...But It's For The Children!

Have you checked out the latest unfunded mandate that will appear on the Oklahoma ballot in November?  It is State Question 744.

According to Hope4OurKids.org, Oklahoma's per-pupil spending on education is the lowest in the region.  Is that a problem?  Yes, considering all the wasteful spending that goes on in the education system.  SQ744 would require Oklahoma to raise per-pupil spending by $1627 to get on par with the regional average, but it doesn't specify a source of funding.  This is where we run into problems.

According to the FAQ on their website:

"HOPE does not call for a tax increase. Revenue growth in the state budget has increased an average of 5.2% a year over the past 25 years. Those revenue growth increases will generate more than $1.5 billion by the time HOPE is fully implemented by the Oklahoma legislature. This means that more than $600 million will be available to provide additional funding for other state agencies." 

Hmm... I think if you've paid attention to the Oklahoma state government's current financial issues, you would be privy to the fact that you cannot rely on past averages to fund things in the future.  For example, a large portion of Oklahoma tax revenues is from the oil and gas industries.  However, after increasing spending when oil was around $140 a barrel and natural gas around $13 per mmbtu, Oklahoma started experiencing huge shortfalls when drilling slowed and nearly halted due to oil dropping to around $40 a barrel and natural gas around $4 per mmbtu.  

To make SQ744 even worse, Oklahoma is (rightfully) a balanced budget state, meaning that it is actually illegal for the state (or any state entity, including public schools) to operate in the red.  So what are we supposed to do about this unfunded mandate when we have another down year, or possible a series of down years?  You guessed it... raise taxes by about 35%!  And if they don't raise taxes from the get-go, then not only will they have to raise them by a (likely) higher amount, but they will be having to raise taxes when Oklahomans are already having to tighten their belts just to stay afloat.

So... if they have to raise taxes... where will they raise them?  Income taxes?  Oklahoma's current income tax rate is 5.5%.  In order to raise the claimed $850 million (if you do the math, it's really just over $1 billion, but we'll use their fuzzy math to keep them happy) that rate would increase to 7.35%.  Oklahoma would then have the highest income tax rate in the region, and 15th highest in the country.  Sales taxes are currently 4.5% and would have to be raised to 6.175% - just below the 6.25% in Texas (and you'd have to kiss the possibility of taxless groceries goodbye).

So how is it determined how much is spent and how?  Simple.  The legislation uses a formula based off of other states' spending figures in the region to determine how much should be spent per pupil.  That means the spending of nearly half of your tax dollars will be dictated not by Oklahoma, but by surrounding states.  There is nothing to mandate how the funds are spent, just that they have to be spent.  This means the school board can spend it wherever they want.  There is even a clause that mandates that the funding can NEVER go down, even if the regional average or tax receipts drastically drop.

State Question 744 is bad news for Oklahoma.