Oklahoma State Question 800: Creating the Oklahoma Slush Vision Fund

Oklahoma State Question 800 would add a new section to Article 10 of the Oklahoma Constitution. It would siphon off part of the gross production tax into a fund that the State Treasurer could invest in private businesses.

I'm voting NO, AGAINST SQ 800.

Here is the new section that would be added to Article 10 of the Oklahoma Constitution:

Section 44. A. There is hereby created in the State Treasury a trust fund to be designated the "Oklahoma Vision Fund" to support the operation of state government and to provide tax relief.

B. The Oklahoma Vision Fund principal shall consist of:

1. Any amounts appropriated by the Legislature;

2. Any other deposits and apportionments from other sources as may be provided by law;

3. For the fiscal year beginning July 1, 2020, and for each fiscal year thereafter, five percent (5%) of total actual revenue from the gross production tax on oil and gas which percentage shall increase in increments of two-tenths percentage points each year thereafter; and

4. Investment and income returns from the fund principal.

C. Four percent (4%) of the average annual amount of the principal of the Oklahoma Vision Fund for the immediately preceding five (5) complete fiscal years, shall be apportioned to the General Revenue Fund not later than September 30 each year. The State Treasurer shall determine the balance of the Oklahoma Vision Fund as of June 30 each year and for the preceding five (5) years in order to apportion the required amount to the General Revenue Fund each fiscal year as required by this subsection. The deposit required by this subsection shall not begin before July 1, 2020.

D. The balance of the Oklahoma Vision Fund shall be invested by the State Treasurer in a manner consistent with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims and by diversifying the investments of the Oklahoma Vision Fund so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.

E. The Oklahoma Vision Fund shall not be subject to the restriction of Section 15 of Article X of the Oklahoma Constitution with regard to investment of public funds and the monies in the Oklahoma Vision Fund may be invested in equity of lawful for-profit business enterprises, whether denominated as shares, stock, membership interests or similar equity securities.

F. Not more than five percent (5%) of the monies in the Oklahoma Vision Fund may be used for debt service payments due on bonds or other financing instruments issued by the State of Oklahoma, counties, municipalities, authorities, commissions, political subdivisions or any other governmental entities within the State of Oklahoma, subject to such restrictions as may be provided by law.

Giving this proposal the most generous interpretation, it appears that the intent of SQ 800 is to diversify Oklahoma's economy by investing taxes generated by the energy industry, on which Oklahoma's economy is overly dependent, into new businesses. It sets up what amounts to a venture capital fund. Ideally, it would help new businesses in new industries to survive the startup period and become established, creating jobs and tax revenue that aren't dependent on how much oil the King of Saudi Arabia decides to produce at any given time.

Putting the worst construction on it, it creates a slush fund that the State Treasurer could use to reward his friends and campaign contributors in the business world.

You'll note that the proposed amendment creates an exception to Article 10, Section 15. This is the constitutional provision banning state investment in private companies, except to a very limited extent:

Article 10, Section 15 of the Oklahoma Constitution begins:

A. Except as provided by this section, the credit of the State shall not be given, pledged, or loaned to any individual, company, corporation, or association, municipality, or political subdivision of the State, nor shall the State become an owner or stockholder in, nor make donation by gift, subscription to stock, by tax, or otherwise, to any company, association, or corporation.

In a later paragraph of Article 10, Section 15, an exception is made for the Oklahoma Center for the Advancement of Science and Technology (OCAST), which is authorized to make loans or purchase shares in companies that are "involved with research or patents from projects involving Oklahoma colleges or universities," but this discretion is limited by a requirement for a 2/3rd supermajority vote in the legislature, which also has the mandate to "establish procedures to review and evaluate the extent to which the purposes of any statute authorizing use of public funds by the Oklahoma Center for the Advancement of Science and Technology are achieved." The idea of this exception is to allow the state to help commercialize technologies that are developed at Oklahoma's universities. While you could debate the wisdom of even this much state involvement in private enterprise, it has boundaries and safeguards that SQ 800 lacks.

The office of State Treasurer, with its discretion to steer large amounts of state money to favored banks and investment companies, provides ample opportunity for corrupt dealings. Since Robert Butkin's election in 1994 the state treasury has been managed with professionalism and without any hint of scandal, but there were accusations of corruption involving the three treasurers preceding Butkin:

Leo Winters:

1974: A federal grand jury indicted state Treasurer Leo Winters, accusing him, among other things, of using his position to extort campaign money from banks. He was acquitted of four counts during a well-publicized trial, and other counts later were dropped. A few weeks after that, he was re-elected. Winters served five terms and was trying for a sixth when his 1986 campaign was doomed by allegations that a Tulsa bank may have written off millions in loans to him.

Ellis Edwards:

Bellmon was asked at a news conference about a weekend newspaper report that said Edwards' office participated in more than $2 billion in securities trades with five individuals who contributed to his 1986 election campaign after he was elected to help retire his election debt.

Claudette Henry:

Mrs. Henry has been accused by a former top assistant of covering up a securities trading scheme that led to a $6.7 million lawsuit filed by Oklahoma against brokers in California and New York. The FBI is investigating.

Without safeguards in place, there would be strong incentives for companies hoping for state investment to make campaign contributions to boost a venal and sociopathic self-salesman to the treasurer's office.

Corruption aside, SQ 800 is a bad idea because it creates yet another segregated pot of money that can only be used for one purpose. Oklahoma's budget woes are exacerbated by the proliferation of separate "pots" of taxpayer dollars that have been earmarked for one purpose or another. These laws protect favored agencies during lean economic times from sharing the burden of reduced revenues, and they limit the legislature's ability to direct taxpayer dollars to where they are most urgently needed.

Because of the potential for corruption, because of the dubious wisdom of investing public money in private enterprise, and because it further inhibits budget flexibility, wise Oklahomans will vote NO on SQ 800.