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Fees Attacked By Legislature, But Is It Smart To Cut Off Another Revenue Source?

Filed by KOSU News in State Impact.
April 24, 2013

SalFalko / Flickr

It’s already nearly impossible to raise taxes in Oklahoma. Now, the legislature is poised to ban raising fees for drivers’ licenses, state parks and other state services, too.

A bill placing a moratorium on fee increases through 2016 has passed both houses of the state legislature. If it becomes law, Oklahoma’s options for raising new revenues to pay for government services will be severely diminished.

House Speaker T.W. Shannon, R-Lawton, says the moratorium is necessary because Oklahoma has raised fees by more than $100 million since 2007. During the recession, it was the easiest way Oklahoma had to raise revenues to fill budget gaps. Increasing taxes in Oklahoma requires a three-fourths supermajority in both houses of the legislature, or a vote of the people.

Shannon says clamping down on fees will force Oklahoma government to live within its means.

“This measure forces our state agencies to be more efficient with their appropriated dollars,” Shannon said in a press release. “When a family is out of money at the end of the month, they can’t go raise fees to pay for things they don’t need. Families have to prioritize when they are making a budget and get rid of extraneous expenses, and state agencies should operate under the same principle.”

But the rising costs of providing services across state agencies still have to be paid for, or the services can’t be provided.

What if we need money?

Oklahoma is already among the states where it is most difficult to raise revenue. In 1992, voters passed State Question 640, which put in place the supermajority requirement for tax hikes. Oklahoma is one of just 16 states that require a legislative supermajority to raise taxes, according to the anti-tax group Americans for Tax Reform.

“Oklahoma shot itself in the foot… You had to have — not a supermajority, a super, supermajority to pass a tax increase.”

-Oklahoma County Special Judge James Croy

Taxes went up across the country when the economic crisis hit in 2008, according the National Association of State Budget Officers — but not in those states with supermajority requirements.

NASBO Executive Director Scott Pattison says those states had to turn to other sources of revenue to help fill their budget holes, like user fees.

What Oklahoma experienced with fee increases was part of the national trend.

“It really accelerated during this last recession,” Pattison says. “So [fees] really morphed over the years from a very discrete, specific, relatively small charge for something that was earmarked for whatever that something was — you paid a nominal fee to camp in the state parks, or for a hunting license.”

Oklahoma did it for Fiscal Year 2011: $6 million more in fees for the decals required to be on sales tax-exempt vending machines, $12 million more from an increase in the fee for obtaining a copy of a driving record, and $17 million more from the fee for moving oversized loads on state highways.

Oklahoma had a head start

Reliance on fees is nothing new in Oklahoma. The state raised fees during the previous budget crisis in 2003 as well.

James Croy has been an Oklahoma County judge since the 1980s.  He says passage of State Question 640 effectively meant the end of tax increases in Oklahoma. That’s bad, in his view, because the cost of administering programs hasn’t stopped going up, even though taxes have.

“Oklahoma shot itself in the foot in 1992,” Croy says of the three-quarters vote of the legislature requirement. “You had to have — not a supermajority, a super, supermajority to pass a tax increase.”

One of Croy’s colleagues, Judge Donald Easter, has been looking into the way the state court system is funded, and provided StateImpact with a list of court fees that shows how they’ve changed over the past three decades.

What it shows is that the cost of accessing the criminal justice system has gone up dramatically for Oklahoma citizens. For example, in 1991, the divorce fee was $102 adjusted for inflation. Now it’s $143. Being granted a jury in a civil case cost $82 in 1991. Now it’s $349. A summary judgment used to cost nothing. Now it’s $50. The probate filing fee rose from an inflation adjusted $102 to $135, and the adoption fee went from $41 to $105, to name just a few.

Even accounting for inflation, practically all court-related fees have gone up substantially.

The end of increases

Finding out exactly how much fees have gone up isn’t easy, says NASBO’s Pattison.

“It’s hard to track them all down,” Pattison says, “short of going to every agency and saying ‘do you charge a fee, what is it, how much is it?’”

Pattison points out that the trend toward fee increases appears to be slowing — mainly because states aren’t as desperate for revenue as they were during the economic crisis. But the backlash against fees is also happening because many politicians hate fees as much as they hate taxes, even if they are the politically safer option.

That seems to be the case in Oklahoma. The moratorium on fee increases passed by a wide margin in the House, and unanimously in the Senate. It doesn’t cover all fees, however. For example, fees that result from breaking the law could be increased. So, the criminal side of court fees would not be impacted.

Judge Croy sees rising fees as a problem, but wonders what will happen if Oklahoma makes increasing fees even more difficult than increasing taxes.

“If we can’t fund government,”Croy says, “government will cease to exist.”

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