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Fallin Underscores Urgency To Deal With Budget Crisis In Her Final State Of The State Address

Feb 5, 2018

Oklahoma Gov. Mary Fallin used her final state of the state address to tell lawmakers to act immediately to shore up the state’s finances.

The state faces an estimated $425 million budget shortfall for the upcoming fiscal year, while the government still does not have enough money to fund services for the current year.

“No more delaying. No more putting things off. No more kicking cans down the road. No more addressing long-term budget problems with short-term fixes,” Fallin said.

The Oklahoma governor embraced a plan by Step Up Oklahoma to increase revenue, which she outlined in her budget. The plan would increase the cigarette tax by $1.50 per pack, raise the gasoline tax by $0.06 per gallon, hike the gross production tax on oil and gas extraction, and implement a gross production tax on wind energy, among other items. The governor’s office estimates the plan would balance an approximately $7.28 billion budget and provide a $5,000 pay raise for the state’s teachers.

“This is a defining moments for our state. We have two clear choices. We can continue down the road on the path of sliding backwards. Or we can choose a second path which is to say, ‘Enough is enough. We can do better. We deserve better. Our children deserve better, too’,” Fallin said.

Step Up Oklahoma is a group of business and community leaders in Oklahoma who proposed the strategy to end the state’s budget crisis. The plan has been endorsed by the state’s five living former governors.

The governor says her plan would also increase government accountability.

Fallin also addressed continuing efforts to change the state’s criminal justice laws. In 2016, voters approved a pair of measures that would reclassify certain drug offenses in an attempt to keep nonviolent offenders out of the state’s overcrowded prison system.

“Too few Oklahomans are getting the treatment they need for substance abuse and mental health issues, and are instead winding up in our criminal justice system,” Fallin said. “We need to stop warehousing moms and dads, sons and daughters, in prison when many just need substance abuse treatment.”

A protester unfurls a banner following Gov. Mary Fallin's state of the state address on February 5, 2018.
Credit Emily Wendler / StateImpact Oklahoma

In a statement, Speaker of the House Charles McCall, R-Atoka, said many GOP members of the House can agree with Fallin’s ideas.

“I share the governor’s belief that Oklahoma citizens want a solution to our budget issues and expect stability in our core government services. A much-needed teacher pay raise is still the top priority for House Republicans, but we need to identify a revenue stream to fund that commitment. The compromise revenue package crafted by the Step Up Coalition is a solution. The plan will get a hearing in the House of Representatives, and lawmakers will have an opportunity early in the legislative session to deliver for our citizens,” McCall wrote.

He added he is optimistic that both Republicans and Democrats in the House could accept the plan.

Senate president pro tem Mike Schulz, R-Altus, released a statement saying he appreciates the governor’s focus on solving the budget issue.

“The Senate has repeatedly passed responsible revenue measures that would help fix the structural problems in our state budget and pay for important things like a teacher pay raise. But we can’t only focus on revenue. We need to implement budgetary reforms and prioritize our spending to ensure the most efficient use and best return on each tax dollar collected. We look forward to working with the governor and our colleagues in the House on solutions to our budget problems so that we can move Oklahoma in the right direction,” Schulz wrote.

Rep. Steve Kouplan, D-Beggs, said he agrees with some of the governor’s statements.

“There are a lot of things different from this speech that the government gave today than the previous seven speeches she gave, and I’ve been in the chamber for all of those,” Kouplan said.

But Democrats are not ready to offer their full support behind the deal.  Rep. Emily Virgin, D-Norman, says Democrats have requested Step Up Oklahoma to include restoration of the earned income tax credit and the standard deduction to its plan, as well as reversing the income tax cut that she says disproportionately benefits wealthy Oklahomans.

“The Step Up coalition wants Oklahomans to pay more at the pump for gasoline, and the House Democrats are willing to do that if the income tax portion of the proposal is truly fair and doesn’t ask even more from those living paycheck to paycheck,” Virgin said.

Virgin pointed to a study that indicates that Republican revenue estimates from the income tax portion of the plan are too high, and that Democrats were concerned about passing a bill with what she referred to as an “inflated projection” that would be attached to recurring expenditures, like a teacher pay raise. According to Virgin, low income earners would pay more in taxes through the Step Up plan.

No state agencies are cut under Fallin’s budget plan, though most are left with flat funding. Some would receive a funding increase, including the departments of Commerce, Education, Management and Enterprise Services, Human Services, Mental Health and Substance Abuse Services, Corrections, Emergency Management, and Transportation, as well as the Pardon and Parole Board, the Court of Criminal Appeals and the Legislative Services Bureau.

Following Fallin’s remarks, protesters unfurled a banner with a cartoon image of the governor’s face that with red lettering that said “Oklahoma: State of Despair.” A protester, yelling at Fallin, was removed from the House chamber.

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