| June 5, 2013
Oklahoma’s 2013 Legislative Session: The Good, the Bad, and the Ugly
From those to whom much is given, much is required, the Bible says.
Oklahoma is a state, not a person. Still, we have been given much, including a government run entirely by Republicans, many of whom professed in their campaign materials to be conservative.
When a political party has a 72-29 edge in the state House, a 36-12 advantage in the Senate, and every single statewide elected office, it is in charge.
This is not California or Illinois. This is one of the most conservative states in the nation. In the context of a liberty-inclined political leadership, it’s reasonable to expect … quite a bit.
OCPA’s analysis of “the good, the bad, and the ugly” in the 2013 legislative session comes in that context. So, cue up the epic soundtrack of the Clint Eastwood classic and walk with us as we separate the wheat from the chaff.
No Obamacare Medicaid Expansion
It might seem strange, in a year with major workers’ compensation reform, to list inaction as the top achievement. But the truth is that the pressure—from Oklahoma’s institutional Left, from the crony capitalist/health care provider complex, even from some Republican lawmakers and consultants—has been relentless to expand Oklahoma’s reliance on a Medicaid system that is already unreliable and ultimately unsustainable. So far, Gov. Mary Fallin and state lawmakers have resisted that pressure.
We must never forget that the misnamed Patient Protection and Affordable Care Act (PPACA)—Obamacare—is “a deadly threat to our economy, constitutional principles and institutions, and even character,” as OCPA’s Milton Friedman Distinguished Fellow, Andrew Spiropoulos, has written. “We will fight this pernicious scheme at every turn and for as long as it takes to dismantle it and begin the path to health care reforms that follow from, and do not flout, the principles of liberty.”
Right now, the fight is being waged on the battleground of Medicaid expansion. As Cato Institute scholar Michael F. Cannon points out, hospitals nationwide are threatening that unless state lawmakers implement the Obamacare Medicaid expansion, “the law’s new taxes and spending cuts will lead to layoffs and closures.
There’s a dual irony here. First, hospitals put themselves in this position when they lobbied for that law. Second, many of the law’s erstwhile opponents, like Arizona Gov. Jan Brewer (R), Florida Gov. Rick Scott (R), and Ohio Gov. John Kasich (R), are now displaying Stockholm syndrome, taking pity on their captors and supporting the Medicaid expansion. Fortunately, many state lawmakers are refusing to punish taxpayers for the sins of the hospital lobby.
Originally, Obamacare would have forced states to open Medicaid to 17 million additional people. Hospitals would have received so many subsidies, they scarcely minded the law’s new taxes and spending cuts. With near-unanimity, they “strongly urge[d]” Congress to pass the PPACA “with or without bipartisan support” as a matter of “national security, equity, and fairness.” The hospital lobby hailed the law as “historic,” “a giant and essential step forward,” and a “major first step” full of “great improvements.”
Then in June 2012, seven Supreme Court justices let states choose whether to participate in the expansion.
Now, the hospital lobby is terrified. If states don’t expand Medicaid, hospitals won’t get their subsidies. Obamacare now means the same thing for hospitals that it has always meant for consumers and employers: costs are a certainty, but promised benefits may not materialize. The difference is that hospitals have only themselves to blame.
Rather than call for repeal, as one union that used to support the law has done, the hospital lobby is doubling down. According to one report, “Hospital associations have paid for television and newspaper ads, organized rallies, and choreographed legislative testimony,” demanding that state lawmakers unlock those subsidies. According to the hospital lobby’s curious logic, lawmakers who consistently oppose Obamacare will somehow be responsible for the harm that law imposes on the hospitals that support it.
Conservatives must continue to fight. As Charles R. Kesler wrote (“The Stakes of Obamacare”) in the Summer 2010 Claremont Review of Books, for liberals, “losing Obamacare after winning it would, at the least, be a serious blow to liberalism’s sense of its own inevitability—the quasi-religious faith so central to all progressivism.”
