To Comfort The Afflicted
And Afflict The Comfortable

To Comfort The Afflicted And Afflict The Comfortable

Thursday, October 29, 2020

New Observercast

SQ 744 Is Good Business

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BY JIM WILSON

It’s always interesting to speculate why some political or issue advertisements are flagrantly incorrect or misleading. It may be an effort to manipulate voters because the facts aren’t convincing.

The opponents [of SQ 744] in their TV commercial suggest a $1.7 billion annual cost and no accountability. Both are incorrect. The funding is to be phased in over three years with a total three-year cost of $1.7 billion. The annual cost is closer to $900 million. The measure also requires accountability in paragraph H which can be read in the full measure on the Secretary of State’s website www.sos.ok.gov/gov/proposed_questions/aspx.

Higher education suggests tuition will increase 15% to 20% per year for three years if SQ 744 passes. The Legislature has increased the appropriation to higher education by 30% over the last eight years while increasing our appropriation to common education by 26%. If we add the tuition and fee increases over the past eight years it inflates the higher education budget to a 56% increase. This year with a tuition increase of 5% plus fee increases higher education generated $85 million in new money or 4.7% of their total budget. A 15% conjecture cannot be taken seriously.

If we accept the idea that public investment in infrastructure and education leads to prosperity – and there is a body of research that suggests that – then we have to adopt a measured approach to tax cuts and credits. Data recently detailed by Thompson and Garrett-Peltier of the University of Massachusetts suggests progressive taxes used to pay for infrastructure and education funding have a return of about 5-1 in job creation over tax cuts and credits. On the other hand if we accept the idea that tax cuts lead to prosperity and we’re wrong we will be past the point of no return because SQ 640 passed in 1992 makes repeal of a tax cut virtually impossible.

We are constantly assaulted by those who mischaracterize common education as poorly structured, poorly delivered and staffed by incompetent teachers. The truth is we can significantly improve outcomes by removing the maladies of poverty from our student population. Simply put that means in the absence of poverty our kids can compete with anyone in the world. So let’s look at a couple of programs where SQ 744 can help.

The STAR elementary school class-size experiment demonstrates that reducing class size to 15 from 25 returns $66,000 above the cost of the program in social benefits for each child over a period of 20 years. That alone will give us an annual return on investment for SQ 744 of 100%. The First-Things-First high school reform initiative generated social benefits of $150,000 greater than the cost per student over 20 years. The American Association of State Colleges and Universities suggests the average of $108,264 invested to educate a child from Kindergarten through the 12th grade shrinks to $20,376 for those earning a college degree because of the contribution to society.

Here’s how we pay for it. We defer $120 million tax cut until revenues exceed 2008 levels. The OSU econometric model used by the Office of State Finance shows projected revenue increases of 7.3% in 2012, 6.0% in 2013 and 5.3% in 2014 giving us about $1.1 billion in additional revenue by 2014. If we use half, or $550 million to satisfy SQ 744, we will have a total of $670 million. Oklahoma allows $5.6 billion in tax credits annually. Most of it comes from sales tax exemptions for manufacturing components and sales for resale which shouldn’t be repealed. Realistically we could expect to repeal $200 million in tax credits. And if revenues don’t meet projections we can repeal another $350 million in tax giveaways to special interests. Health care reform should save the state 20% in employee premiums or $100 million. It will do this by reducing the uninsured by half by 2014 that will cut by half the justification for providers to charge as much as a 43% premium to the insured. We could save $100 million by adopting some of Minnesota’s progressive corrections program. We always talk about running government like a business. Let’s capitalize common education. It’s good business.

The author, a Tahlequah Democrat, represents District 3 in the Oklahoma State Senate

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Arnold Hamilton
Arnold Hamilton
Arnold Hamilton became editor of The Observer in September 2006. Previously, he served nearly two decades as the Dallas Morning News’ Oklahoma Bureau chief. He also covered government and politics for the San Jose Mercury News, the Dallas Times Herald, the Tulsa Tribune and the Oklahoma Journal.