Vision Fund offers a plan worth trying

THE budget challenges of the past several years have highlighted the problems created when state government relies too heavily on a revenue source as volatile as energy taxes. State Question 800 seeks to reduce that volatility.

State Question 800 would amend the state constitution to create an Oklahoma Vision Fund. Under the measure, starting in 2020 the fund would receive 5 percent of collections from the gross production tax on oil and gas. The percentage of the GPT going to the fund would then increase by two-tenths of a percentage point every year. Each year, 4 percent of the average annual principal amount over the preceding five years would then be deposited into the state's general revenue fund to spend however lawmakers wish. Five percent of fund cash could be used to pay for debt obligations of the state or counties. Money from the fund would be invested to increase its holdings over time.

The main appeal of the proposal is that it could reduce some of the up-and-down swings associated with energy taxes and lead to slightly more stable revenue that reduces the boom-and-bust cycle of legislative budgeting. That said, it will take many years before the fund has significant impact.

Some school groups oppose the proposal because education receives a dedicated slice of gross production taxes, and they say their funding will decrease. Yet the money dedicated to schools from gross production tax is left untouched. And even if it wasn't, supporters say the first-year impact represents a tiny sliver of overall education funding that can easily be replaced from other sources. The State Chamber notes that Oklahoma public schools receive about $10 billion in state and federal funding annually. By year eight, it’s estimated the vision fund will produce sufficient revenue to offset any annual “losses” from deposits.

Some are concerned that county governments can tap the fund for unspecified purposes, and that’s a reasonable objection. Prudent oversight will be vital to the fund’s success.

Another reasonable concern is that lawmakers will raid the fund, as they have so many others, making SQ 800 an exercise in futility. Backers of this idea say the language of the proposal should prevent that, but lawmakers have spent much of the past three years concocting loopholes to get around the constitutional prohibitions on tax increases without supermajority support in the Legislature, so there is reason for skepticism on that front.

Even so, the idea behind the fund is valid, and the state clearly cannot continue down the path it has traveled in recent years when it comes to budgets and spending. SQ 800 represents a slight improvement, which is better than none.

Passage of SQ 800 won’t be transformational. The heavy lifting of much-needed reform still awaits. It would be particularly wise to restrict the rate of spending increases during boom years and mandate that far more money be set aside in reserve for down years. Oklahoma politicians and tax consumers balk at this common-sense idea, but it would be far more beneficial to taxpayers and state government stability.

Nonetheless, SQ 800 is an idea worth trying. The Oklahoman endorses a “yes” vote.