Oklahoma Politics: November 2017 Archives

On Friday, the Oklahoma Legislature approved a budget compromise that funded essential services, cut spending in other areas, and avoided raising taxes entirely. Later the same day, Gov. Mary Fallin used her line-item veto to remove all of the bill except for funding for the three agencies that would have been funded by the cigarette tax increase that was approved during regular session and struck down by the State Supreme Court because it lacked the constitutionally required vote of the people.

Legislative leaders were puzzled by Fallin's veto.

When asked what the Oklahoma Legislature might do after Gov. Mary Fallin line-item vetoed the product of its eight-week special session, House Floor Leader Jon Echols struggled to give an answer.

"I don't think anybody really understands what the intent of this is," said Echols, R-Oklahoma City. "There's a lot of unanswered questions here."

It appears that her veto leaves the state short $110 million this year instead of $215 million, which mostly affected three agencies that have a critical health care mission. She signed enough of the bill to send some money to the Department of Mental Health and Substance Abuse Services, the Oklahoma Health Care Authority and the Department of Human Services.

Fallin said she wants to call the Legislature back into special session to address the shortfall without spending what is considered one-time funding. She didn't say, however, when that might happen.

"Bringing the Legislature back into special session at this point seems like a waste of time and taxpayer dollars," Senate President Pro Tem Mike Schulz said. "The governor's veto doesn't help Oklahoma thrive; it only serves to throw our budget further into chaos."

(This was not the first time Fallin has vetoed bills unexpectedly, seemingly on a whim.)

State Rep. Josh Cockroft says Fallin's veto broke a promise and may have broken the State Constitution:

I am not happy about the veto especially since the Governor had agreed to the plan if it passed both the House and the Senate. Her actions are a complete reversal of her promise. This is unacceptable, and she should and will be held accountable.

The Governor's decision gives no stability in a state that desperately needs it.

Questions of the constitutionality of the Governor's decision have been raised since it now leaves our budget unbalanced. These concerns must be explored. The fact of the matter is that right now, the legislature has no idea what exactly she did last night or where any funding is. She only released a statement and no documentation to show exactly what was being done. This is highly concerning for us as legislators and should be for the entire State as well.

Oklahoma's budget crisis reflects eight years of no leadership from Gov. Fallin or legislative leaders. Rather than decisively acting to audit the performance of state departments and consolidate services, rather than enduring the attacks from aggrieved interests that decisive action would have incited, Fallin and a succession of House and Senate Republican leaders kicked the can down the road. The minority of courageous fiscal conservatives in the legislature did not have the clout to push for reform, but, thanks to SQ 640 their numbers were sufficient to block the tax hike, forcing state leaders at last to reckon with the kind of waste and duplication now being exposed at the State Health Department.

Had a tax increase been enacted, it merely would have sent a higher baseline for overspending, temporarily relieving the pressure of financial constraint.

As I wrote this summer:

Oklahoma's current dilemma proves that, whether union-label Democrats or crony-capitalist Republicans run the government, public choice theory holds true: In politics, concentrated benefit trumps diffuse cost. Barring a grassroots miracle, a state's governor and legislative leaders will be those politicians most easily swayed by the special interests who come to the State Capitol bearing gifts in exchange for government-given financial advantage, be they public-employee unions looking for a raise, superintendents of tiny school districts hoping to dodge consolidation, or oil barons and wind tycoons looking for targeted tax credits. Pliable legislators get contributions for themselves and their PACs, with which they win the loyalty of their colleagues in the caucus room.

With this sort of leadership, if it can be called leadership, state spending will rise to match rising revenues, because the Ado Annies on Capitol Hill just cain't say no. Concentrated benefit trumps diffuse cost. The profligate spending only makes the cuts all the more painful when revenues fall, as they always do. Oklahoma would be in much deeper trouble were it not for the constitutionally mandated "rainy-day fund" that sequesters some of the financial windfall in good years.

