Oklahoma struggles after large tax cuts
OKLAHOMA CITY — Four years ago, Oklahoma’s oil patch was booming, unemployment was falling and state lawmakers were debating what to do with $200 million in surplus revenue.
Republicans who control state government successfully pushed to reduce the state’s top income tax rate, slash the oil and gas production tax rate from 7 percent to 2 percent and give more tax incentives to industry.
But the boom ended and the money dried up. Now the once-unwavering confidence in the wisdom of lower taxes has given way to a growing panic over how to pay for basic services such as schools, health care and public safety. Revenue has fallen about 20 percent short of budgeted needs for the third year in a row. The situation has deteriorated to the point where highway patrol troopers have been warned not to fill their fuel tanks, and drunken drivers have been able to keep their licenses because there are not enough administrative workers to revoke their driving privileges. Nearly 100 of the state’s 513 school districts have moved to four-day weeks.
Oklahoma’s woes are intensifying just as President Donald Trump’s administration proposes its own ambitious plan to slash corporate and personal taxes. The White House insists the overhaul will spur economic growth and bring prosperity to the middle class, but the idea alarms lawmakers worried about the risk of ballooning federal deficits.
Legislators have tried cutting the budget. Overall, last year’s inflation-adjusted budget of $6.9 billion was 11 percent less than 2009, according to a recent analysis. But the spending cuts have not been enough to close a projected $900 million gap. Lawmakers are weighing drastic steps such as reducing Medicaid payments, which officials say could cause hundreds of nursing homes to close.
“We’re not running the state based on a plan and a strategy. We’re trying to operate it on a philosophy,” said State Auditor and Inspector Gary Jones, a former Oklahoma Republican Party chairman who’s among a growing number of Republicans and Democrats calling for an about-face. “It seems like we’re afraid to admit we’ve made mistakes and correct them.”
It’s not clear that some in Oklahoma’s GOP are ready to see taxes as a twoway street. The party holds more than three quarters of the Legislature’s seats. “I think we need to … make sure we’ve squeezed every nickel, dime and penny out of every corner that we can before we just start raising taxes,” said Republican Mike Schulz, the Senate leader.