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Oklahoma's State Question 800 polarizes supporters, detractors

The State Chamber is for it.

The Oklahoma State School Boards Association is against it.

Oklahomans will decide the issue Nov. 6 when they vote on State Question 800 — a controversial ballot measure that calls for creation of yet another fund aimed at reducing state budget volatility.

Lawmakers have for years complained about the huge boom and bust cycles that the state budget experiences because of its dependence on oil and natural gas tax revenues that fluctuate wildly based on volatile energy prices.

SQ 800 seeks to smooth those boom and bust cycles out over time through the establishment of a new state budget reserve fund that would be called the Oklahoma Vision Fund.

If the state question passes, 5 percent of gross production tax collections would be diverted to the fund beginning July 1, 2020, with that percentage set to increase by .2 percent a year with no cap on the ultimate percentage to be transferred.

About $20 million to $35 million a year would be expected to be transferred into the fund, depending on oil prices, said Mike Jackson, executive vice president of government and political affairs for the State Chamber.

That money would create an endowment-type fund that would be expected to grow over the years as the state treasurer would invest the proceeds in stocks and other investments. The fund would be expected to contain hundreds of millions of dollars within just a few years.

Each year, 4 percent of the average amount of money in the Oklahoma Vision Fund over the previous five years would be transferred into the state's general revenue fund where it could be appropriated to state agencies.

Jackson said school districts and state agencies could expect to receive a little less than they would under the existing system for the first 8 years, but after that they could expect net funding increases.

"We believe that long term solutions to budgetary problems help everybody in the long term," Jackson said. "This fund is set up to help smooth the ups and downs."

Jackson said a similar stabilization fund is utilized by virtually every other major oil and gas producing state.

"At the same time we were cutting education, having core services cut, those other states — and I'll just point to Wyoming and North Dakota — those states were making significant improvements in their budgetary efforts toward priorities like infrastructure and education ... That's one of the reasons why we think this solution is important for Oklahoma moving forward."

The Oklahoma State School Boards Association doesn't agree.

"Simply put, this state question is vague, filled with unknowns and could erode millions of dollars in dedicated funding for public schools," said OSSBA Executive Director Shawn Hime.

Schools currently receive about 10 percent of gross production tax collections as dedicated revenue, and approval of the state question would result in at least an initial reduction in funding for schools without a guarantee that the lost revenue would be offset, he said.

"There's nothing visionary about the planned erosion of dedicated funding for public education," Hime said. "It's bad policy, and a step backward. The state's largest ever teacher pay raise that passed last session was a great first step, but the work of properly investing in public education isn't finished. Our per-student investment in education is still last in our region. Our students deserve better."

Hime noted that only a small percentage of the fund's balance would be available for appropriations and that some of the money could even be diverted to fund obligations of cities and counties.

Oklahoma has at least two other funds that are designed to provide the state budget with some stability.

The Rainy Day Fund, formally known as the Constitutional Reserve Fund, was created in 1985 to protect the state against economic downturns. It is set up to take in money when revenue exceeds official projections. The fund can then be tapped during times of shortfalls or emergencies in accordance with specific formulas.

Another fund, the Revenue Stabilization Fund, was set up in 2016 and is designed to grow in years when collections from the gross production tax on oil and gas and the corporate income tax come in above recent averages. Jackson said that fund has never received any money.

Jackson said the Rainy Day Fund and the proposed Oklahoma Vision Fund have some key differences.

"I would view the Rainy Day Fund more as a piggy bank with a cap," he said. "This is more of a long term 401(k), IRA.

Jackson said if the Oklahoma Vision Fund had been put in place in 1990, research shows the Legislature would have been able to give teachers each a $2,500 pay raise this past year and eliminate the budgetary deficit in 2018 without raising any taxes.

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<p>Shawn Hime</p>

Shawn Hime

<figure><img src="//cdn2.newsok.biz/cache/r960-88172984144ec7a82546a8b0f255f383.jpg" alt="Photo - Shawn Hime " title=" Shawn Hime "><figcaption> Shawn Hime </figcaption></figure><figure><img src="//cdn2.newsok.biz/cache/r960-6f2261345a1752ec7d365827887e453e.jpg" alt="Photo - Mike Jackson " title=" Mike Jackson "><figcaption> Mike Jackson </figcaption></figure>
Randy Ellis

For the past 30 years, staff writer Randy Ellis has exposed public corruption and government mismanagement in news articles. Ellis has investigated problems in Oklahoma's higher education institutions and wrote stories that ultimately led to two... Read more ›

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