Lawmakers outline $853 million in unnecessary government spending

OKLAHOMA CITY – Over $853 million in unnecessary state government spending of taxpayer dollars was outlined today by a group of lawmakers who want to use the savings to make Oklahoma a no-income-tax state.

The group is advancing a proposal to phase out Oklahoma’s personal income tax over 10 years.

“We believe Oklahoma should be the state where people keep more of the fruits of their labor than anywhere else,” said state Rep. Leslie Osborn, R-Mustang. “This will make us a magnet for job creators and set us on a path of vibrant economic growth and long-term prosperity.”

The group’s proposal aims to achieve full phase-out of the tax without raising other tax rates, negatively affecting core state government services, or harming retirees, senior citizens or veterans.

To do so, the lawmakers say their proposal requires a total of $525 million in total reductions in state government outlays that must be found over a two-year period. Because the savings can be found over two years instead of just one, annual savings found for Fiscal Year 2013 could also be counted again in Fiscal Year 2014 toward the total savings necessary.

In offering a list of $853 million in total savings options over the next two budget years, the lawmakers maintain there is plenty of room to reduce wasteful, unnecessary state spending while avoiding cutting core services, and still put Oklahoma on track to become the tenth state in the nation without a personal income tax.

“We can make these reductions and not touch one dollar of actual core spending in education, transportation, public safety, or the safety net for the truly needy,” said state Rep. David Brumbaugh, R-Broken Arrow. “In return, we can repeal our state’s income tax in a responsible amount of time and see an influx of new jobs and investment in Oklahoma at levels we’ve not seen before.”

The list of $853 million over two years includes savings from three areas: wasteful, inefficient or unnecessary state expenditures; corporate tax credits that have not exhibited a high enough return on taxpayer investment; and modernization, consolidation and technology reforms within state government bureaucracy that are still in the process of being implemented.

“Some of our colleagues may feel uneasy about eliminating taxpayer subsidies for things like golf courses or rodeos that may be in their home district,” said state Rep. Tom Newell, R-Seminole. “Or they may think it’s inconvenient to make state agencies operate efficiently. But our constituents sent us to the Capitol to use common sense and fix what needs fixing. And they don’t deserve for their hard-earned tax dollars to be spent wastefully.”

Newell said the goal in releasing the list was to compile credible savings ideas from several sources. Working from this list, the lawmakers hope to encourage their colleagues to build a consensus around which areas of nonessential state spending could be trimmed over the next two years.

One source lawmakers credited was the work in recent months by state Rep. David Dank, chair of the House Appropriations & Budget Subcommittee on Revenue & Taxation, and state Sen. Mike Mazzei, chair of the Senate Finance Committee, to bring attention to ineffective corporate tax credits.

Another acknowledged source was a recently released list of state budget reduction ideas from the Oklahoma Council of Public Affairs (OCPA), a free-market think tank.

State Rep. Charles Ortega said he and his colleagues, when examining the savings recommendations from these and other sources, adopted some and left others for another day.

“The goal here is to put together good ideas from several different places and start reaching a consensus on what’s possible, both politically and practically, in order to find enough savings to phase out our income tax,” said Ortega, R-Altus. “We have great respect for the ideas put forward in recent weeks and months by Chairman Dank, Chairman Mazzei, groups like OCPA and others. Some of these ideas have legs right now, and some may not. We believe repealing Oklahoma’s income tax is essential for our state, so we’re asking our colleagues to work with us to determine where we can reduce unnecessary taxpayer expenditures in order to make it happen.”

Click here to see a list of suggested cuts

Senate Tax Review Complete, Report Issued

OKLAHOMA CITY –The task force charged with recommending reforms in Oklahoma’s tax system has completed its work. Copies of the report were given to Gov. Mary Fallin, President Pro Tempore Brian Bingman and Speaker Kris Steele on Friday.


Senator Mike Mazzei served as Co-chair of the task force. He told the governor and legislative leaders that as they and members of the Legislature consider the panel’s proposals, it was his hope that the taxpayers of Oklahoma would be the main priority throughout the process.

“The non-partisan Tax Foundation has rated Oklahoma’s overall tax structure 30th in the nation when rating our job creation environment,” said Mazzei, R-Tulsa. “We must transform the tax code; it is simply wrong when a special interest group benefits from an obsolete or ineffective tax preference at the expense of hardworking Oklahomans who deserve to keep more of their hard-earned income.”


The report includes recommendations on reforms which will enable reductions in the top income tax rate from 5.25 to 4.75 percent over a two-year period as well as reducing corporate income taxes from 6 to 5 percent. Additional recommendations would offset those reductions through the elimination of select tax credits and a thorough review of existing tax preferences with an expectation of reduction or elimination of a number of tax credits.

Sen. Rick Brinkley, R-Owasso, served as Vice-chair of the task force.


“These reforms are aimed at simplifying tax law and reducing rates for individuals and businesses,” Brinkley said. “The overall goal is to grow our economy while continuing to make crucial investments in core government services such as education, transportation and public safety,” Brinkley said.


