The Militant Moderate

The Militant Moderate wonders how many Oklahomans remember the last time they voted in an election to place debt upon the State of Oklahoma.  You cannot remember?  The MM also has some difficulty remembering, but it was 15 or 20 years ago.  At that time a sizable bond issue of around $100 million was voted for higher education and various other state agencies.  There was a tobacco tax levied by that same vote for the purpose of paying off the bonds.  

The Constitution of the Sate of Oklahoma forbids general state debt without a vote of the people and a dedicated source of funding from which the bonds will be retired within 25 years.  The reader is invited to check the wording from the Constitution as referenced below.  

Considering the constitutional provisions, one would have cause to wonder about all the different state bond issues which are now bandied about with apparently little fiscal concern.  During the Keating administration, it was decided that there were insufficient funds to build and repair highways and bridges.  So the Governor promoted, and the legislature authorized, a bond issue of several hundred million to be paid from anticipated federal highway funds to be received in future years.  When that bond issue was contested, a weak Oklahoma Supreme Court was brow-beaten into approving it as legal and constitutional.  (They also received a new court building from another issue.)  Paying off those questionable bonds is a major cause for the recent shortage of highway dollars.  

From that time since, bond issues have been made for every conceivable government related capital purpose – all to be repaid from regular revenues in future years.  This past year a much needed $500 million higher education bond issue was approved, to be retired from future state appropriations.  The venue of the Capitol Improvement Authority is now used for whatever projects upon which the legislature and Governor may agree, and more state debt is created for various and sundry purposes.  Since all these bonds must be paid from current income, and no special taxes are levied and dedicated, these become a growing state debt year by year.  

We are a state that has a constitutional prohibition against debt except by vote of the people and a dedicated revenue source for its retirement.  Yet we may now be about a billion dollars in bonded debt with no vote and no new taxes identified for payment.  (A little dab of gambling revenue is the exception, although that is not a tax.)  This makes neither legal nor fiscal sense to the Militant Moderate.  

Adding to the state’s future fiscal problems are the huge debts of its pension systems, particularly the Oklahoma Teachers’ Retirement System.  This system now has $7.4 billion in unfunded liability.  The state has failed to keep up its share of the funding for decades, and the fiscal chickens are coming home to roost.  Since the benefits for retired and active teachers are promised in state statutes, the OTRS debt is legally the debt of the State of Oklahoma.  The Oklahoman has headlined this problem on its front page.  

Presently there is a legislative proposal, sponsored on behalf of administrators and the highest paid school and college personnel, which would give these high paid people a windfall of new benefits and load the system with as much as $400 million to $1 billion in added new liability.  There is a contrary proposal, sponsored by the Oklahoma Council of Retired College Presidents, which calls for all such special interest proposals to be denied.  Further, it provides for additional funding from individual, school, and state sources to gradually pay down all system liability.  This latter proposal also calls for low-cost adjustments in benefits for elderly retirees who now receive least.  Which will the legislature choose?  

Compounding the problem of increasing state debt are the constant cries from some politicians for reducing taxes, and then such proposals as TABOR.  The Militant Moderate is compelled to shout, “DON’T REDUCE TAXES!  PAY OFF DEBT AND LIABILITIES!”  One might also add, “Fund education and other state services adequately before any mention is made of cutting revenue!”  The state has been behind for so long that it needs some good years of funding just to catch up.  Certainly it needs to reduce its debt before considering revenue cuts.  


Dr. Edwin E. Vineyard, AKA Militant Moderate  


Legal References from the Constitution of the State of Oklahoma:

Article X. S.4
“For the purpose of paying the state debt, if any, the Legislature shall provide for levying a tax, annually, sufficient to pay the annual interest and principal of such debt within twenty-five years from the passage of the law creating the debt.”  

Article X. S.25
“….. no debts shall be hereafter contracted by or on behalf of this State, unless such debt shall be authorized by law for some work or object, to be distinctly specified therein; and such law shall impose and provide for the collection of a direct annual tax to pay, and sufficient to pay, the interest on such debt as it falls due, and also to pay and discharge the principal of such debt within twenty-five years from the time of the contracting thereof.  No such law shall take effect until it shall, at a general election, have been submitted to the people and have received a majority of all the votes cast for and against it at such election.”