Workers’ Compensation Reform
Every election and every legislative session, politicians and their partisans like to overstate the upside of every reform and downplay remaining challenges. If political rhetoric could be believed, Oklahoma solves its problems every year—but for some reason has a new set of problems every year.
But every now and then, something truly positive and meaningful happens in the Legislature, or through executive appointments, or through votes of the people.
When future histories of this era are crafted, 2013 will be recorded as the year in which the corner was turned on Oklahoma’s high-cost/low-benefit workers’ compensation system.
The old system has combined faulty “insurance” with litigation (and its costs) that poorly served both businesses and injured workers. “Ours is a system where everyone loses: the employers, the taxpayers and, most importantly, the injured workers themselves,” OCPA’s Jonathan Small wrote this spring in the Oklahoma Gazette. Incredibly, “our system devotes more resources to litigation and operation of the system than it does to medical benefits.”
The new administrative system will bring almost immediate savings. As the old system is phased out starting next year, savings will mount every month of the new era. (One concern: The issue of “dueling docs”—a feature of all workers’ comp systems but one particularly hurtful in a litigation-based system—may yet require additional legislation. It’s worth keeping an eye on.)
Workers’ comp reform united conservatives in 2013, and will make a difference.
Compassionate Welfare Reforms
Henceforward in Oklahoma, able-bodied food-stamp recipients will need to work or be seeking work (see page 7). Some federal welfare money coming to Oklahoma will be directed toward pro-marriage advertising and education. And no longer will welfare cards be able to be used in strip clubs, liquor stores, or casinos.
The “lifeline” cell phone program for welfare recipients—marred by abuses that allowed drug dealers to have access to multiple tax-financed mobile devices, among other abuses—has been reformed and the Corporation Commission now has the authority to bring some discipline to a federal program that, fairly or not, has become known as “ObamaPhones.”
Few government abuses of recent years have been more shocking than the decision of the Jenks and Union school districts to try to block Oklahoma’s historic special-needs scholarships by suing the parents of children who sought to access the scholarships. In essence, the two districts wanted to punish parents of handicapped children for having the temerity to seek resources to help their children. (As state Rep. Jason Nelson put it at the time, “It’s like suing grandma for using Medicare.”)
Now, thanks to a bill signed into law by Gov. Mary Fallin, if a school district sues a student’s parents and loses, the school district will pay the family’s legal costs.
Holding the Line on Government
It’s not that some employees of state government don’t deserve better compensation. Many do. It’s that Oklahoma has too many employees, and boosting pay is irresponsible until policymakers show they’re serious about bringing the size of the government workforce closer to the national average. According to a 2012 publication of The State Chamber’s research affiliate, Oklahoma’s government bureaucracy is among the nation’s largest. Of the 50 states, Oklahoma ranks 14th in the number of state and local government employees as a percent of the population.
The governor and legislative leaders deserve credit for holding the line. Our worry is that the employee-compensation study now under way at the capitol will conclude that the average government employee is paid too little, without the accompanying understanding that the best way to address that without crushing taxpayers is to “right-size” government at long last, then pay the remaining employees more handsomely.
No Income-Tax Cut
Oklahoma is in its third year of strong recovery from the doldrums of the Great Recession. State government revenues have risen hundreds of millions of dollars in these three years. Yet those whose ingenuity, entrepreneurship, and hard work have provided the rising tide to lift all boats have only the promise of tax relief—two years from now. Say what?
Personal income taxes should have been cut in 2011. An income tax cut in 2012 would have been a year late. Waiting two more years will mean that Gov. Mary Fallin will be a few days away from starting her presumptive second term before she delivers the income tax relief she promised in 2010. Something is very wrong with this picture.
Wait, there’s more. Oklahomans were promised in 2011 that the hospital provider tax—a gimmick used to game the federal government for more money to prop up the dysfunctional Medicaid program—would be temporary. But policymakers, many of them violating a no-new-taxes promise they made to their constituents, extended the tax this year. This despite the fact that President Obama’s own National Commission on Fiscal Responsibility (of which U.S. Sen. Tom Coburn was a member) has recommended that states eliminate this “Medicaid tax gimmick.”
