Study: TABOR would have squeezed 1992-02 revenue growth
Marie Price, The Journal Record
February 21, 2006
OKLAHOMA CITY – A Taxpayer Bill of Rights would have put the brakes on state revenue growth from 1992-2002, according to a new study.
Research by economist Mickey Hepner, director of the University of Central Oklahoma Policy Institute, determined that during that decade, Oklahoma’s ratio of state tax growth to personal income growth ranked 19th among the states.
If Oklahoma had a TABOR law in those years, Hepner found, the state would have ranked 49th, above only Alaska.
Hepner said that state tax revenues increased by 60.75 percent over the 10 years, slightly less than growth in personal income. Had a TABOR been in place, he said, growth would have been limited to 35.24 percent.
A TABOR ballot proposal is awaiting a probable legal challenge later this week before the Oklahoma Supreme Court.
A TABOR limits growth in government spending to the combined growth rates of inflation and population, and returns part of the savings to taxpayers in rebates.
"The purpose of TABOR is to dramatically reduce the growth of government," Hepner said.
Hepner said he applied the TABOR formula to the revenue side of the state ledger because what is collected is generally spent or allocated in some fashion.
He pointed out that the Oklahoma TABOR proposal would affect only state funds, not local or federal dollars, or user fees.
Hepner said his paper deliberately takes no stance as to whether reining in government by a TABOR law is a good or bad idea. He said Monday that is a question for policy-makers to resolve.
However, activists on opposite sides of the issue have very definite opinions.
David Blatt, public policy director for the Community Action Project of Tulsa, expressed no surprise at Hepner’s conclusion about the shrinking effect a TABOR law would have on state government.
"The numbers confirm what we’ve been saying," Blatt said. "If you put a TABOR in effect, you will ensure government services will not be able to grow at an adequate rate to meet the needs of Oklahoma’s population."
Without a TABOR, Blatt said, revenues grew slightly less than overall economic growth during the period Hepner studied.
"As long as state tax revenues are not growing substantially faster or slower, then you’re about on course," he said. "Had you had TABOR, there would be a large gap between the rates of economic growth and funds available for government services," he said.
Blatt said the 1992-02 decade was sandwiched between two periods of economic downturn.
"You’re talking about a period where growth was fairly strong," he said.
During that time period, Blatt said, Oklahoma was able to make substantial investments in key government needs.
He said a TABOR would have endangered those investments.
"I don’t think we want to be 49th," Blatt said. "If your goal is to be 49th and disinvest from areas where Oklahoma has pressing needs, then TABOR would be the way to go."
Not surprisingly, state Sen. Randy Brogdon, R-Owasso, a key legislative proponent of TABOR, disagrees.
Brogdon said that ranking 49th would not necessarily be a bad thing.
"I think it would be a great thing, as long as we’re still able to pay for the things government should be paying for," Brogdon said. "We’re continuing to grow government spending at an unsustainable rate."
Returning revenues to taxpayers would help the economy as recipients spend or invest their rebates, he added.
Brogdon said Oklahoma tends to rank at or near the bottom in several economic indicators, but has a high top-income tax rate, currently 6.25 percent.
He said he would like to see some of those figures, such as personal income, improve.
Brogdon said that lawmakers will have close to $1 billion in additional revenue to allocate this session.
"Excess money means over-taxation," he said. "We’re going to spend every bit of it."
He likened a TABOR to putting the state on a budget, like many Oklahomans must follow.
"Government will still grow," Brogdon said. "There’s nothing to whine about."
Only one state actually has a TABOR law, Colorado. Last November, voters there suspended their spending-limitation law for five years.
