Notes on the Oklahoma teachers' strike

I'll be on 1170 KFAQ with Pat Campbell Wednesday morning, April 11, 2018, just after the 8:00 am news to discuss the teachers' strike, the race for governor and other political topics. Listen at 1170 on the AM dial, online, or on the Tune In app.

A collection of notes about the Oklahoma teachers' strike, which has extended over seven school days so far.

The teachers' unions continue to move the goalposts and act like they've gotten nothing. This handout circulated at the capitol on Monday morning, purporting to be the latest set of demands, including repeal of the capital gains tax exemption that was approved in 2004, veto of the reversal of the proposed $5 nightly tax on hotel rooms, taxes on the wind industry, and an increase in the state sales tax rate (offset by a grocery exemption).

Alicia Priest, head of the Oklahoma affiliate of the far-left National Education Association, emphasized two demands as the strike ended its first week: Taxing long-term capital gains and reinstating the hotel/motel tax that was approved with the original tax package, then repealed by a separate bill. But it didn't seem to matter to her if any of the money went to schools.

Reporter: So, you are asking for 100 percent of the capital gains?

Priest: I'm saying that we need the repeal of the hotel/motel repeal and we need to pass capital gains in order for the walkout to end.

Reporter: What portion of capital gains for education?

Priest: I'm not...

Reporter: So, the walkout would end if (the governor) vetoes the hotel/motel tax and capital gains passes, but not another dime goes to the student funding formula?

Priest: I don't think that is it at all. I think we have to get them passed and work on getting funding to public education.

This is a significant overreach. I understand the OEA lobbying for more more money to schools, but why specify the funding mechanism? Why should it matter to the OEA where the money is coming from? The answer, I believe, is that as a state affiliate of the left-wing NEA, they just want more money flowing to government. I have to wonder if this was part of a deal -- funding for strike expenses in exchange for pushing for a tax on capital gains.

It's also a non-starter. Oklahoma business owners and farmers understand how this tax would hurt them. Investors would find it much more attractive to invest their money south of the Red River as Texas has no income tax at all and thus no tax on capital gains. If we want businesses to be able to grow and create jobs and diversify our economy, they must have access to capital investment. In his FY 2005 budget, Gov. Brad Henry, a Democrat, called for a long-term capital gains exemption:

A key to economic growth, and especially wage and income growth, is investment. Accordingly, any practice, policy or law that discourages investment in Oklahoma is not in the state's best interest and should be changed. One such policy is the taxation of gains on investment in Oklahoma. This budget recommends a full exemption from the individual income tax for all capital gains resulting from Oklahoma business interests or property held for five years or more.

The folks at the state and metro chambers of commerce must feel rather used right now. They've been vocal in supporting higher taxes for education and have helped to build the platform of positive publicity that the teachers' unions are now using to call for a tax that would damage their members. The bill passed the Senate but won't be heard by the House. Had the unions succeeded in browbeating passage of the tax, they would have found their erstwhile allies leading and funding the repeal effort. Legislative leaders have said that the capital gains tax came out of the funding package in order to get the votes needed for passage.

The teachers would have been wise to have their one-day show of force at the capitol and then returned to the classroom. They don't have much to show -- ball-and-dice games in casinos and Amazon tax -- for seven days of lobbying.

Someone else who feels hung out to dry is State Rep. Kevin McDugle. His frustrated video complaint about teacher behavior at the capitol, posted the morning of the strike's second day, went viral. McDugle voted for the tax increases and voted to make it easier for the legislature to impose higher taxes, alienating many of the Republican constituents who supported him, supposing him to be a conservative. In his Facebook video, he didn't specify the behavior that got under his skin, but clearly he felt the teachers were not sufficiently appreciative of the political risks he and others took to give them their demands. His video drew brickbats from the union teachers -- and an opponent to his re-election. McDugle now finds himself not only politically homeless and in the midst of what looks like a messy divorce, in his wife, the plaintiff cites adultery as grounds for divorce, a charge McDugle denies.

