Budget & Tax
Jonathan Small & Larry Parman | March 12, 2017
A public letter to state lawmakers
Jonathan Small & Larry Parman
In the past few days a number of memos, emails and letters have been distributed regarding solutions to Oklahoma’s current budget challenge.
This is a sensitive time when well-intended people on all sides of the argument are working hard to create a satisfactory solution to a complex situation. You are to be congratulated and thanked for your service and willingness to tackle these difficult issues.
It is also a time to not let emotions control the conversation. It’s a time to focus on balancing a budget and building a state. Solutions we create today will have far-reaching implications. OCPA is committed to continuing to offer strategic and thoughtful policy recommendations for your consideration.
Let us clear up one thing. Tradition holds that the Governor presents an outline of policy priorities during the State of the State message. Governor Fallin laid out her plan to address the budget shortfall. We differ with the over-arching strategy, some of the recommendations and the premises that underlie them.
For example, we believe there is ample opportunity to look for savings within the state government system. That’s what fiscal conservatives do. One dollar of waste and inefficiency saved is a dollar of new revenue not required. Take education for example. We continue to fund an underperforming, top-heavy, bureaucratic system that is failing children who need an “I am prepared” education. Taxpayers receive a return on that investment of 39th in 8th grade reading and 46th in 8th grade math. Yet, we continue to heed the call of education producers for “more money” without reform and the true cost of our failure is paid for by the unprepared kids. More money without reform will change no outcome and only create a larger, ineffective system.
When the narrative is “We have a revenue problem,” we should not be surprised that the only path offered to achieve a balanced budget is to take the easy way out and manufacture more revenue. In this case through a nearly $2 billion tax increase...one that will never go away. That’s one possibility.
Another narrative is “there’s nothing else to cut.” That’s another possibility, but our experience and research suggests otherwise. But to do so requires hard work, clear thinking, and a relentless pursuit of carving out marbled waste within the meat of each agency. It risks disappointing someone and we get our hands dirty. So, instead, some want to solve the problem by force – tax increases. This would be like a business going to its customers, notifying them of their money-losing operation and forcing them to pay more or buy more product.
Another possibility is to modify our tax structure so we tax work less in exchange for taxing consumption more. Or examine, perhaps eliminate, policies that siphon revenue from state coffers.
There are two bedrock issues that are absolutes in building a great state – a dynamic economic environment that encourages the creation of high-paying jobs and an excellent education system that stresses rigor and accountability. Without these, little else matters.
OCPA has been criticized by some for constantly saying NO. That refrain has been delivered throughout the halls of the Capitol for years. It is a specious argument with no basis in fact. OCPA has led the charge, and been highly supportive of many significant reforms in recent years. But, when policy reflects a continuous shift to the left and abandons the principles of free markets, individual initiative/responsibility and limited government, we will always say NO.
Here’s why the argument is flaccid. OCPA was not the first to say NO. Budget proponents said “No” to conservative ideas. They said “No” to the idea of limited government. They said “No” to the idea of taxing work less in exchange for increasing taxes on consumption and services. Proponents said “No” to the idea of first creating greater efficiency in government. And, their “Yes” to nearly $2 billion of tax increases without reform is not good for the long-term viability or competitiveness of our state.
We continue to believe that for Oklahoma to be a high-achiever we must be a smarter, more prosperous state served by a lean, efficient government. That statement is principled and compatible with OCPA’s mission – free markets, individual initiative/responsibility and limited government. OCPA will continue to advocate policies based on conservative principles as an alternative when political expediency ignores them.
We encourage you to let your upcoming decisions rest on principle, not expediency. We encourage you to not just balance the budget, but also focus on building a state. You represent your state, not just your district. By your vote you accept responsibility for the outcome those votes create. We believe the OCPA mission – free markets, individual initiative/responsibility and limited government are the decision filters that will produce the best long-term outcomes for Oklahoma. We look forward to continue working with you for the betterment of all Oklahomans and thank you for your service.
Larry V. Parman, Chairman of the Board of Trustees
Jonathan Small, President
Jonathan Small, C.P.A., serves as President and joined the staff in December of 2010. Previously, Jonathan served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. Small’s work includes co-authoring “Economics 101” with Dr. Arthur Laffer and Dr. Wayne Winegarden, and his policy expertise has been referenced by The Oklahoman, the Tulsa World, National Review, the L.A. Times, The Hill, the Wall Street Journal and the Huffington Post. His weekly column “Free Market Friday” is published by the Journal Record and syndicated in 27 markets. A recipient of the American Legislative Exchange Council’s prestigious Private Sector Member of the Year award, Small is nationally recognized for his work to promote free markets, limited government and innovative public policy reforms. Jonathan holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.
Jonathan Small is president of the Oklahoma Council of Public Affairs. Larry Parman is chairman of the Oklahoma Council of Public Affairs.