Oklahoma needs a new governor and new legislative leaders willing to eliminate the revenue earmarks that keep taxpayer dollars from flowing where they're most needed, to eliminate duplication in our colleges and career technology centers, to eliminate tax credits that do nothing for economic growth, to eliminate administrative bloat and the regulations that create it. Every one of those necessary steps will threaten some group's concentrated benefit. Persisting with necessary reform in the face of the resulting resistance will require principled courage, a quality scarce amongst the crony-capitalists currently running the state or the big-government tax-hikers who want to replace them.

Mary Fallin's non-leadership is what happens when voters choose image over substance. Her unwillingness to lead has been evident throughout her term and even before her first election to the governor's office:

• April 3, 2013: Mary Fallin: What's holding her back from bold leadership?
• July 6, 2010: Fallin plans lobbyist meet, skips grassroots event and forums
• July 20, 2010: Mary Fallin disparages following the Constitution as "the easy way out!"
• July 24, 2010: "Fallin-esque" vs. Brogdon's specific plan

Oklahoma Council of Public Affairs president Jonathan Small praised the Legislature for reaching a budget compromise that balanced the budget without raising taxes:

The Legislature did the right thing by utilizing surplus funds and other available resources rather than raising taxes on working Oklahoma families and small businesses. After the loss of $215 million in expected cigarette tax money, policymakers only needed to address revenue failures for three core agencies during this special session.

This special session was a reminder that, even with total state spending at an all-time high, government will always ask for more money. Leading up to and during the special session, well-paid state government agency heads resorted to threatening many of Oklahoma's most vulnerable citizens.

Meanwhile, subsidies remained in place for out-of-state wind companies, Hollywood filmmakers, and other non-essential programs. There's also plenty of misguided, non-critical spending in agencies like TSET. And, given the recent troubles surrounding one of Oklahoma's largest and most powerful regulatory agencies, it is incumbent upon lawmakers to pump the brakes on any more tax increases until performance audits and true reforms can be completed.

Oklahoma families have to live within their means and make tough choices, as do state policymakers. Using so-called one-time funds in state government is not ideal, but it's better than raising taxes on working Oklahomans.

Americans for Prosperity-Oklahoma reacted to the veto:

Oklahoma City, OK - Americans for Prosperity-Oklahoma (AFP-OK) is disappointed in the surprise vetoes issued by Governor Mary Fallin on Friday. Her vetoes will bring the legislature back in to what has already been a costly special session. AFP-OK is a strong advocate of good stewardship of taxpayer dollars and hopes lawmakers push to resolve the threat of a continued budget crisis quickly and without raising taxes on hard working Oklahoma families and businesses.

Over the past several months, a steadfast group of legislators have repeatedly rejected the Governor's desire to raise taxes on lower and middle-class families and AFP-OK continues to applaud that effort.

AFP-OK state director, John Tidwell released the following statement:

"I think Will Rogers was right when he said, 'when you find yourself in a hole - quit digging.' This largest tax increase in state history only digs that hole deeper. Governor Fallin's decision to veto large parts of a balanced budget deal and intention to drag out a special session is a raw deal for taxpayers. The governor should have signed the budget deal and accepted the tough budget cuts which would have balanced the budget."

"Her insistence on raising taxes on Oklahoma families is just wrong," Tidwell continued. "What's worse, the Governor seems totally obstinate to truly cutting wasteful spending or reforms of any kind. Oklahomans should support those lawmakers who worked in a bi-partisan way to balance the budget and ask them to continue to stand strong against costly tax increases that will hurt families and small businesses."

MORE: Earlier this month, State Rep. Jason Murphey of Guthrie explained why you should never believe that state government needs more of your money:

Those in the arena of public policy are constantly subjected to the unending refrain of, "Give us more money or all types of armageddon-type scenarios will inevitably occur."

Too often, the weak-minded policy maker acquiesces and accepts the overstated demands at face value.

Worse, many times he doesn't just acquiesce, but actually becomes a co-opted agent for the very bureaucracy to which he was commissioned by the people of Oklahoma to be the check and balance.

Those policy makers who take their responsibility seriously and don't accept the claims of the bureaucrats at face value know that many millions of dollars are wasted by government every year.

It seems that significant waste is found almost every time a truly independent authority investigates the actual spending practices of these agencies.

Over the years, I have seen report after report and audit after audit expose this waste and point to potential spendings.