The final recommendation of the task force stresses that other important reforms must be examined should the Legislature consider making Oklahoma a no income tax state.


Throughout the interim, the task force heard from a variety of speakers, including representatives from the Oklahoma Council of Public Affairs, the Oklahoma Policy Institute, the National Conference of State Legislatures, state and local chambers of commerce, economists, specialists in tax and business law and the National Federation of Independent Business.


“I want to thank the members of the task force and all those who participated for their hard work throughout this process,” Mazzei said. “This report is a blueprint that will benefit Oklahomans while attracting the jobs and businesses that will result in the kind of economic development necessary to boost per capita income and quality of life throughout our state.”

Continued Good News on Pension Issues

OKLAHOMA CITY  – For the second time in two months, state lawmakers were told this week that reforms enacted this year have resulted in significant improvement to a state pension plan.

Thanks to legislative reforms, the Oklahoma Public Employees Retirement System’s unfunded liability has been slashed by approximately $1.7 billion, officials told members of the Pension Oversight Committee today.

Teachers' Retirement System Responding Positively to Pension Reform Efforts

Sen. Mike Mazzei
R-Tulsa

The chairman of the Senate Select Committee on Pensions said he was encouraged that the solvency of the state’s largest retirement system has dramatically improved in recent months. Dr. James Wilbanks, Executive Director of the Teachers’ Retirement System, announced the decrease in unfunded liability in the pension fund late last month.

“Our committee’s goal was to reduce the unfunded liability in TRS which was more than $10 billion this past session. Thursday’s (Sept. 29) announcement shows we were right on target,” said Sen. Mike Mazzei, who chairs the Select Committee on Pensions. “It now stands at $7.6 billion, meaning we are on track to ensuring long-term stability. This will protect the retirements of dedicated educators throughout Oklahoma.”

According to Wilbanks, the estimated time needed to fully fund the pension plan has virtually been cut in half. Previously, it was projected that it would take nearly 40 years or more to fully fund the plan—now it could be 100 percent funded within 22 years.

“For too many years, legislators refused to acknowledge or address the fact that left unchecked, the Teachers’ Retirement System was facing insolvency,” said Senate President Pro Tempore Brian Bingman. “Sen. Mazzei has worked tirelessly on this issue for years, and now we are already seeing the results of our legislative efforts. In terms of protecting our state’s financial future, we cannot understate the importance of these new laws.”

Governor Fallin Signs Key Pension Reform Legislation into Law

Reforms Will Reduce Pension Systems’ Unfunded Liability by Over $5 billion


Governor Mary Fallin yesterday signed several key pieces of pension reform legislation into law at a public bill signing with state leaders. The bills aim to provide a boost to the fiscal solvency of the state’s public employee pension systems, which are currently troubled with $16 billion in unfunded liability. 


“Pension reform is about creating a sustainable future for our state budget and our state retirement systems,” Fallin said. “We can’t keep allowing these systems to go deeper and deeper into debt without serious consequences. By beginning the reform process today, we are helping to ensure that we don’t one day face a crisis scenario where the state is simply unable to deliver on the benefits we’ve promised our retired workers.”


One bill, HB 2132, authored by House Speaker Kris Steele and Senate Pro Tem Brian Bingman, would reduce unfunded liability in state pensions by $5 billion by requiring the legislature to provide a funding source for cost of living adjustments (COLA’s). Fallin said the commonsense measure restored fiscal responsibility to the system.
“We can’t promise to increase pension payments without identifying where that money is coming from,” Fallin said.


“That’s the sort of behavior that put the state of Oklahoma $16 billion in the red when it comes to our pension systems. HB 2132 changes that and ensures that any COLA increases are fully funded and fiscally sound.”

Rep. Randy McDaniel
R-Oklahoma City

In addition to HB 2132, Fallin also signed the following pension reform measures into law, all authored by Senator Mike Mazzei and Representative Randy McDaniel:

• HB 1010: increasing the retirement age for new members of the Uniform Retirement System for Justices and Judges (URSJJ) who started work after January 1st of this year. For new members with 8 years of service, the measure increases the normal retirement age from 65 to 67 years old. For new members with 10 years of service, the measure increases the normal retirement age from 60 to 62 years old.
• SB 377:  Raising the normal retirement age for new teachers from 62 to 65 years of age and establishing a minimum age of 60 for full retirement benefits for teachers who meet the rule of 90. Currently, there is no minimum age requirement for those employees whose age and service equals the sum of 90.
• SB 794: Ensuring that elected officials are treated the same as other public employees when calculating retirement benefits. Also, applying the same minimum retirement ages to all new public employees as SB 377 does to new teachers: a minimum age of 60 when the rule of 90 is met and a normal retirement age of 65.
• SB 347: providing for the forfeiture of a municipal officer or employee’s retirement benefits upon conviction of crimes related to their office (bribery, corruption. etc)