Janet Pearson: State tax-cut effort raising more concerns
BY JANET PEARSON Associate Editor
Sunday, March 25, 2012
4/16/12 at 12:38 PM
"That train has left the station," said Rep. Earl Sears, R-Bartlesville, about the likelihood of a tax-cut plan emerging from this legislative session.
From the looks of things, it's a runaway train.
Why, when state services are crippled and concerns about tax cuts are growing, are state lawmakers still hurtling toward that goal?
Senate President Pro Tem Brian Bingman, R-Sapulpa, says it's because "Oklahomans have told us time and again they are hungry for a meaningful tax cut."
Maybe they're clamoring for cuts in Creek County, but that does not appear to be the case in the Ardmore area. "I have yet to have a constituent come up to me and say, 'I'm sure glad you're getting rid of that income tax,'" said Rep. Pat Ownbey, R-Ardmore, at a recent event.
In an effort to satisfy all stakeholders, tax-cut proponents keep saying they'll protect "core services" like education in the process. But the awful, unsaid truth is these core services haven't been protected for years and as a result are decimated by recent cutbacks. Protecting them should mean restoring some funding, but that's not how tax-cutters see things.
Which is why more and more people are speaking out against tax cuts: local school leaders, local city leaders, senior citizens, health-care advocates, college professors, business leaders - the list goes on. Even the state's well-regarded GOP treasurer is urging caution.
The case against
School leaders make one of the most compelling arguments against cutting taxes.
Tulsa Public Schools, for example, is looking at cutting another 150 teaching positions and increasing class sizes - on the heels of cutting 225 teaching positions and 130 administrative and support positions in the last few years.
The new cuts would be due to a federal grant running out and an anticipated drop in student enrollment.
"Our district is facing this severe challenge after three years of cutting expenses, cutting staff, and closing buildings," said Trish Williams, chief financial officer at TPS.
"We are left in a position of this (grant) funding going away and the state making no moves to help fill that funding gap," she added.
Lynn Stockley, president of the Tulsa Classroom Teachers Association, said teachers are under "unbelievable" stress because of cutbacks, and she wondered how legislators could consider tax cuts at such a time.
"We are at pre-2008 funding levels. I don't know anybody who would be comfortable in their household if their income level remained there because the cost of everything has increased. There's no difference with what's happened in education," she said.
Educators have some allies at the Tulsa Metro Chamber and the OneVoice lobbying coalition, which includes 55 stakeholders in northeast Oklahoma. In a position paper listing education as one of its top two priorities, OneVoice said members oppose "further reduction in the income tax rate."
Tax-cut talk has these local leaders also worried about the fate of core state services.
"It's going to be a challenge for us," said new chamber Chairwoman Becky Frank. "It's something of a concern."
Others worried about tax-cut consequences include our own City Council and local developers.
An existing program targeted for elimination provides a transferable tax credit of 20 percent for certain building rehabilitation projects - typically, structures listed on the National Register of Historic Places.
Without this tax credit, many of these historic buildings would not be saved.
"In order to keep these historic buildings, this program is 100 percent critical because it's cheaper to knock it down and go up with new construction," said local developer Mark Larson.
The tax credits not only preserve beloved buildings, they also improve the economy - one reason the City Council adopted a resolution asking the Legislature to retain the program.
The new Courtyard by Marriott hotel, for example, received $2.9 million in state tax credits and already has paid $2.3 million in state taxes in just two years of operation. It also employs 47 full-time employees.
And the Mayo 420 apartments created more than 300 construction jobs and 75 new full-time jobs.
Retirees who fear higher taxes on retirement income also are speaking up. Their objections have gotten the attention of some lawmakers, but still, seniors cannot rest easily, because nobody knows what the final form of any tax-cut plan will be.
Even if they retain their existing retirement exclusions, many senior citizens are concerned about the consequences of significant tax cuts, according to AARP Oklahoma Director Sean Voskuhl.
"AARP Oklahoma is concerned that these proposals may result in a significant revenue shortfall that threatens the state's core services," Voskuhl said.
'Important to us'
Here are more observations and concerns, compiled by the Oklahoma Policy Institute from newspaper articles and other reports:
- Mickey Hepner, dean of the University of Central Oklahoma College of Business: "Perhaps one of the most disingenuous arguments being made in support of reducing and/or eliminating the state's personal income tax is that somehow reducing the state income tax will pay for itself. The evidence, and common sense, tell us otherwise."
- The Oklahoma Academy, a leadership coalition that promotes state goals: "The state income tax should not be eliminated until further independent studies have been conducted on the impact and a budget-neutral strategy has been developed."
- Wes Stucky, CEO of the Ardmore Development Authority: "For 24 years, I've been conducting interviews with executives of companies that we tried to recruit to Ardmore that ended up locating elsewhere. Not once in all those years did a company that rejected Ardmore base its decisions on taxes."
- Don Millican, Tax Reform Task Force Member and chief financial officer at Kaiser-Francis Oil Co.: "Basically, you're taking money from the poor and giving it to the rich. I can't support that."
- Rep. Earl Sears, R-Bartlesville: "If you just go to cut, it affects public education, health care, and services such as public safety. We have to know what the ramifications are when we go making these decisions."
- Republican Rep. Tommy Hardin, R-Madill: "We have roughly 750 highway patrolmen on the highway right now. Of those, 239 are eligible to retire and we've got a 30-man academy this year. These are things that are important to us right now. Why cut the income tax right now?"
- State Treasurer Ken Miller, a Republican: "To responsibly finance tax cuts, policymakers should eliminate one dollar of spending or credits for every dollar cut in taxes."
Original Print Headline: The Tax-Cut Blues
Janet Pearson 918-581-8328
Senate President Pro Tem Brian Bingman speaks during a legislative forum at the State Capitol in Oklahoma City on Feb. 2. MATT BARNARD/Tulsa World