Leading CapitolBeatOK’s top 10 for 2011: pension reform, economic boom, proposed income tax phase-out
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Published: 28-Dec-2011

Three stories capture the dynamic issues that defined Oklahoma state government in 2011: pension reform, economic growth, and proposed phase-out of state income taxes. Sketching those three, and stories in fourth and fifth:

CapitolBeatOK’s top news story centers on passage of pension reforms that captured as much as one-third of unfunded liabilities in retirement programs for government employees. 

CapitolBeatOK’s second top story underscores Oklahoma as an exception to the national economic rule. America’s lowest unemployment rates. Oklahoma City and Tulsa both in the top five in an economic security rating from the Urban Institute. Such reports make the Sooner State the envy of much of the nation, at least recently. 

In third place: Conservatives driving the policy bus want to keep momentum going. The Oklahoma Council of Public Affairs (OCPA), a leading advocate of free markets, limited government and economic liberty, is pressing for a decade-long phase-out of the state income tax.

In fourth: A legislative push for reform of tax credits and business incentives seems certain in 2012, with the bulk of the heavy lifting done by a task force that met throughout the latter half of 2011. Rounding out the top five: Janet Barresi as a (sometimes controversial) change agent. 

Why pension reform is ranked #1

Many would rank the state’s economic vibrancy the year’s top story. Indeed, it was listed as Oklahoma City’s top story in a focus on local news posted here earlier this week. To be sure, that is the second top story in CapitolBeatOK rankings. 

However, good economic news is about here and now, and to some extent, the future. The pension reform story captures past, present and future. 

The significance of government pension changes enacted in spring 2011 can scarcely be overstated. Gains to the taxpayers’ “bottom line” were dramatically more significant than those achieved in reform packages that edged forward in other states.

In early May, Governor Mary Fallin signed five pension laws. In an interview earlier in the year with CapitolBeatOK, state Senator Mike Mazzei of Tulsa had memorably described the $16 billion unfunded liabilities as “the one that could implode us.”

When the chief executive signed the law, Mazzei made his point another way, asking rhetorically, “When was the last time you heard state government say that they are saving you billions of dollars?” 

State Rep. Randy McDaniel, who shepherded pension reform through the House, said the new laws “might be the signature achievement of this legislative session, taking from 25 to 35 percent of the unfunded liability burden off the table.” 

Effect of the new provisions? A ban on cost-of-living-adjustments (COLAs) to government employees, unless they are funded. Teacher retirement ages increase from 62 to 65; retirement ages for justices and judges also increase. Elected officials, who in the past got better pension deals than “regular” state employees, will no longer be eligible for sweetheart deals. Employees convicted of felonies will lose pension benefits. 

More remains to be done, however, reforms already achieved might be the closest legislative Republicans and the governor have come to fulfilling campaign promises made to bring fiscal conservatism and spending restraint to government. And, in the end, the reforms were achieved with significant bipartisan support. 

Oklahoma is more than OK: More jobs, more growth, more hope

Sometimes conventional wisdom is not merely a collection of untested assumptions. After sharing in some of the misery provoked by the Great Recession, Oklahoma has now enjoyed two years of economic growth. The details of that resurgence constitute the second top news story of the year for Oklahoma government.

Unemployment is more than 2.5 percent lower than the national average . A slight uptick in jobless statistics is actually a counter-intuitive sign of good news: thousands of workers who had left the job market have returned to it because they have hopes of finding employment. Oklahoma City has become not only a state engine of growth, but robust energy investment and other factors are allowing it to assume leadership in the southwest United States. 

In third place, an idea whose time has come? 

Responding to a dramatic speech by economist Arthur Laffer before civic leaders in Oklahoma City, state Finance Director Preston Doerflinger said enthusiastically, “Let’s get it on.” 

He was talking about what CapitolBeatOK lists as the year’s third top story, one which illustrates the power of ideas: Conservative policy advocates contend the slow descent of state income taxes over the past several years and pro-business trends result in the state’s enviable economic good news. 

Not content to preserve the status quo, OCPA and its president, Michael Carnuccio, drew nationwide attention for a dramatic proposal to eliminate the state income tax levy – but to do so methodically over a 10-year period. In response, Governor Mary Fallin and legislative leaders are ready to consider at least a phase-down, and they are not taking a phase-out off of the table. 

