Wednesday, July 19, 2017

State Budget Breakdown, By Rep. John Bennett

One of my major jobs as a legislator is to work on the state budget to ensure money gets where it’s needed to fund core state services for Oklahomans and to cut waste and duplication. The budget is one of the things I’m asked about most by the people I represent. I thought it would be helpful, therefore, to break down the state budget in my next few columns to give a better overview of how taxpayer money is appropriated.

First, let me explain the budget shortfall the state has experienced the past few years and how that happened.

The state has been in a recession for a while due in part to oil and gas prices falling more than 70 percent and the resulting loss of tax receipts from families that lost their jobs. Add to that the millions of dollars in tax credits and incentives that have been flying out the door since a Democrat majority in previous Legislatures approved them and we got this year’s perfect storm.

In fact, this entire mess was worsened by more than 100 years of Democrat mismanagement. The Democrats gave oil and gas a sweetheart deal – 1 percent gross production tax on horizontal wells for two years. They then went back and changed it to 1 percent for four years. The Republicans changed it this year from 1 percent to 4 percent for two years, then it goes back to 7 percent.

When the Democrats approved tax credits on oil and gas horizontal and vertical drilling, they failed to put a mechanism in place to monitor return on investment. They also passed the wind mill tax giveaways, which we Republicans ended this year. The Democrats also passed the first of four years of income tax reduction starting in 2004.

Under Democrat control, education received 10 percent cuts when Democrats tapped revolving funds for about $120 million. Republicans have held education funding flat even in the past two budget years when we’ve had large gaps to fill.

People ask me if the economy wasn’t better under Democrat control, but the state suffered three revenue failures in 2000, 2002 and 2003.

When Republicans took control of the House eight years ago, our state roads and bridges were in pitiful shape. We had more than 3,000 structurally deficient bridges. Because of this, we’ve dedicated more than $500 million to $600 million a year in off-the-top money to the Oklahoma Department of Transportation for its 8-year roads and bridges plan as well as the County Improvements to Roads and Bridges plan.

Our Teachers Retirement System was likewise almost bankrupt under Democrat control. Now about $300 million a year comes off-the-top of the state budget to ensure our teachers have a viable retirement plan. Almost $1 billion comes off the top for the 1017 Direct Fund to schools and for a separate education fund. (I’ll dive deeper into overall education funding in future columns.)

The problem with off-the-top funding is it removes that money from the amount that can be appropriated by the Legislature and instead sends it straight to the agencies. In down years like we’ve experienced this doesn’t allow us to be flexible and certain programs can suffer. It also hurts our overall state credit ranking.

So how do we right this listing ship? We have to do a forensic audit on all state agencies, continue to assess and do away with tax credits not producing revenue, prioritize core functions of government first and provide an environment for the private sector to thrive and produce jobs. 

Sally Maxwell, Senior News Director

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