Sales tax increase not a good solution

NOW in his final term at the Legislature, Senate President Pro Tem Mike Schulz, R-Altus, has shown a willingness to throw revenue-raising bills against the wall to see what sticks. Nothing has yet, but Schulz is still firing away.

In amendments to a House bill, Schulz called Tuesday for increasing the state sales tax to 5.5 percent, from its current 4.5 percent, and raising the initial gross production tax on all new oil and gas wells to 4 percent (from 2 percent) for the first three years, then 7 percent thereafter.

The plan is a reaction to the Oklahoma Education Association’s call for about $800 million in new spending for fiscal 2019, to cover pay raises for teachers and support staff. The OEA also is demanding raises for state workers and additional funding for public schools and health care, and is threatening an April 2 walkout.

Estimates are that the amendments could raise $500 million to $600 million. We support teacher raises and have said Oklahoma needs new revenue to help stabilize its budget, but these proposals aren’t the way to do it.

The Step Up Oklahoma plan, voted down in the House last month, sought, among other things, to increase the GPT to 4 percent, the cigarette tax by $1.50 per pack and the fuel tax by 6 cents per gallon. The Step Up package, which we endorsed, also included several reforms intended to streamline and improve government. The Schulz plan is strictly about revenue.

House Democrats rejected Step Up, saying it took too high a toll on low-income Oklahomans, and were cool to Schulz’s tax-raising ideas Tuesday. Although intrigued by a separate Senate amendment to eliminate the grocery tax, the caucus leader said Democrats want a minimum GPT of 5 percent, and noted that voters have rejected an effort to increase the state sales tax rate to 5.5 percent.

That was in November 2016, when a state question to increase public school teacher pay and generate new money for higher education, CareerTech and early childhood education was rejected 59-41 percent. Voters understood that approval would have given Oklahoma one of the highest state-local sales tax rates in the country, and hurt cities. In Oklahoma City, for example, approval would likely have ended the prospects for future MAPS-style initiatives. The same holds true today.

And, public support for a sales tax increase hasn’t increased. A December poll commissioned by the OEA asked Oklahomans if they thought raising a particular tax to fund teacher pay raises was a “good idea,” “acceptable if necessary,” or a “bad idea.” Just 17 percent labeled the sales tax increase a “good idea.”

Last fall, Schulz joined the governor and House speaker in backing a bill to raise taxes to pay for teacher raises and fill a hole in the budget. All three said it was the best option. Immediately after it was rejected, Schulz offered another bill that included a doubling of the GPT. No lawmaker runs on a promise to raise taxes, Schulz said later, but “we’re here and we understand the problem in recurring revenue and we’re here to solve the problem.”

His latest plan, however well-intended, carries a considerable downside particularly for Oklahoma municipalities and should be dismissed.