Oklahoma Tax Increases Have Ground To A Halt Since Voters Passed This One Petition

Jun 23, 2017

Twenty-five years ago, a majority of Oklahoma’s voters thought it was a good idea.

Today, not so much.

Back in 1992, following the passage of a controversial education funding and reform measure, House Bill 1017, Oklahoma voters pushed back against the tax increase with a state question that pretty much stopped all future tax increases.

Led by stockbroker Dan Brown, voters passed State Question 640, an amendment to the Oklahoma Constitution that added new restrictions on how revenue raising measures could become law.

Under SQ 640 measures that would increase revenue (that is, a tax increase) could only become law if passed by supermajorities in both Houses of the Oklahoma Legislature or if the proposal was sent for a public vote at the next general election and if it received a majority of the vote.

State Question 640, which amended Article Five, Section 33, passed with 56.2 percent of the vote.

Since then, only one revenue bill – an increase in the tobacco tax that passed in 2004 – has cleared the hurdles established by SQ 640 and become law.

The proposal has worked as its authors intended, said Deputy State Treasurer Tim Allen. Allen, who worked as a member of the state Senate’s committee staff during the 1990s, said SQ 640 was pushback against a string of tax increases that passed the Oklahoma Legislature in the late 1980s.

“Remember in the 1980s there was an oil boom, then a bust,” Allen said. “During the boom, the legislature and the governor went in and cut taxes, then the bust happened and they had to reverse course and go back and raise taxes.”

By 1990, the public’s tolerance for tax increases was pretty shot, Allen said.

“I think people saw that time as a tax increase after a tax increase,” he said. “And HB 1017 was the last tax increase in a long string of tax increases.”

Not long after the House Bill 1017 was signed by then-Governor Henry Bellmon, a group calling itself Stop New Taxes circulated a referendum calling for a repeal of the reform package. At the same time, the organization pushed an initiative petition that would become State Question 640.

The effort to repeal HB 1017 failed, but the proposal known as State Question 640 passed by a large majority of votes.

And though the proposal has been largely responsible for eliminating any talk of tax increases for the past twenty years, the continued strings of revenue shortfalls and budget cuts have caused many people to rethink their support of SQ 640.

“I really believe the tax taboo is dead in Oklahoma,” said David Blatt, executive director of the Oklahoma Policy Institute, a progressive leaning think tank based in Tulsa. “I believe people are beginning to realize just how important a table revenue stream is to the government.”

Though State Question 640 has its critics, Blatt said in some instances the law has protected lower-income Oklahomans from burdensome taxes.

“Up until now there was a consensus that State Question 640 was the worst thing to ever happen to Oklahoma,” he said. “But at the same time there is also a belief that it has protected the most vulnerable Oklahomans, too.”

Blatt, who is no fan of the state question, said some state officials now have a better understanding of the need for a stable revenue stream.

This year, state lawmakers passed a $6.8 billion state budget that includes stand-still spending for many state agencies and cuts for others.

Blatt said he believes that many of those who previously embraced the hurdles placed in state law by SQ 640 are rethinking their position.

But don’t expect SQ 640 to go away any time soon.

Even though Oklahoma’s economy is well known for its boom and bust cycles, Oklahoma’s lawmakers, University of Oklahoma Political Scientist Keith Gaddie said, will always forget the past.

“We will always forget,” he said. “In part because politicians are influenced by recent memory and institutional memory has to be present to affect change and remind people of what happened.”

When times are good, Gaddie said, policy makers forget the past.

“Remember the wildcatter’s prayer,” he said. “Dear Lord, give me one more boom and I promise not to screw it up.”

Oklahomans have made changes to the state’s tax code that leaves the state with insufficient reserves and an insufficient capacity to address a downturn in the economy, he said.

“When the economy turns down we need to be able to spend more,” Gaddie said. “If we have reserves we can do that without increasing taxes.”

Because of the hard, 12-year term limit, Gaddie said state lawmakers have lost their institutional memory.

“The only folks left with memory are the lobbyist and the agencies and they have other interests,” he said. “Remember what Bill Archer, the old chair of the House Ways and Means Committee said. ‘Don’t tax you. Don’t tax me. Tax the guy behind the tree. The problem is we’ve cut down all the trees.”