No Pension Reform
Gov. Fallin vetoed legislation which would have authorized an optional defined-contribution retirement plan for new state employees. Had the bill become law, employees would have had the opportunity to choose between this new defined-contribution plan and the current Oklahoma Public Employees Retirement System (OPERS), a defined-benefit plan. The governor argued her proposal for consolidation of pension administrative costs deserved a fairer hearing at the Capitol—and we agree. But vetoing an achievable incremental reform certain, in the long run, to save hundreds of millions of dollars for taxpayers?
In her veto message the governor said she wants even stronger reforms. There is no doubt that pension reform will continue to be discussed in 2013 and will be a hot topic during the 2014 legislative session. The question is whether the solution that emerges will be a half-measure (such as a “cash balance” plan, or a defined-contribution plan which is merely optional) or a robust solution that brings Oklahoma into the 21st century: a defined-contribution plan.
More Money for the Monopoly School System, But No Parental Choice
Policymakers provided a $17 million supplemental appropriation for public schools, and a hefty increase of $74 million for fiscal year (FY) 2014. No reforms, no enhancement of private-school choice, and no provisions for increased accountability resulted from the increased spending. This was House Bill 1017 redux: Spending hikes without the redeeming feature of real reform.
There will never be enough money to satisfy the employees of the government’s monopoly school system. And, parents will not have more choices in government-financed education until there is statewide leadership determined to make that happen.
Then there’s the ugly. And, it is quite ugly.
In recent press releases, two of our state’s top political leaders boasted of their commitment to a government that is “smaller.” But as one wise old conservative has said, “Don’t read their lips. Read their budgets.”
Behind door number one, there is $251 million in increased state government spending for FY 2014. Behind door number two, it’s $267 million if you include the supplemental approved in May. Or, behind door number three, it looks more like $285 million if you go line by line through the evidence. No matter which government figure you choose to believe, it’s an increase.
To borrow and recast for Oklahoma that wonderful old line of the late U.S. Sen. Everett Dirksen of Illinois: “A million here and a million there; pretty soon you’re talking real money.”
The increase in direct appropriations comes in at about 3.9 percent, although some analysts project it at 4.1 percent. Approximately $50 million in “one-time money” is included in the spending hike, meaning it is cash that won’t be there next year.
Last month, our friend Pat McGuigan of CapitolBeatOK opened his news story on the budget hike this way: “A government completely dominated by conservative Republicans will increase spending by at least $250 million next fiscal year.” That’s a pretty clear sentence.
After the frustration of increased budgets and delayed tax cuts came a news report in The Oklahoman demonstrating that creeping user fees and licensing costs right now swamp the envisioned tax cut of two and three years hence.
The plot thickened even after the budget took shape. Advocates of the Native American Cultural Center maneuvered for a new round of tax subsidies drawn from use taxes (including the levy on Internet sales), and backers of Tulsa’s pop-culture museum sought a three-year chunk of future state sales tax collections. As our distinguished fellow Andrew Spiropoulos observed recently in The Journal Record, “the worst-kept secret in town is that Republican state senators like spending money more than cutting taxes.” Fortunately, there are some exceptions to that rule. And in any case, the museum proposals failed to advance this year.
This is no spaghetti western, well made but violent, a film the meaning of which critics still debate.
No, this is the real world: Under Republican dominance, state government spending in three fiscal years has increased by roughly $800 million (this despite the best efforts of some policymakers to hold the line on spending). Elected Republicans hereabouts are, thus, on their way to duplicating the records of the two Bushes—increased government spending in most categories without, however, the redeeming feature of an early tax cut under the younger Bush.
Does the good outweigh the bad and the ugly? The answer to that question is not a slam-dunk yes.
In 2014, will Republicans take the cumulative increase in Oklahoma state government spending beyond $1 billion? A billion here, and a billion there…