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Budget Alternatives

Op-Ed: Sen. Ron Sharp

Oklahoma's citizens are demanding their elected lawmakers present plans to address Oklahoma’s revenue and budgeting problems.  Although, I’m just one of 149 state legislators, I believe I have an obligation to present a plan or, in this case alternative plans.

There are two ways to look at what’s happening at the state Capitol. For those who don’t want additional taxes to be enacted to address the state’s revenue problems, things are going great. Clearly, SQ 640, which was enacted by voters in 1992 requiring a three-fourths supermajority by legislators to raise taxes, has accomplished its purpose. 

However, for those fearing that basic core essential services will be cut unless the legislature can find a compromise on revenue increases, things are not good at the state Capitol. This side fears there won’t be school teachers in the classrooms to provide an education for our children or grandchildren; nursing homes won’t be open to care for our parents or grandparents; roads and bridges will be structurally-inadequate to provide safe travel; and mental health services won’t be available to care for our citizens needing counseling. These are just some of the vital state services that could be cut if a compromise isn’t reached to raise revenue.

As a retired educator, I’d prefer to modestly raise revenue to pay for these core essential services.  I know the importance of an education to our children to become independent, self-sufficient adults. My mother suffered from Alzheimer’s and had to be provided nursing home care.  My youngest brother suffered from the mental health issue of depression and committed suicide. Mabel Bassett Women’s Correctional Facility (McLoud) is in our Senate district. And, nearly every community in the district is requesting better roads. I’m very aware of how important these state services are to Oklahoma families.

I’d prefer my plan to raise sustainable revenue for core essential services. However, I recognize the House of Representatives is unlikely to approve this plan.

While not popular with legislators, only through the income tax can brackets be created on the ability to pay. Singling out one business to bear the burden of raising additional revenue or creating consumption taxes, which target the poor, have proven regressive and won’t help long term. 

My other plan would be the creation of the Emergency Revenue and Budgeting Act of 2017.  This would be enacted as a result of the legislature’s inability to enact revenue increases to fill the budget hole.  This Act would utilize current revenue to pay for only core essential services, therefore eliminating all non-essential services. 

Under this Act, the Legislature would provide the Emergency Budgeting Office (EBO) (created by the Act) with an itemized (line item) budget, which they would examine.  The EBO would scrutinize each service and/or agency and decide whether they were a vital need or just a want.  Any non-essential services or agencies would be terminated. 

The revenue saved from the termination of "wanted" services or agencies would ensure core essential "needed" services could be adequately funded.  This is no different than families and businesses living within their means when they have financial struggles.

The foundation of Oklahoma’s budget is built on toothpicks that will ultimately collapse under the weight. Using one-time money and the Rainy Day Fund doesn’t provide stability. 

The EBO would be comprised of legislators who wish to provide an itemized budget based on the necessity of essential services.  

If additional revenue can’t be provided through compromise, the only alternative is to create a budget based on need, not want. I haven’t been a proponent of an itemized budget as in years past legislators used the idea for political purposes to fund pet projects within their districts. Obviously, this doesn’t save money but simply adds to the expenses.

However, under our state’s continued revenue shortfall the past several years and the impossible requirement for supermajorities to raise revenue, hopefully the itemized line item budgeting of agencies and services will better utilize and direct funds where they’re needed most.

There are consequences to all decisions. Either state revenue (taxes) must be increased to match the needs of Oklahomans, or those needs must be decreased to match the revenue. 

PLAN A / RAISING REVENUE PLAN

  • .5% increase in income tax; sunset after 3 years.  Will raise $343 million.  Sunset on December 31, 2021.  Can be extended only by a vote of the People or a ¾ majority of the legislature.
  • Cigarette cessation tax of $1.50 per pack.
  • 6 cents motor fuel tax.  Sunset after 3 years, December 31, 2021.  Can only be extended by a vote of the People or a ¾ majority of the legislature.
  • HJR for November, 2018 to increase the income tax by .5% for a $5,000 pay raise for teachers.  Repealed only by a vote of the People or a ¾ majority of the legislature.
  • Create a flat $100 Franchise tax for businesses registered with the Secretary of State with a total asset less than $250,000. (Note: in 2007, the OK state legislature tax code change failed to include LLCs in its change of tax. Corporations of assets over $250.000 already pay a franchise tax minimum of $250.) Estimated revenue is $150 million.

PLAN B / CUTTING THE BUDGET PLAN

The Oklahoma Emergency Revenue and Balanced Budgeting Act of 2017.

  • An Emergency Budget office will be created, consisting of the following people: governor, Speaker of the House, Senate Pro Tempore, Minority Leader of the House, Minority Leader of the Senate, House and Senate Appropriation Chairs and the House and Senate Appropriation sub-committee chairs.
  • Only services needed, and not wanted, will be continued as of March 1, 2018.
  • The EBO will create an itemized budget before December 31, 2017.  The budget will prioritize only essential core services eliminating all non-essential services and agencies of the state of Oklahoma.
  • The Appropriations sub-committees of the House and Senate will submit to the EBO an itemized budget for their consideration.
  • A House or Senate member may request the funding of a specific service or agency that the EBO deems unnecessary be restored, if a revenue source to specifically fund that service or agency is designated as necessary and approved by 60% majority of the legislature. A ¾ majority of the legislature would be needed to void decisions of the EBO in January.