In 2014, the State of Oklahoma wagered the good times would last. Oklahoma placed its chip on tax breaks. A gamble made in desperation, the state stood so much to lose. The dice rolled snake eyes. Every state department is malnourished by budget cuts. Facing bleaker economics in 2016, Oklahoma demands even more cuts. One of the most devastated departments is Education. The children of Oklahoma are the ones to pay the price for a bet gone badly.
The cost of oil comfortably sat at over $100 a barrel in the summer of 2014. Oklahoma passed a bill that legislature hoped would encourage more drilling. