Budget & Tax
Jonathan Small & Larry Parman | January 29, 2018
Building a state
Jonathan Small & Larry Parman
This article was published in OCPA's Perspective magazine View Issue
In 2018 much of the focus in the state Capitol building will be on building a budget. But in this issue of Perspective, we urge policymakers to remember the larger imperative: building a state.
There are two bedrock issues which are absolutes in building a great state: a dynamic economic environment that creates high-paying jobs, and an excellent education system that stresses rigor, prepares our students for international competition, and respects a parent’s right to decide the best education pathway for his or her child. Without these, nothing else matters.
Yet, tax consumers push to grow government and demand an increase in public spending. For years, even decades, government has commanded “just give us more money”—and “okay” was the only acceptable answer. In a strong economic environment, that might work. When revenues are increasing, no one puts a microscope on spending to see if it meets the “spend it wisely” test. Old habits are hard to break. Even during the past few years, with the Oklahoma economy in decline, few leaders paused to ask, “What better outcomes will taxpayers receive in exchange for giving government more money?" No one wanted to tackle the hard work of reform. Instead, in many cases, politicians abandoned their campaign promises and turned to the easy path—tax increases.
It’s difficult to build a great state when the narrative, even from professed conservatives, is that “we have a revenue problem.” These policymakers aim to solve the problem by force: tax increases. This is like a business going to its customers, notifying them of their money-losing operation, and forcing them at gunpoint to pay more or to buy more products.
We’re told “there’s nothing else to cut.” That may be true in some agencies, but our experience, research, and recent revelations in the Oklahoma State Department of Health suggest otherwise. What serious person now believes we have done all we can do to eliminate waste and inefficiency? Cutting spending requires the hard work of executive leadership and legislative oversight. It requires a relentless pursuit of carving out marbled waste within the meat of each agency. In other words, at some point you have to govern. Families do it. Businesses do it. To maintain the trust of taxpayers, government must do it. Continuously.
Both of us having worked in state government, we know full well that there is ample opportunity to find savings. That’s what conservatives are supposed to do. One dollar of waste and inefficiency saved is a dollar of new revenue not required.
Take education, for example. We continue to fund an underperforming, heavily unionized system that employs more non-teachers than teachers. We spend on average $9,781 per student per year—that’s well over $100,000 for a student’s K-12 education—and yet the majority of Oklahoma students lack proficiency in all but one subject area! That is a broken promise to our children and an unacceptable return on taxpayer investment.
Incredibly, some policymakers continue to heed the call of education producers for “more money” without reform. But more money—without reform in exchange—will not markedly improve student performance. It will only create a larger ineffective system. Shameful.
Recent media articles reveal the misguided policies of Illinois, Connecticut, California, New Jersey, and others. Politicians in those states fell for the siren song of “just give us more money” and continued to raise taxes. Now those states face declining economies, loss of their credit rating, population migrating to other states, and pension systems that are broke. By the way, those states have per-pupil common education funding that ranks among the highest in the country, yet student outcomes remain stagnant.
It’s time to build a smarter, more prosperous state served by a lean, efficient government. It’s time to look at modifying our tax structure so we tax work less in exchange for taxing consumption more. It’s time to focus on prioritizing core services. It’s time to eliminate the crony giveaways that siphon revenue from state coffers.
We encourage our political leaders to think beyond balancing a budget and to remember they are building a state.
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.
Jonathan Small is president of the Oklahoma Council of Public Affairs. Larry Parman is chairman of the Oklahoma Council of Public Affairs.