Oklahoma SQ 779: Boren sales tax for schools and colleges

Oklahoma State Question 779, an initiative petition promoted by University of Oklahoma President (and former Oklahoma governor and senator) David Boren, would amend the Oklahoma Constitution, establishing a permanent 1 cent on the dollar sales tax (a permanent increase in the state sales tax rate from 4.5 cents per dollar to 5.5 -- a 22% increase) to be used for funding K-12 schools, Career Tech, and higher education. Complex language is intended to ensure that this permanent sales tax is in addition to and not in place of existing state funding.

Here is the text of the proposed new Article XIII-C, which would be added to the Oklahoma Constitution if SQ 779 is approved:

CONSTITUTION OF OKLAHOMA, ARTICLE XIII-C - OKLAHOMA EDUCATION IMPROVEMENT FUND

§ 1. CREATION OF OKLAHOMA EDUCATION IMPROVEMENT FUND

There is hereby created in the State Treasury a limited purpose fund to be known as the "Oklahoma Education Improvement Fund." The fund shall consist of the proceeds of the sales tax levy and the use tax levy provided in Section 2 of this Article XIII-C, and any monies or assets contributed to the fund from any other source, public or private.

§ 2. LEVY OF ONE CENT SALES TAX AND USE TAX FOR OKLAHOMA EDUCATION IMPROVEMENT FUND

There is hereby levied upon all sales, not otherwise exempted in the Oklahoma Sales Tax Code, an additional excise tax of one percent (1.0%) of the gross receipts or gross proceeds of each sale of tangible personal property, or of other goods and services subject to the sales tax as provided in the Oklahoma Sales Tax Code. Except as otherwise provided herein, this tax shall be collected, reported, and remitted or paid in accordance with the Oklahoma Sales Tax Code. There is hereby levied and there shall be paid by every person storing, using, or otherwise consuming within this state, tangible personal property purchased or brought into this state, an additional excise tax on the storage, use, or other consumption in this state of such property at the rate of one percent (1.0%) of the purchase price of such property. Said tax shall be levied on the storage, use or consumption of personal property as provided in the Oklahoma Use Tax Code. Except as otherwise provided herein, this tax shall be collected, reported, and remitted or paid in accordance with the Oklahoma Use Tax Code. This sales tax levy shall be in addition to, and shall not supplant, the general sales tax levied in the Oklahoma Sales Tax Code or any other sales tax authorized by Oklahoma law and this use tax levy shall be in addition to, and shall not supplant, the general use tax levied in the Oklahoma Use Tax Code or any other use tax authorized by Oklahoma law. All revenue from the sales tax and the use tax levied pursuant to this Article XIII-C, and penalties and interest thereon, collected by the Oklahoma Tax Commission shall be paid to the State Treasurer and deposited into the Oklahoma Education Improvement Fund.

§ 3. ALLOCATION OF MONIES IN OKLAHOMA EDUCATION IMPROVEMENT FUND - PURPOSES - USES - ETC.

A. Monies in the Oklahoma Education Improvement Fund shall be apportioned by the State Treasurer, appropriated by the Legislature, and distributed monthly for the educational purposes established herein, as follows:

1. Common Education: Sixty-nine and one-half percent (69.5%) of said monies shall be apportioned among and between all the several common school districts of the State in proportion to the school population of the several districts, on the basis of the state aid formula for common education then in effect.

(a) Monies from the Oklahoma Education Improvement Fund shall be specifically identified and segregated from other monies appropriated and apportioned among the several common school districts of the State on the basis of said state aid formula.

(b) The common school districts shall use eighty-six and one-third percent (86.33%) of the additional funds provided to them under this Article XIII-C to increase teacher salaries as required by Section 4 of this Article, and to otherwise address and prevent teacher and certified instructional staff shortages in the manner most suited to local district circumstances and needs, including but not limited to differentiated compensation methods or performance pay.

(c) The common school districts shall use thirteen and two-thirds percent (13.67%) of the additional funds provided to them under this Article XIII-C to adopt or to expand programs, opportunities, or reforms to improve reading in the early grades, to improve high school graduation rates, and to increase college and career readiness. The common school districts may use the amount apportioned to them under this Section 3(A)(1)(c) only to adopt or to expand said programs, opportunities or reforms, and may not use the amount apportioned to them under this Section 3(A)(I)(c) to maintain programs, opportunities or reforms established prior to the effective date of this Article XIII-C.

(d) The State Auditor and Inspector shall approve auditors who shall annually audit the use made of the monies distributed to the school districts under this Article XIII-C to ensure that it is used only for the purposes specified in this Article XIII-C..

2. Higher Education: Nineteen and one-quarter percent (19.25%) of said monies shall be paid to the education and general operating budgets of the institutions under the authority of the Oklahoma State Regents for Higher Education, for use in improving college affordability, or otherwise in the improvement of higher education.

3. Career and Technology Education: Three and one-quarter percent (3.25%) of said monies shall be paid to the Oklahoma Department of Career and Technology Education, for use in the improvement of career and technology education.