Opponents include credible voices like the Oklahoma Academy, Oklahoma Policy Institute, and some economists. Even in the face of such opposition, nothing has more power than an idea whose time has come. And, it is time that will tell if this year was the beginning of sweeping transformations of tax policy in Oklahoma.

Contenders: Tax credit tightening, Changing times for education

Another “prospective” idea that ranks high among the year’s news stories for state government is state Rep. David Dank’s long (but no longer lonely)  crusade for reform in provisions for tax credits and business incentives. 

The work of Dank’s Task Force on State Tax Credits and Economic Incentives is the fourth top news story of the year for CapitolBeatOK. The group submitted a final proposal to tighten eligibility for tax credits and business incentives without, however, abolishing them.

Oklahoma’s most powerful Chambers of Commerce opposed the task force’s key proposals, setting the stage for a high stakes, consequential debate that may define the 2012 legislative session. 

The fifth top story of the year is the blend of controversy and change at the Oklahoma Department of Education under Superintendent of Public Instruction Janet Barresi. The superintendent ultimately got most of the enhanced powers Governor Mary Fallin wanted to give her. Along the way, support for Barresi’s policies eroded, but no one can doubt education policy has changed in Oklahoma. 

The end of trial de novo provisions, anticipated abolition of social promotion, the start of a mixed package of new teacher evaluations and other reforms are undeniably significant. 

Less certain is the ultimate result of Barresi’s hiring of a high-ranking official of the Oklahoma Education Association (OEA) as her chief of staff. Joel Robison advocated, along with others in the state’s largest union, for passage of a state question intended to bring about major increases in taxpayer funding for public schools. The measure secured 19 percent support. 

Robison’s hiring as Barresi’s chief of staff drew sharp criticism from past allies of the conservative Republican, but those criticisms may be forgotten if he helps Barresi deliver on commitments to advance pro-child education transformation. 

The rest of the top 10; Terrill, DHS, right-sizing, water, Fallin & friends

The sixth top story of the year is the cluster of controversies dogging state Rep. Randy Terrill, an Oklahoma City Republican. He and former State Sen. Debbe Leftwich, a Democrat, face charges of bribery in Oklahoma County. The state House reprimanded Terrill for his words and actions directed at a House staff member and the Speaker, and a bi-partisan House investigation of Terrill decried his activities, but declined to press for further sanctions.

Turmoil at the Department of Human Services, the seventh top state government story, has led to a major legislative push for reform, led by House Speaker Kris Steele. Changes to the governing commission of the troubled agency came after a series of deaths of children under state care or supervision. The commission’s skirting of open meeting provisions brought scrutiny from advocates of transparency. Change is coming to DHS, and time will tell how sweeping those changes will be. 

The continuing discussion of “right-sizing” state government, and legislative actions to give meaning to the discussion, is the eighth top story of the year. The reform proposals guided by state Rep. Jason Murphey of Guthrie, in alliance with Fallin, Doerflinger and some agency heads, are saving money through increased efficiencies. Simultaneously, spending patterns in Higher Education and other parts of state government lead many lawmakers to conclude that more reductions in spending or government functions will be required. 

The ninth top story of the year centers around litigation by two large tribes aimed at state government and against Oklahoma City’s water rights, assertions of aboriginal rights by the Caddo Nation, and the rising swirl of controversy surrounding the future of Oklahoma water policy. There seems little room to doubt that water will be a major controversy facing Oklahomans for years, perhaps decades, to come – unless all players are somehow drawn together in a broad consensus that now seems elusive.

Our tenth top story of the year? Well... that’s a tale that many would probably rank number one. Mary Fallin made history when she led the sweep of Republican victories in all statewide elections a year ago. 

She and her colleagues in statewide office have now been exercising executive powers for nearly a year. (Corporation Commissioners, all Republicans, pre-date the GOP sweep.) Governor Fallin is working closely with members of her party who control both houses of the Legislature. 

The Grand Old Party is in charge. Still, the first year of Republican power is merely a first chapter, the equivalent of 1908 for the Democrats. The rest of this history is yet to be written.

Worthy stories not in our top ten include the weather, ObamaCare fights and other significant events. A case can be made for those and other stories in any such listing. The prism in this story is merely one, but it is informed. 

Journalism is sometimes described as "the first draft of history." The staff of CapitolBeatOK will continue writing first drafts, as history unfolds.

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