Unfortunately, state government is so large and spending is so great that legislative purview (already quite minimalistic) has only reached a small subset of overall spend.

Even with those reports and audits pointing to the waste, modernization efforts frequently run up against the political power of bureaucrats who have worked the system to the point that they can use taxpayer dollars to finance an army of lobbyists who are extremely effective at protecting those bureaucracies from reforms.

STILL MORE: The failure of the tax hike seems to be giving new impetus to efforts to address waste:

Following revelations of apparent financial mismanagement at the Oklahoma Department of Health, House of Representatives Speaker Charles McCall today said he is empaneling a House Special Investigation Committee to begin conducting an investigation into the agency's use of taxpayer dollars.

The committee will focus its investigation into the finances, state appropriations and other financial resources of the Department of Health and how they were managed. The scope of the committee's investigation could expand to other agencies.

"The allegations at the Department of Health are very concerning, and I share the public's frustration with the mismanagement of at least $30 million in taxpayer funds," said Speaker McCall, R-Atoka. "The Legislature has the authority to conduct an investigation, and our members want that to begin as soon as possible. This is a very serious matter, and I would encourage those associated with these allegations to cooperate fully with our investigation."

State Rep. Scott McEachin of Tulsa, one of the votes against the HB1054X tax increases, explains in a statement that HB1054X would not have provided needed revenue for another 90 days, but bills already passed by the State House would provide immediate funding from cash on hand -- if the Senate will pass the bills and if Gov. Fallin will sign them.

In 1943, Winston Churchill gave a speech which has come to be known as "A Sense of Crowd and Urgency." Certainly, today, November 9, 2017, we will have both a crowd and a sense of urgency at the Oklahoma Capitol. I'll explain why I think Churchill's remarks are relevant to today, but first let us focus on what is urgent--why we must have a sense of crowd and urgency.

Today, all Oklahomans must focus their attention and their political energy on the fierce urgency of having the Senate pass and the governor sign the measures already passed by the House to fund vital health services now.

I repeat, emphatically, all Oklahomans must focus their attention and their political energy on the fierce urgency of having the Senate pass and the governor sign the measures already passed by the House to fund vital health services now.

Let's look to history, to parliamentary tradition, to Churchill for guidance. First:

'And there should be, on great occasions, a sense of crowd and urgency. There should be a sense of the importance of much that is said; a sense that great matters are being decided, there and then, by the House.'

Eliminating the anxiety - in some cases said to be no less than life-threatening to those who suffer from depression - is the great matter to be decided, here and now.

Now is not the time for analogies about cans and roads; now is the time to act. Revenue derived from the passage of HB1054X will not be available until 90 days after the bill is acted upon by the governor. It will not answer our urgent need.

Again, from Churchill: 'The House of Commons has lifted our affairs above the mechanical sphere into the human sphere. It thrives on criticism, it is perfectly impervious to newspaper abuse or taunts from any quarter.... There is no situation to which it cannot address itself with vigor and ingenuity.'

Therefore, let us conduct our affairs in the Capitol today with vigor and ingenuity, according to the 'Oklahoma standard.' In my opinion, the essential element of the Oklahoma standard is how we express our concern for one another in times of crisis. Historically, Oklahomans are both charitable and frugal, but money extracted by law from Oklahoma's citizens is not charity, and money given carte blanche to government which has admitted to misuse of funds is not frugality. Today is not a day to pass a massive tax increase; today is a day to assure all Oklahomans that its House of Representatives, Senate and governor can see that our most vulnerable are protected.

Muskogee State Rep. George Faught has posted a vigorous defense of his "no" vote on the HB 1054 tax increases. Faught states that the House has already passed bills filling the current budget hole without raising taxes; the Senate can choose to take these bills up and pass them. Faught also questions the wisdom of considering additional spending during the special session; the focus should have been solely on meeting the gap created when the State Supreme Court overturned the cigarette tax increase.

Faught also chides the fearmongers who have caused Oklahoma's most vulnerable citizens to worry unnecessarily. This is a classic move by the tax-consuming elements of society: Hold the most vulnerable hostage until the voters agree to a tax increase. They'll always throw senior citizens out on the street or lay off teachers and police officers, rather than cut fruitless tax credits or pointless agencies.

