State Question 800 – Is it a Vision or a Mirage - October 7, 2018
State Representative David Perryman
State Question 800 is one of those ballot measures that at first glance appears to be a wise and frugal approach to the state’s budget problems. Conventional logic is that sooner or later oil and gas prices are going to crater, thus proponents of this “new” concept seek to stabilize Oklahoma’s budget by segregating revenue while oil prices are high for use when they are low.
If this idea of saving money for a “Rainy Day” or for “Revenue Stabilization” sounds familiar, look no further than in our own current law. Remember, the current budget crisis is not Oklahoma’s first trip around the block.
In 1985, following that decade’s oil bust and dramatic drop in state revenue, the Oklahoma Constitution was amended to create a Constitutional Reserve Fund. Commonly called the “Rainy Day Fund” to hold excess revenues so that when the ever-cyclical oil bust comes around, money will be available to meet critical needs.
Unfortunately, the Rainy Day Fund only receives money when revenues exceed predictions and even then only an amount equal to 15% of the anticipated revenue may be deposited each year. Troubling also is the manner in which Governor Fallin and her staff “borrowed” from the fund despite the Constitution’s clear language limiting the purpose and restricting the manner in which this “locked box” fund is to be accessed.
Then, in 2016, the state legislature created a fund named the Revenue Stabilization Fund curiously (and confusingly) based on 7% Gross Production Taxes, Corporate Income Taxes and a Five Year Rolling Average that does not appear structurally able to net even one penny of revenue to stabilize anything.
So fast forward to 2018, State Question 800 is a legislatively proposed Constitutional amendment creating a “Vision Fund” to serve basically the same purpose as the existing Rainy Day and the Revenue Stabilization funds were designed to do.
The “Vision Fund” if adopted will purportedly hold a portion of the GPT and other “excess revenues” to meet critical needs when the ever cyclical oil bust comes around. Some believe that “third time’s the charm” but a more reliable maxim is, “Insanity is doing the same thing over and over and each time expecting a different result.”
This attempt to figuratively sew a third pocket on Oklahoma’s tattered coat does little to fill that pocket with reliable, available revenue. During this era when cuts to education and health care and infrastructure has nullified Oklahoma’s ability to provide services to its citizens and when hundreds of millions of dollars are needed for things like incarceration costs and mental health care, available funds should be used to make programs viable now so that citizens needs may be met.
The diversion of 5% of the oil and gas gross production taxes (plus automatic increases in future years) from the general revenue fund into the Vision Fund whose investments will be as volatile as the stock market seems out of step with Oklahoma’s reality.
Perhaps a better plan would be to increase the GPT to at least the regional average, using it to properly fund our current needs and tweaking what we already have by removing the deposit limitation on the Rainy Day fund.
Questions or comments, call or write at David.Perryman@okhouse.gov or 405-557-7401.