Budget & Tax
Michael Carnuccio | August 8, 2014
Free Market Friday: A lesson for lawmakers
Recall the saying: “Those who refuse to learn from history are doomed to repeat it.” Such wisdom is particularly true regarding the doom and gloom often predicted by those fixated on raising taxes and fees in order to increase revenue for government. Recent attempts to raise state taxes here in Oklahoma provide a valuable lesson.
Last summer, some politicians and pundits predicted state revenue shortfalls, warning that government would have less to spend on important programs. They blamed the reduced rate for certain oil and gas taxes or small cuts to personal income taxes. Warnings that the state’s general revenue fund was not reaping the results of robust oil and gas production were repeated by numerous lawmakers, government officials and lobbying groups.
That was a year ago. Today, we can judge these claims against what actually happened. According to state Treasurer Ken Miller and secretary of finance, administration and information technology, the state achieved a total revenue record for fiscal year 2014. The state’s general revenue fund slightly exceeded the prior year. The claims of a shortfall for government proved false. It’s true that lawmakers chose to appropriate based on an overestimate, ignoring federal officials’ predictions of revenue declines due to federal tax changes and a sluggish economy. Amazingly, revenue collections were still enough to cover appropriations even based on the overestimate.
What about gross production taxes on oil and gas production? Dire predictions of declines in gross production tax revenues were also false. According to state records, gross production tax collections for the general revenue fund alone (without a single statutory change or tax increase) grew $111 million over the prior year, even after the state paid back portions of an interest-free loan from the private sector. That’s not all.
“Gross receipts to the treasury, a good snapshot of our state’s productivity, incomes, and consumption, are higher than ever before,” Miller recently said. “In fact, collections have been higher than the same month of the prior year in 45 of the past 51 months, which indicates a steady economic expansion.”
Today, Oklahoma’s state government has more resources than ever before. These record revenues are not the result of tax increases, but of private-sector economic growth – and tax cuts. It’s a lesson taxpayers should hope Oklahoma policymakers will remember.
Former OCPA President