Miner setback: Californians must dig a bit deeper

Blaming the cuts for the state’s current fiscal challenges is fool’s gold.
BHAW-HAHAHA
Cut all your taxes to zero if cutting taxes does not cut revenue. The pledge to cut taxes is one of the oldest political tricks in the book to get votes and the GOP uses it in every election. CUT ALL THE TAXES TO ZERO

Money is similar to a commodity. It all works on supply and demand. The government demands it and the taxpayers supply it. We can only control it in voting cycles.

MBA, I have yet to see one of your "papers" not be easily understandable. Keep on with the info as you see fit! Thanks.

Good job MBA but I have a feeling that Lynn speaks for the OPCA or some other ultra-conservative think tank financed by older, wealthy men who are sorta greedy and self-serving. Lynn parrots their talking points.

Bert: I agree with you. Having been in both the private and public sector, I have seen and experienced it first hand. It is never a good time to lay employees off. I can't speak for the federal government, that's a whole other animal.

MBA, You speak of sympathy for state employees. I hate to see anyone laid off for no fault of their own. But during this downturn, which has really no end in sight as far as the employment picture is concerned , employees from private and public firms large and small have lost their jobs. The sympathy must be for all. it does appear the federal government is not laying off or furloughing people. It appears in the downturn they are hiring.

Lynn: You bet RIFs. My wife is having to do one tomorrow in a State agency. She has done several over the past few months in her agency and her agency is small. Other agencies have too and are contemplating more but most are doing furloughs. Although I work in a quasi-State agency, I have purposely eliminated positions as they have become vacant this year. I have been “fortunate” as turnover has been enough to meet the budget cuts so far. The chances of getting these positions back when State revenues increase are pretty slim. It is obvious you have no sympathy for State employees and I cannot change that. Let me ask you one question. In times of economic downturn, do more or less people need State government services? I’m betting more.

Again, you keep mentioning tax increases. Who here is advocating them? I have given reasons why taxes shouldn't have been cut. Do you agree with what the Legislature did in cutting taxes in a period in which they were increasing permanent spending? I sure hope not.

FYI, I used the word “business cycle” because that term is easily understandable for most people. I used the term government before it because I was referring to the economic cycle of revenues of State government. Sorry for not being more clear.

You say I talk in circles, maybe so to you, but I’ll explain the concept of inflationary growth of State government to you simply. If a State agency buys 100 tons of material at $100 per ton last year to pave a mile of road, the agency would need $10,000. If the price goes up to $110 per ton this year, the agency would need $11,000 to buy 100 tons. If the agency’s revenues did not increase due to a tax cut, then the agency could no longer buy 100 tons of material this year and could not pave a mile of road. The agency could not provide the same level of service as last year. Pretty simple isn’t it?

About the unemployment comment. State agencies must pay this also as part of their “cost of doing business”. RIFing an employee will still cost the State significant money with the statutory payouts which must occur with RIFs and the unemployment on top of this. This occurring when State agency budgets are being cut. In many cases it would be almost as cheap to keep a State employee on for the rest of the year than RIF them. Long-term, RIFs are the way to go if a program is being eliminated permanently. Furloughs are a better option at this time during temporary budget cutting.

RIF ...... who are you trying to kid ? Only those who've never been near a state agency.

The old excuse of " putting people out of work " is exactly what we heard in the 80's to justify all those tax increases. The taxpayers took care of that little matter at the polls a few years later.

Those of us in the private sector who have lost jobs and/or taken big hits to our income, have no sympathy for state employees. And employers will pay for unemployment benefits, in case your not aware, that is an expense every business has to pay.

You say...

" What I was implying is that tax cuts have impacted the government business cycle in Oklahoma. "

What the heck is the " government business cycle " ?

And yes, exenditures increase with inflation ... duh ... of course they do, but so do revenues. You talk in circles.

It is also true with gross production tax, that tax is a percentage of sales at the wellhead. As the price of oil and gas rise and fall, revenues adjust. And as the price of oil rises, oil companies increase spending on exploration and production, which generates more income and sales tax revenue, along with excise tax revenue from vehicle sales.

Government agencies scream and cry poverty when tax revenues dip. The media eats it up. But anyone who has spent time in a state agency, especially in the accounting area, knows what cuts are real and which are made for political impact.

Every new government program created also creates personnel positions that are never eliminated. It just growth on growth and the ship is never trimmed. What should happen in times of low economic activity and low revenues is the state becomes more efficient. Decisions should be made about what and who are really needed. But that never happens. Furloughs will not achieve that.