Notice that the conservatives who voted yesterday are proudly explaining and defending their votes. They are not hiding from what was an unpopular decision. They understand the emotional manipulation being used and the game that the lobbyists and their allies are playing. I admire their courage.

THE TRUTH ABOUT THE CURRENT BUDGET CRISIS

There are differing viewpoints on the answer to fixing our state budget woes, but the issue at hand is protecting and funding our core services. While I take my role as State Representative very seriously, I understand that I will never make everybody happy. I tell my constituents what my beliefs and core principles are when I am asking for their vote. Integrity demands that I am true to my word and every decision made as a legislator means that both the benefits and consequences of each measure presented must be weighed before making a decision. Believe me, there are no easy answers!

It is important to note that even if HB1054 had passed with the required 76 votes, the monies generated would not have been appropriated until March 1st, 2018. The immediate crisis facing DHS (specifically the Advantage Waiver program) would not have been averted by passage of this bill. The good news is that in addition to available Rainy Day funds and recent revenue upturns, there is more than enough in numerous state revolving accounts that can be tapped to appropriate the necessary dollars to keep the core services provided to our citizens.

This Special Session should have dealt solely with the current deficit created when the State Supreme Court overturned the Cigarette "fee", ruling it unconstitutional. Digging the financial hole twice as deep and compounding the problem with added spending in a time when sufficient funds are not there and when our state is slowly but surely emerging from a deep national recession is reckless and irresponsible. Raising taxes at this time actually threatens to stall or possibly even reverse the fragile economic recovery we have started to see. In a two-income family, if one wage earner loses their job, the family doesn't decide to buy a new car and go further in debt - state government shouldn't increase spending until we regain a sure financial footing. Recovery is occurring and we are seeing some very encouraging numbers as our revenues are gradually increasing, but unfortunately, it doesn't happen overnight. Raising taxes should always be a last resort.

Oklahomans solidly rejected a tax increase 12 months ago when they voted down the Education Penny Sales Tax at the polls. They had the opportunity, but rejected a one cent permanent increase in sales tax even though it was targeted to Education. This wasn't because they were not in support of our teachers, but because they felt they were taxed enough already. Had HB1054 passed, it would have been the largest tax increase in Oklahoma history.

Over the last few weeks, it has come to light that several state agencies have been lying to legislature and the people of Oklahoma about the monies they have been allocated. Millions of taxpayer dollars which come from hard-working Oklahoma families and small businesses have been squandered and misused. This is totally unacceptable. We should demand audits and oversight on agencies before they misspend another dime of taxpayer money. Continuing to appropriate funds to these agencies without accountability is a dereliction of our duty.

The House already has passed funding to get DHS and the Department of Mental Health and Substance Abuse Services through this current crisis. The Department of Health shortfall will be covered as well. Contrary to what people are hearing from the news, there IS money to address the issue at hand. We can "plug the hole" WITHOUT raising taxes. Agency heads are publicly threatening to make the most dramatic and harmful cuts to create a bigger crisis rather than doing what is necessary to avoid them. Fanning the flames of fear on our most vulnerable citizens in unconscionable and simply "government bullying." An acceptable measure has been passed by the House which fills the budget hole. The Senate and Governor should stop grandstanding and address the issue at hand. Additional spending can be brought up at the appropriate time - during the next regular session.

In order to provide long-awaited pay raises for teachers and state employees, we need to have the funds to sustain those increases year after year. However, missing monies, illegal payments and irregularities in accounting must be addressed before simply passing a higher tax burden on to our citizens. As a side note, these pay raises would not have gone into effect until August of 2018 - another reason to address this issue in the next legislative session.

Oklahoma State Rep. Tom Gann, one of the votes against the proposed tax increase package, analyzes the state budget crisis from his perspective as an auditor.

Oklahoma House of Representatives Communications & Public Affairs Nov. 9, 2017

FOR IMMEDIATE RELEASE:
Contact: State Rep. Tom Gann
Office: (405) 557-7364

Tone at the Top
By Rep. Tom Gann

When referencing fraud prevention, auditors use the catchphrase tone at the top. It refers to an organization's ethical climate, its integrity - set by its leaders.