4. Early Childhood Education: Eight percent (8%) of said monies shall be paid to the State Department of Education, for use in increasing access to and enhancing the quality of voluntary early learning opportunities for low-income and at-risk children prior to entry into the common education system.

B. Monies expended or distributed from the Oklahoma Education Improvement Fund as provided herein shall be used only for the purposes specified in this Article XIII-C, Section 3.c. None of these monies distributed from the Oklahoma Education Improvement Fund to common school districts may be used to add superintendent .positions or increase superintendents' salaries.

§ 4. INCREASE IN TEACHER SALARIES

Each common school district of the State of Oklahoma shall pay each teacher employed by such district a salary at a rate that is at least $5,000 greater than the salary schedule transmitted by such district in the most recent year prior to the adoption of this Article XIII-C.

§ 5. FUNDS NOT TO SUPPLANT OTHER EDUCATION FUNDING

A. Monies expended or distributed from the Oklahoma Education Improvement Fund shall supplement, and shall not be used to supplant or replace, other state funds supporting common education, early childhood education, higher education, or career and technology education, including but not limited to the Permanent School Fund, the Oklahoma Education Lottery Trust Fund, the Education Reform Revolving Fund, the Common Education Technology Revolving Fund, the Higher Education Capital Revolving Fund, the Oklahoma Tuition Scholarship Revolving Fund, the Common School Fund, appropriations from the Legislature as provided in Article XIII, Section 1a of the Constitution, and any other appropriations from the Legislature used for educational purposes.

B. The Legislature shall appropriate the monies from the Oklahoma Education Improvement Fund solely to supplement other funds supporting common education, early childhood education, higher education, or career and technology education. The Legislature shall not appropriate such monies to supplant or replace any other state funds supporting common education, early childhood education, higher educ.ation, or career and technology education.

C. In order to ensure that the monies from the Oklahoma Education Improvement Fund are used to enhance and not supplant funding for education, the State Board of Equalization shall examine and investigate appropriations from the Fund each year. At the meeting of the State Board of Equalization held within five (5) days after the monthly apportionment in February of each year, the State Board of Equalization shall issue a finding and report that shall state whether appropriations from the Oklahoma Education Improvement Fund were .used to enhance or supplant education funding. If the State Board of Equalization finds that education funding was supplanted by monies from the Oklahoma Education Improvement Fund, the State Board of Equalization shall specify the amount by which education funding was supplanted. In this event, the Legislature shall not make any appropriations for the ensuing fiscal year until an appropriation in that amount is made to replenish the Oklahoma Education Improvement Fund.

§ 6. EFFECTIVE DATE, CONSTRUCTION

A. This Article XIII-C shall become effective on July 1 immediately following its passage.

B. Nothing in this Article XIII-C shall be construed as conflicting with Article X, Section 23 of the Constitution.

§ 7. SEVERABILITY

The provisions hereof are severable, and if any part or provision hereof shall be void, invalid, or unconstitutional, the decision of the court so holding shall not affect or impair any of the remaining parts or provisions hereof, and the remaining provisions hereof shall continue in full force and effect.

Article X, Section 23, is the balanced-budget requirement in the Constitution of Oklahoma.

Before you even get to the question of whether common schools should get more state funding or teachers should get raises, there are numerous reasons to defeat this proposition:

1. This is a logrolled proposition, in violation of the Oklahoma Constitution's single-subject rule. The essence of logrolling is to link unpopular provisions, which could not pass on their own, with provisions that enjoy public support. Boren has framed this issue so that you have to give him more money for OU if you want to give more money to K-12 schools. That's selfish and greedy on his part. The lavishly funded Tulsa Technology Center will get more money too, even though they can barely figure out how to spend the money they take in through their dedicated property tax levy. The high priests of the Oklahoma Supreme Court pretended not to see the obvious logrolling, so it's left to the voters to punish logrolling by defeating it at the polls, along with the unjust judges who approved it (including Supreme Court justice Combs and Civil Appeals Court judge Thornbrugh, on the ballot for retention in November).

2. There's no mechanism for reducing the tax rate if the tax generates more revenue than is needed. We will have the same problem we already have with dedicated property tax levies for TCC, Tulsa Technology Center, the library, and the health department. Taxpayers lose, money gets wasted, other needs go unfunded.

3. Our cities and towns will have some of the highest combined sales tax rates in the nation. This will hurt border communities, as shoppers cross the state line to avoid the higher tax rate. This will hurt Oklahoma's poorest citizens, as the regressive tax on food, clothing, and other necessities hits even harder.

4. Sales tax is a highly volatile revenue source. Just ask your city's finance director.

5. The degree of detail, the specificity of the earmarks, and the severability clause all indicate that this is really statutory language, not constitutional language.

