The state we're in, part III

It's taxing.

Very near the end of Woody Allen’s “Love and Death,” a dead Boris Grushenko (Allen) appears to his former love, Sonja (Diane Keaton).

He is standing with Satan.

“What happened?” she asks, untroubled by or oblivious to the hooded figure holding a sickle.

“I don’t know,” says Boris, explaining how a vision came to him and told him all would turn out fine. “I got screwed.”

On February 1, Governor Mary Fallin gave her sixth State of the State Address.

What happened?

We got screwed.

"If we don’t adjust our tax structure to reflect this change in commerce, there will be increasing pressure to raise government revenue in less palatable ways."

Palatable … Adjust?  What a profile in euphemisms.

For starters, what made Fallin think a $147-million tax cut was a good idea when there was already a 600-million budget shortfall (it’s now $1.3 billion)? Who thinks lowering tax rates to a level where a state can’t provide essential services is a panacea, anyway?

Well, Governor Brownback of Kansas, but I digress.

In Oklahoma, we decided to codify our own paralysis.

In 1992, voters approved State Question 640, a measure that forced any tax increase proposal to be presented directly to voters unless a super majority (75 percent) in both houses of the legislature approved the increase. You can’t get 75 percent of Oklahoma legislators to allow advanced placement history courses, so what are the chances they’re going to support tax hikes and/or admit they were wrong to approve them in the first place?

So, now, not only is there not enough money to pay for the things we want, like education, there’s barely enough to keep the lights on. As good friend of the column Oklahoma Policy Institute Director David Blatt points out, there’s no easy way out of this.

"Our state tax system is no longer generating the revenue needed to pay for basic public services." 

And he cautions against rounding up the usual suspects. 

"It’s easy to blame falling energy prices and accompanying job losses for the shortfall – until we recall … when oil prices were over $100 a barrel and the state was enjoying stronger economic growth than the national average, we still faced a $188 million shortfall."

Why is that?

"Proliferating tax breaks: Tax credits, deductions, and exemptions grow in number and magnitude each year as a result of legislative action and inaction."

Let’s stop for a moment to remind ourselves of the last time we had such a budget crisis—2010— and who came in and saved us.⁶

"Federal stimulus money could take care of more than half of the state’s $900 million budget hole, a key budget negotiator says. Of the $2.6 billion in federal money earmarked for Oklahoma over the next two years, indications are about $500 million can be used for budget stabilization and programs for the 2010 fiscal year, said state Rep. Ken Miller, chairman of the House Appropriations and Budget Committee."

Damn Obama—oh, wait. 

But getting back to David’s point, if doing away with the tax break for horizontal drillers would slash almost $400-million from the deficit, why don’t we do that?

The governor’s answer: I’ve got a better idea—bring me the smokers.

"Of that $910 million [budget shortfall], my budget proposes $181.6 million from a personal consumption tax on cigarettes."

For the love of Johnny Depp, is she kidding? 

"This is the most important thing we can do to improve Oklahoma’s health ranking."

Actually, the most important thing we can do to improve Oklahoma’s health ranking is to accept ACA money and expand Medicaid.

But, yet again, I digress.

Come now. Isn’t there something else we could do? 

Some have suggested that Oklahoma should postpone the 0.25 percent income tax cut that went into effect this month because of the budget shortfall and its impact on the upcoming 2017 fiscal year. The income tax cut’s budgetary impact in the upcoming 2017 fiscal year is only a little more than 10 percent of the projected budget hole. Oklahoma would still have over an $800 million budget hole even if that tax cut hadn’t taken effect.

So, the $181.6-million we’d raise in new cigarette taxes is significant, but the $147-million that could be saved by postponing the most insupportable of all tax cuts is chump change?  How is it more palatable to raise that kind of money on the backs (and pre-carcinogenic lungs) of smokers than it is to raise them on corporations that frack? Couldn’t be because more poor people smoke than drill for hydrocarbons, could it?

Of course not. 

In 2007, the state income tax was 6.65 percent; it was then lowered to 5.25 percent (Brad Henry proposed that), which was insane, for even then we weren’t spending enough on education, infrastructure, etc. Last year, Fallin proposed lowering it to 4.5 percent (actually she proposed getting rid of it altogether, which was, well, what comes after insane?) but then agreed to a 5 percent rate. Before it could be lowered, though, mechanisms were put in place to make sure we could afford it, that the state economy could handle the hit.

To the astonishment of anyone with firing synapses, for at this point oil prices had already started to slide and the state deficit was already ballooning, GOP leadership said, “Yes, we can.”

What a windfall it’s been.

"The median Oklahoma household will get only $29 from the cut to the top rate, while two out of five households will get nothing at all because they earn too little to have any of their income taxed at the top rate. Meanwhile, the wealthiest 1 percent of households will receive, on average, $2,009."

Lovely.

From the Center on Budget And Policy Priorities:

"Taking into account the fact that their costs eventually must be paid for, most American families likely will lose from the tax cuts over the long run."

But the governor persists.

"High taxes are job killers and hurt families’ disposable income."

Fine. Give me my $29. I’ll take myself out to dinner.

This budget debacle is further indication the Republican hegemony in Oklahoma may be coming to an end, buried beneath sepia-toned hubris and discredited financial models, not to mention ten commandment statues and botched executions. Maybe Oklahoma voters are fed up with the party’s embrace of guns, xenophobia, and climate deniers.  Maybe voters want healthcare, reproductive rights, a state that doesn’t lead the nation in earthquakes and hungry children, dignity for gays and lesbians, teachers who don’t have to get second jobs, hiring freezes that actually freeze hirings, and an attorney general who will stop suing everyone. And maybe this explains the recent victories of Democrats Cyndi Munson (in a district that has been Republican for 50 years) and J.J. Dossett (from a district that elected Randy Brogdon).

Maybe voters are done with a party that hates government and governance.

Eight different times during her speech on February 1, the governor, imploring us to be smarter, saner, more fiscally responsible, said,  “We can do it.”

She’s right. We can. We should. She’s done enough. 

For more from Barry, read his article on Dan Boren, perhaps Oklahoma's least Democratic Democrat.