To set an effective internal control environment, auditors have to assess an organization's tone at the top. Do leaders show a commitment to honesty, integrity and ethical behavior, or do they pursue winning at all costs? Are they transparent, or do they hide what they are doing behind closed doors?

As a former auditor myself, I find myself now in government assessing the tone at the top as I learn more and more each day of the shell game being played with government money.

A perfect example of what I'm talking about is the state Department of Health. A recent news story says that the agency "employed a series of accounting tricks to provide the illusion of a balanced budget," but has in fact spent more than its annual revenues since 2011.

I'm afraid the health department is only the first indicator of a much deeper problem in our state. If this agency could get away with this for six years, how many other agencies are using similar tactics? We won't know until we begin an audit of each recipient of state appropriations.

First, however, we must examine our tone at the top. If the Legislature itself thumbs its nose at the rules it establishes and enacts legislation that is clearly unconstitutional, why would we expect more from our state agencies?

Laws lose effectiveness when people ignore them.

When the Legislature funds pet projects and protects special interests, why would we expect our agencies to perform differently?

On the other hand, if we set a tone of transparency, and we uphold ethical behavior from the top down, then our agencies would be more inclined to do the same. We as legislators need to be above board and set a tone of integrity. We should be able then to expect the same from our agencies.

We must raise the standard for ourselves as lawmakers first. If we're going to point fingers at our agencies, we need to first look at ourselves.

Once we can stop engineering the crisis, we can manage it.

Tom Gann serves Oklahoma House District 8. He can be reached by phone at (405) 557-7364 or by email at tom.gann@okhouse.gov.

In a Facebook post, Sen. Nathan Dahm has explained his reasons for opposing a massive tax increase to meet the current Oklahoma state budget shortfall.

This week I voted no one of the largest tax increases in state history. Why? Because I don't believe the answer to our state's budget woes is raising taxes.

Where are the reforms?

Every program that is currently being used as a bargaining chip with claims that the program will be eliminated could be fully funded WITHOUT raising taxes if reforms were made.

The majority of the legislature seems willing to raise almost half a billion dollars in taxes on nearly every single Oklahoman without passing any reforms.

Why is it that they will raise taxes on the oil & gas industry which creates tens of thousands of jobs in our state while at the same time cutting checks for tens of millions of dollars to subsidize the wind industry (and their dozens of jobs) every year?

Why is it that the entire state is forced to subsidize the Amtrak between OKC & Dallas? Why can't people pay the full price of a ticket? Why do people in Tulsa or the panhandle or Enid have to pay for others to take a joy ride to go shopping and spend their money (sales-tax free on certain items!) in Texas?

Why is it that the taxpayers had to subsidize over $4,000,000 to line the pockets of sleaze-ball Harvey Weinstein with his movie that made Oklahomans look backwards?

Why is it that we have to pay sales tax on groceries and necessities but not to buy a newspaper or magazine to read the fake news?

Why is it that state agencies can use taxpayer funds to foment raising taxes to take even more money from the taxpayers?

The reason is because those select few have extra influence at the Capitol. If you go after the newspaper carve out, they'll smear you for trying to eliminate freedom of the press (and they'll endorse your future opponent). If you go after the wind credits, they'll fund your opponent (tens of millions of dollars goes a long way in campaign contributions). And on and on it goes.

So what's the result? The state budget is balanced on the backs of average Oklahomans. Because the average joe doesn't have a huge force of lobbyists and government affairs directors canvassing the Capitol on their behalf. All they have is two people who are supposed to be fighting for them: their Representative and their Senator.

Our focus should not be on the next election, but on the next generation. Elected officials must remember the purpose for government as outlined in our Declaration of Independence: "that to secure these RIGHTS, governments are instituted among men, deriving their JUST powers from the consent of the governed."

Yesterday, a proposal intended to increase taxes on beer, cigarettes, and gasoline and to increase the gross production tax on the oil industry to fill Oklahoma's budget gap failed to get the three-quarters majority in the State House required to put the taxes into effect without a vote of the people.

