Jonathan Small | April 26, 2022
Statesmen show up at Capitol
They say a statesman thinks of the next generation, not the next election. Oklahoma citizens owe a debt of gratitude to those statesmen who still serve in the Legislature and just gutted a self-dealing bill that would have enriched politicians while saddling Oklahoma taxpayers with greater debt.
In March the Oklahoma House of Representatives passed House Bill 2486, which would have eliminated a nationally recognized and successful state defined-contribution retirement plan, similar to a 401(k) plan in the private sector, and instead forced most state employees into the old defined-benefit plan that has a history of failure and politician enrichment.
Current law mandates any legislator assuming office after Nov. 1, 2015, “shall become a participant” in the 401(k)-style plan rather than the old defined-benefit plan. But page 37 of House Bill 2486, as passed by the House, repealed that language.
That meant many lawmakers, who can serve no more than 12 years in the Legislature, would have received potentially significant increases in their overall retirement-benefit package. And those benefits proportionally would have exceeded what many private-sector workers enjoy.
While the sight of politicians lining their own pockets was sickening, the damage created by the bill was even worse. For years, Oklahoma had some of the worst-funded state pension systems in the nation with billions of dollars in unfunded liability. That occurred because with the defined-benefit plan politicians routinely voted to increase benefits without funding, and usually did so in election years. That created ever-larger financial obligations for Oklahoma’s private-sector working families.
In contrast, the 401(k)-style plan provided long-term financial stability and was projected to save taxpayers $3.8 billion over 30 years at the time of its 2014 enactment.
So House lawmakers not only voted to boost their own benefits, but also voted to eliminate billions in savings and set the state back on a financially precarious path.
Fortunately, members of the Senate Retirement and Insurance Committee put a stop to that. They amended the bill and left the 401(k) plan intact. Instead, they voted to increase the state employer match for the system. That preserves financial stability and protects taxpayers.
State Sen. Dewayne Pemberton authored the rewrite. Sens. Marty Quinn, Zack Taylor, and Shane Jett publicly highlighted problems with the House version of the legislation. And 23 House members opposed the original version of HB 2486. All deserve taxpayers’ thanks.
Sadly, too many House members tried to deny reality when the bill’s contents were made public. State Rep. Josh West voted against HB 2486 but nonetheless claimed the Legislature “was not included in this bill” and any reports to the contrary were “misleading,” “false,” and “BS.” (In a separate public outburst, West recently declared he wanted to “burn this sucker down.”)
The plain language of the bill proved West wrong.
This was a test of true leadership. Many lawmakers failed. But those who passed should be celebrated.
Jonathan Small, C.P.A., serves as President and joined the staff in December of 2010. Previously, Jonathan served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. Small’s work includes co-authoring “Economics 101” with Dr. Arthur Laffer and Dr. Wayne Winegarden, and his policy expertise has been referenced by The Oklahoman, the Tulsa World, National Review, the L.A. Times, The Hill, the Wall Street Journal and the Huffington Post. His weekly column “Free Market Friday” is published by the Journal Record and syndicated in 27 markets. A recipient of the American Legislative Exchange Council’s prestigious Private Sector Member of the Year award, Small is nationally recognized for his work to promote free markets, limited government and innovative public policy reforms. Jonathan holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.