Revenue upturn an opportunity to save

GROWTH in Oklahoma government’s gross tax receipt collections shows how quickly events can shift political narratives. A few months ago, state leaders proclaimed financial crisis. Today, government is awash in cash.

Politicians may be tempted to heave a sigh of relief and go on with business as usual. Instead they should take advantage of this moment so we don’t repeat this year’s chaos and dysfunction.

Treasurer Ken Miller reports state gross receipts reached a record high for May collections, and total gross receipts during the past 12 months are within a whisker of an all-time high. Expansion has been ongoing for 14 months.

Contrast that to the start of the year when politicians warned of a budget shortfall and associated spending cuts unless taxes were increased. Lawmakers then raised income, fuel, tobacco and energy taxes by nearly $600 million combined. Yet at the end of the session, The Oklahoman’s Dale Denwalt reported state appropriations totaled “nearly a billion dollars more than the state spent in fiscal years 2017 and 2018.”

The amount exceeding the funds generated by tax hikes, Denwalt reported, was “attributed to growth in Oklahoma’s economy.”

So lawmakers ultimately had hundreds of millions in growth funding available even without tax increases. Tax collections have surged so briskly it’s now expected the state could end the budget year with a surplus of more than $300 million.

Virtually all the new money comes from economic growth. The treasurer’s office reported just 2.7 percent of gross collections since August 2017 were due to tax increases approved that year (and 2018’s tax hikes have yet to take effect).

The revenue boom is an opportunity to enact reforms that put Oklahoma on a sustainable path. First and foremost, lawmakers must understand they don’t have to spend every tax dollar just because it’s there.

By instead increasing state savings, officials can prepare government for future downturns without poorly implemented budget cuts or economically damaging tax increases.

Furthermore, it's in good economic times that organizations have the greatest ability to identify and implement cost savings and efficiencies in an effective manner. Delaying such decisions until another downturn only ensures cuts will be made without requisite planning and consideration.

Senate leaders have talked of the need to “modernize” Oklahoma’s tax code to reflect the service-based economy, a reference to expanding the sales tax to services. If they pursue such tax increases, the effort should simultaneously repeal other, economically detrimental taxes.

Some will object that only by increasing spending as much as possible, as fast as possible, can Oklahoma improve its national standing on a host of measures. Yet past application of that theory contributed much to the state’s financial instability.

Rather than ramp up spending at unsustainable rates while putting little aside for inevitable downturns, officials must devote more money to long-term budget stabilization and increase spending only at carefully planned, reasonable and sustainable rates. And they must constantly re-evaluate spending practices.

Otherwise, as this year’s session proved, a failure to plan is only a plan to fail.