Oil tax cuts to blame for lack of school funding
Amidst ever-dwindling school funding, a new budget concern has appeared. In addition to the 60 million dollar reduction in appropriated funds for common education from the 2016 to 2017 fiscal years, the 1017 Fund, also known as the Education Reform Revolving Fund, has dried up.
The 1017 Fund generated money from taxes that were used directly for education without having to be funneled through the often politically charged appropriations process. In the last few years, Oklahoma’s education system has been dependent on cash reserves created by that fund in order to sustain themselves while the state’s economy flounders.
However, those cash reserves are gone, and even if the economy were to magically improve, schools would not be able to collect any of the money they would have received from the fund. I feel like I’m stuck in a situation where all of the news articles and editorials I’ve ever written about education are now a glowing neon sign that reads, “I told you so,” and I find no self-righteous joy in saying that.
Oklahoma is so broke that any sort of reappropriation of state funds would do more harm than good. The top ten receivers of state funds in order are: common education ($2.46 billion), health care ($991 million), higher education ($810 million), human services ($651 million), corrections ($484.9 million), mental health ($324.8 million), transportation ($154.9 million), career tech ($118.3 million), juvenile affairs ($92 million), public safety ($89 million), and all the other government agencies combined (nearly 200) only receive $634.9 million.
While those numbers seem large, a glance at the commentary section on any given week will tell you just how much Oklahomans with mental health issues suffer, how overcrowding affects Oklahoma jails, or how awful road conditions are. The problem in our state isn’t that there are some public sectors taking the available money from everyone else, rather that there is simply not enough money to go around.
Cutting funding to other agencies would also contribute to a self-defeating cycle. Much of those funds go into the pockets of government workers in those agencies. If you cut their pay, or their jobs entirely, you make it harder on them to be consumers in the marketplace and generate revenue for the state.
Any Republican pundit will tell you that what this state needs is to get the economy going again, and they’re right. The state generates revenue from taxes, and you can’t get taxes without a healthy economy. However, the solution the Republican party has been putting forward for years now is to cut taxes on business, especially big business like oil and natural gas, and that solution has almost singlehandedly led to the problems we have today.
In 2014 the oil and natural gas industry was looking great, like the world’s purest batch of heroin. So what did Oklahoma do? We cut taxes on the oil and natural gas industry all the way down to just one percent on production for horizontally drilled wells and provided various other exemptions and incentives to get companies to choose Oklahoma over other states. And can you guess what happened next? Every major oil company in the US came to Oklahoma, just like Republicans hoped. However, taxes were so low that the state actually made $282 million less than it could have had they not changed the tax structure in 2014, and in 2015 the state lost $379 million, according to OK Policy.
Right now, however, Oklahoma is too addicted to care. We know the right solution. We can’t cut any more taxes because there are no more taxes to cut. We can’t increase sales taxes anymore without suffocating consumers. We know we need rehab, but like Amy Winehouse we say, no, no, no.
Republican pundits cling on to the idea that if we raise taxes on the oil industry they will leave, and the Oklahoma economy will be worse off than it is now. Once again, they are right. However, just like a heroin addiction, the only way the state is going to be able to stop our self-defeating dependence on oil is to quit it cold turkey. We cannot heal our economy by continuing to give tax breaks to companies that will exploit our generosity and give us nothing in return.
Oklahoma needs progressive taxation on business, and incentives for entrepreneurship and small business growth, but we can’t even begin to pursue those kinds of policies until we can get the oil industry to stop leeching our natural resources without paying for them. We cannot fix our roads, provide for our families, treat our mentally ill or fund our public schools until we come to terms with and bring an end to our harmful addiction to oil.