State Rep. Kevin Calvey, one of the 29 representatives who voted against the plan, yesterday called on his fellow legislators to plug the current spending gap in the Oklahoma budget with available cash and resist the urge to raise taxes. Adding revenue, he says, allows bad actors in state government to hide corruption and mismanagement, and he offers some specific recommendation. (Emphasis added below.)

Tax Increases Just Cover Up Corruption

Last spring, Dr. Terry Cline, Governor Fallin's then-Secretary of Health, berated me for refusing to vote for tax increases. Last week, Dr. Cline was forced to resign when apparent fraud and/or mismanagement was uncovered at the Department of Health.

The heads of two other agencies which support tax increases are also under investigation.
Makes one wonder: if we had passed all the tax increases last year, would this corruption have remained hidden? I suspect so. The additional money would have filled accounts emptied by mismanagement.

I suspect we've only seen the tip of the iceberg of exposing corruption in state spending, because state agencies have not been independently audited in years!

State government insiders are lying to those who serve vulnerable Oklahomans, telling them that tax increases are necessary to preserve services, when there is enough available cash to plug the current $214 million gap without any tax increase. These lies cause needless anxiety to the vulnerable, causing them to pressure legislators for tax increases.

Perhaps now we are seeing the real reason for the increasingly desperate attempts by government insiders to raise your taxes. The insiders need tax increases to cover up the corruption.

The insiders have raised taxes by $500 million these last two years. Instead of more tax increases, we should audit state agencies to expose corruption and waste. Even before auditing, we can identify more than enough potential savings to fill the current gap, cover next year's expected shortfall, and raise teacher pay. Here's a sampling:

• Roll back Big Wind subsidies. Over a billion of your tax dollars have subsidized corporate welfare for huge wind companies, often foreign-owned, which provide almost no jobs. (By contrast, the oil and gas industry employs over 150,000 and pays 25% of all Oklahoma taxes).
• Trim university administration costs. Oklahoma's universities have administrative costs 70% higher than the national average. Reducing administration to the national average saves $374 million annually.
• Shift more education dollars to teachers. Who got the money from House Bill 1017 and the lottery that "saved" education? Administrators and other non-teacher costs. Rolling back this noninstructional staffing surge saves $373 million annually, to raise teacher pay by $8000.
• Increase low-income scholarships. A recent OCU study shows every $1 spent on the Opportunity Scholarship Tax Credit leverages private donations to save $1.24 for the state budget, and produces $2.58 for education. Increasing the cap on this credit saves taxpayers millions and helps low-income children.
• Reserve TSET funds for Medicaid. The Tobacco Settlement Endowment Trust (TSET) spends money on ads for smoke-free strip clubs and drag shows, among other waste. Reserving TSET for Medicaid saves at least $85 million annually.
• Criminal justice reform. I'm tough on crime- I prosecuted terrorists for the Army in Iraq. Let's be tough on crime in a cost-efficient way. Too many Oklahomans are jailed for what amounts to debt collection, often for minor offenses.

If we raise taxes now, we will never expose the corruption or cure the state's spending addiction.

MORE: State Rep. Tess Teague, another vote against yesterday's tax bill, but who voted for an increase in the gross production tax last week, explained her vote in a press release:

I voted against it because this was not the right way to fix the problem. Because I knocked doors for a year and half and I know that House District 101 does not want more taxation. Because I believe in standing firm in my principles and 65% of this district sent me to the Capitol because they believed I would do just that....

Many people think that this was our last option and that since this failed, several critical services and programs will end. Let me be clear, that is not true. Please do not fall prey to fear-mongering. There are other options and we will get them passed.

​Last week the House passed a series of bills that would use cash on hand to fund DHS, Mental Health and Substance Abuse Services and the Oklahoma Health Care Authority fully until April, giving us more time to work and preventing any cuts. The Senate has refused to hear those bills and instead sent us an unconstitutional, log-rolled bill in the form of a $500 million tax increase package. Does that make sense? Right now we're dealing with state agencies who have committed fraud and mismanagement with tax payer dollars, yet instead of conducting the necessary audits and finding efficiencies in government....we're going to our citizens with our hands out saying "Give us more!!" before addressing those issues. I refuse to punish the citizens of this state by making them pay for a problem they did not create.