Blaming tax cuts for current spending trends downplays the starring role of the national recession. States that raised taxes during the same period that Oklahoma lowered them have also faced major budget challenges. What's more, some state services are being funded at higher levels in fiscal 2014.
We see no calamitous impact from the next income tax cuts. Phase 1 of the cuts is relatively small and it won't start immediately. Phase 2 may not start at all if economic growth triggers aren't reached. For sure, though, every release of tax receipt information will be used to “prove” either the wisdom or the folly of income tax cuts.
Just as an unusually cool April doesn't necessarily mean a mild summer is in the offing, monthly revenue figures tell us little about long-term trends. Our forecast: The skies aren't as blue as the tax cutters would have us believe, but they're also not as dark as their opponents claim. Oklahoma will get through the next round of income tax cuts and likely emerge stronger economically.
But adequately funding state services will remain a looming presence, like a squall line approaching from the west.