Lynn: I hate to break it to you but I have been around here for a long time (almost 50 years) and been involved with all aspects of State and local revenue and taxation. Perhaps you should read my post again. Maybe you would comprehend it better. First, where did I mention tax rates should increase with inflation? Nowhere. My second sentence stated “nobody was advocating tax increases”. That includes me. I also stated to keep the same level of government services, spending must increase with inflation, just as your spending must increase in your personal life. I didn't say raise taxes. I said the Legislature should not have lowered them. I do agree somewhat that government revenue will rise and fall naturally along with the private sector in revenue categories such as income tax and sales tax. However, this is not necessarily true with gross production taxes. What I was implying is that tax cuts have impacted the government business cycle in Oklahoma.

As far as trimming the ship and number of State employees, I currently know of several agencies that are doing and have done RIFs in the past few months. Many are doing furloughs, many are eliminating or not filling positions when they become vacant. Are you saying that the State needs to lay off employees when furloughs will accomplish the same task of cutting expenditures? In my opinion, the last thing we need is to be putting people out of work. Who will pay the unemployment on these laid off employees until they find another job? With the budget cuts as large as they are, State agencies have no choice but to trim the ship and/or cut services.

MBA ....... you could not be any further off base. Tax rates are almost always a percentage of an economic " value " . When wages and prices rise in the private sector, government revenues rise also. Its a built in hedge against inflation.

Thats very basic stuff MBA, you must not have been around very long. To try to state that tax rates should increase due to inflation is stupidity.

The problem with state employee pay, is that there are waayyy tooo many state employees. Whenever the economy turns down, they never lay off any empoyees. They never trim the ship. They just furlough.

So they add employees in good times and don't cut back in the bad times.

Ha ha, dok still trying to convince us the change in the tax rate wasn't a moronic irresponsible move. The dummies in the lege got bailed out of their stupidity and incompetence by the stim $ the wingnuts were all bleating socilaism about.

The D.O. still doesn't get it. Their statement, "From the California example, it appears Oklahoma could have raised income taxes significantly and still be experiencing a mother lode of a money crisis” is a brilliant example of their ignorance.

Who in Oklahoma thought raising taxes was a good idea? Those of us who knew the tax cuts were bad just didn't want to see the tax rate lowered. Nobody was advocating tax increases. We knew that the economy in Oklahoma was cyclical in nature and didn't want to see a fairly stable revenue source in personal income tax cut just because we had surpluses in other less stable sources such as gross production tax. We had already experienced what had happened in the 80's and in the early 2000's with State revenues. On top of that, throughout the mid 2000's, the Legislature increased permanent State government spending in teacher pay increases (not to mention the yearly increases in State worker health insurance premiums) while cutting taxes. The promise of "tax cuts stimulating the economy" was total bunk.

The D.O. constantly brings up California as an example. Why? Different economy and different budget practices altogether than Oklahoma. The bottom line is that the D.O. advocated the tax cuts. Now that they have not done what they were supposed to do and are part of the reason for the State revenue shortfall, they are grasping at straws to find any way to defend them. The state revenue figures don’t lie. Would State personal income tax revenues have fallen due to the economic downturn? Most likely. Did the tax cuts further contribute to the shortfall and make the situation worse? Absolutely.

In reality, State government spending must increase to keep up the same levels of services. Just like personal items we pay for, things cost more every year. Examples of this are material for roads and bridges and employee health costs to name a couple. Dare I even say State employee pay raises, which most State employee have not received for several years now? The notion of its O.K. to cut taxes when times are good is fine if the same logic applies to raising them when times are bad. What the tax cuts are going to do is hinder the recovery of the State. Furthermore, there is an automatic trigger put in by our Legislature that will cut the tax rate by another quarter of a percentage point once Oklahoma’s revenue begins to increase, thus further hampering any recovery. I’ll quit now, my rant is already too long.

Honestly, in this case, it's probably not a bad idea. I lived in California for 10 years. My wife is an ex-IRS employee, and she KNOWS taxes, but we still couldn't get the withholding to work out right. We *ALWAYS* ended up paying the state in April, and we almost never got the fed wrong.

And before you start screaming about the wonders of Prop 13, think about this -- in 1972, when the proposition was passed, California had the best schools in the country and a medium sized house in the SF bay area was about 2x the cost of a similar house in OKC. Today, their schools are #49 in the country and a house in SF costs about 8x what it costs in OKC. The people who owned a home in 1972 are the ONLY ones who ever benefited from Prop 13. The sold out their future to save a few bucks in the present.

That is the danger of raising taxes during down economic times. If those raises were reversed during good times, it would be acceptable, but of course, they're not reversed and govt spending goes even higher as all tax revenue is appropriated.

After several economic cycles have occurred, tax rates have gone through the roof. California should know this, this is the catalyst that brought on Proposition 13 in the 1970's .

Oklahoma did this in the 80's. Every tax, fee, and license was raised to maintain the revenue levels created by the oil boom of the 1970's. There were no cut backs in spending , no layoffs, and no economizing in bad times.

Its the bad times that keeps the private sector lean and mean and raising taxes in bad times that keeps government payroll bloated.