oklahoma policymakers can encourage business investment and entrepreneurial growth, significantly impacting Oklahoma’s economic growth rate.”

In contrast, the study finds that tax cuts are an extremely inefficient fiscal tool for achieving economic growth. In one study cited by the brief, researchers found that 96% of the revenue given up by a typical tax cut is wasted money, going to firms whose investment decisions were not affected by taxes.

“Research has found that public services, especially those dealing with education and infrastructure, are key determinants to business location and investment decisions,” said Jim Alexander, a policy analyst at CAP and the brief’s author.

“Likewise, policy that improves the health and the opportunity for greater educational attainment of all Oklahomans creates a more productive, better-skilled workforce that attracts businesses and high- skilled workers.”

Speaker Lance Cargill issued the following statement today after Governor Henry indicated he would veto five budget bills passed today that match his own executive budget:

“Oklahomans won’t let the governor’s smoke-and-mirrors press release cloud this simple fact: The governor is getting ready to veto his own budget. The absurdity of this speaks for itself.

He doesn’t like our plan. Now he doesn’t like his own plan. And he still refuses to publicly submit a new plan.”

OKLAHOMA CITY (AP) Governor Brad Henry says appropriation bills passed by the Legislature are “dead on arrival” if they’re unchanged from appropriations in the general budget bill he vetoed two weeks ago.

Leaders in the state Senate are planning to introduce five appropriation bills they say contain the same amount of money for separate state agencies that was contained the original budget.

The lawmakers would not say which agencies would be included in the bills.

But Henry says he’ll veto those bills if they’re just “repackaged” from the budget bill and he says legislative leaders should stop wasting time on what he calls an “exercise in futility.”

Henry wants leaders in the House and Senate to negotiate with him and House Democrats on what should be included in the budget.

Oklahoma House Speaker Lance Cargill issued the following statement yesterday, after Governor Henry threatened to veto five agency budget bills that match his own executive budget:

“The Governor continues to sit on the sidelines and throw rocks at our ideas without submitting any of his own. Our bipartisan plan has been released for weeks, and there are only six weeks left in session, butthe Governor still refuses to submit an alternative budget based on current projections. The Governor is now threatening to veto his own executive budget. The five budget bills that passed today are identical to the numbers in his executive budget. It makes absolutely no sense for him to veto these bills. This is theater of the absurd. The Governor needs to quit worrying about who gets credit and playing obstructionist games. He needs to put in the effort and show us his detailed planinstead of just criticizing ours.”