That aside, it's not smart to alienate the people who have helped you. I'm sure McDugle isn't the only legislator who feels underappreciated right now, and many may wish they could get their vote back. I read somewhere that the reason the $5 hotel tax needed a separate repeal, rather than being taken out during conference committee, is that House leaders were uncertain that they'd be able to get 76 votes for the bill the second time through. By continuing to push, despite the big legislative win that happened before the walkout, teachers are risking the same sort of backlash that followed passage of HB 1017.

In a press release in connection with her signing the repeal of the new $5 hotel tax, Oklahoma Gov. Mary Fallin has said she's done with education funding for the year, and it's time to move on. I'm not a Fallin fan, but she's right about this.

Fallin said today's action should complete funding K-12 public schools for the 2019 fiscal year. She encouraged legislators to turn attention now on other issues, such as criminal justice, and address the financial needs of other core services, such as public safety and health and human services, in finishing work on the 2019 fiscal year budget.

Dave Bond of OCPA tallied all of the new funding for education approved in the last three weeks, most of it before the strike began (bullets added for legibility):

HB 1010xx - signed by Governor BEFORE the teacher's union walkout began:

• cigarette tax increase = $152 million
• little cigars tax increase = $1 million
• gasoline fuel tax increase = $51 million
• diesel fuel tax increase = $53 million
• oil gross production tax raised to 5% = $95 million
• natural gas gross production tax raised to 5% = $71 million

HB 1011xx - signed by Governor BEFORE the teacher's union walkout began:

• itemized deductions capped at $17k = $94 million

HB 3375 - awaits Governor's signature:

• gaming expansion ("ball & dice") to be assessed exclusivity fee = $24 million

HB 1019xx - awaits Governor's signature:

• third-party sales on Amazon now assessed sales tax = $19 million

Total new revenue = $560 million

That represents a 19% increase in state appropriations for public education and moves Oklahoma to 2nd in average regional teacher's pay and 1st in benefits.

Four of the six major Republican candidates for governor have gone on record about the recent tax increases. Lt. Gov. Todd Lamb, Gary Richardson, and Kevin Stitt all said they would have vetoed them, State Auditor Gary Jones would have signed them into law (and took credit for the plan), and outgoing Oklahoma City Mayor Mick Cornett wouldn't say one way or the other. Former State Rep. Dan Fisher was not quoted in the story.

Lamb said the package "gets an 'F' in reform. I'm opposed to tax increases. We continue to kick the reform can down the road ... I'm very frustrated and very disappointed in how this teacher pay raise was signed and how it was passed."

That certainly narrows the field for me. I'd already ruled out Mick Cornett, but now I'm ruling out Gary Jones as well. I appreciate Jones in his role as State Auditor, I respect his integrity, but I have also observed over the years that he has a hard time thinking outside the box. I want a governor that is aggressively looking for ways to deliver state services without growing government and increasing our tax burden. Where Jones sees barriers and hurdles to getting money where it needs to go, a real leader in the governor's office would push to tear those barriers down, even if it means amending the constitution or changing laws. Some people are pushing to change the constitution to make it easier to impose tax increases on the people without their approval; why not instead change the constitution to make it easier to allocate the tax dollars government already receives to the areas where they're most needed?

In hindsight, Jones deserves some of the blame for the current lack of leadership at the State Capitol. Jones was elected Oklahoma Republican Party chairman after the disastrous 2002 election, when Democrats used cockfighting and fears of school consolidation to mobilize rural voters for Brad Henry. Jones's platform focused on building the party in rural areas. He and his team recruited legislative candidates who were not party activists or vocal conservatives but rather were respected leaders in the community who happened to be registered Republican. The strategy was successful in winning seats that Republicans had never before held, ultimately producing Republican supermajorities, but many (perhaps most) of these new legislators did not have the grounding in principle to withstand the blandishments of lobbyists and bureaucrats. As a result, we don't have a principled conservative majority in either chamber, and, consequently, significant cost-saving reforms that might have provoked resistance from vested interests didn't move forward. Thus we found ourselves in a budgetary dilemma that, to Jones's way of thinking, could only be solved by a tax increase. That same lack of political courage meant that the legislature wouldn't override Governor Fallin's veto of a 2013 bill that would have created a joint legislative committee authorized to direct his State Auditor's office to conduct performance audits of state agencies.