Any additional funding for post-secondary education should be tied to a College Realignment and Closure Commission, modeled after the military's successful efforts to cut costs by reducing duplication, consolidating commands, and closing inefficient bases. There is considerable overlap between our comprehensive universities, regional universities, community colleges, and career tech schools. (For example, if you want to learn computer programming, any one of those four types of taxpayer-funded, post-secondary institutions will offer what you need.) Colleges are often located based on political considerations of the turn of the 20th century, rather than the population distribution of the early 21st century. And Oklahoma colleges don't need any more taxpayer money for subsidizing culturally corrosive garbage or persecuting dissenters from the official left-wing ideology.

Funding for common schools needs to go back to a local model -- local funding, raised locally, spent locally, under local control. In FY2016, local and county funds accounted for 28% of school funding, while state sources (including earmarked funds and appropriations) amounted to 61%. That ratio needs to be reversed. Property-rich districts like Union and Tulsa shouldn't be receiving state aid at all, beyond targeted assistance for special needs. District taxpayers should have the option of voting in a higher permanent support levy. Rural county assessors should suffer a penalty for failing to assign true market value to local property, as their sloth results in lower property taxes and lower levels of local support. Under the current system, the state steps in and subsidizes that behavior by supplementing lower property tax collection with state funds. The system hurts well-managed counties that are paying their fare share of taxes in favor of poorly-managed counties that aren't. Making local districts more responsible for their own funding would have the natural consequence of encouraging various types of consolidation and efficiency, including administrative consolidation, campus consolidation, and distance learning. If kids on a Queensland cattle station can learn math over the radio from a teacher 200 miles away, surely rural Oklahoma children can learn math over the internet.

SQ 779 is a rotten apple. I plan to throw it out on November 8 by voting no, against SQ 779.

MORE: Here are the opening paragraphs and a few other key passages from Justice Taylor's dissent, which was joined by Kauger and Winchester:

¶1 I respectfully dissent to the Court's decision finding no constitutional infirmity with Initiative Petition No. 403. The Court is presented with a clear example of logrolling--what Article XXIV, Section 1 of the Oklahoma Constitution intends to prevent. An extremely popular one-time pay raise for a group of state employees paired with other less popular tangentially related questions is repulsive to this constitutional provision. The plain language of Article XXIV, Section 1 requires each proposition in an initiative petition to be of one general subject. This proposed constitutional article to provide a pay raise for a small group of state employees, paired with an increase in funding for common education and higher education, a 1% sales tax, and the enhancement of the Board of Equalization's power is a perfect example of what Article XXIV, Section 1 was written to prevent. Even if logrolling were not the determinative issue, the proposed initiative petition impacts several other constitutional provisions in which allocations for salaries are delegated to the Legislature, and only the Legislature.1

¶2 The Respondents admitted during oral argument that amending our founding document to give a pay raise to one group of state employees is unprecedented. Unprecedented may undersell this point. Stop and think about this proposal for a moment--our Constitution will be amended to grant a onetime pay raise to a group of state employees. Is constitutional amendment to become the new vehicle for pay raises for state employees going into the future? It is evident that this unprecedented constitutional pay raise is being proposed because it is the popular subject in this collection of independent and unrelated provisions. Without the pay raise provision, Initiative Petition No. 403 would likely stand no chance with the voters.

¶3 It is the duty of this Court to follow the rule of law and the Oklahoma Constitution. This case is not simply an approval or disapproval of increasing pay for common education teachers of this state. If that were the case, it would sail through these challenges and be adopted by the people. I would send Initiative Petition No. 403 back to the Respondents and require the questions of a public-school-teacher pay raise, an increase in the state sales tax, the marriage of common education and higher education, and an increase in the Board of Equalization's powers to be presented to the voters as separate conditional propositions....

¶18 In a future budget year, where failure of revenue will require the Legislature to make cuts across the board to all agencies, the Legislature will cut common education and higher education at its own peril due to the powers now given to the Board of Equalization. If the Board of Equalization does not approve of the Legislature's decisions on education appropriations, then the Board of Equalization can shut down the entire legislative branch of government until it follows the command of an executive branch entity. We may very well see the Legislature grind to a halt as the Board of Equalization test-drives its new power.

¶19 There is a reason that a state employee pay raise through constitutional amendment has never been utilized before. The Oklahoma Constitution sets forth precise appropriations procedures for the Legislature to utilize, and the Legislature only. This proposed provision thwarts a core function of the Legislature and clashes with other constitutional provisions which control the appropriations process. See Okla. Const. art. 5, §§ 55-56;4 Okla. Const. art. 13A, § 3; 5 Okla. Const. art. 13, § 1A.6 In essence, Initiative Petition No. 403 contains internal logrolling and causes external logrolling of other relevant constitutional provisions...

¶24 Public support for a public-school-teacher pay raise is very high in this state. I could not agree more that it is a noble goal and purpose. Yet this Court has an obligation to follow the rule of law and the Constitution. And when such a well-supported measure is used as a Trojan horse to add provisions into the Constitution which are only tangentially related to public-school-teacher pay raises, the Constitution and the Court become the gatekeepers. The voters should decide these issues, but they should not be forced to support public-school-teacher raises along with an increase in the sales tax, the marriage of common education and higher education, and an increase in the power of the Board of Equalization all in one vote. I respectfully dissent.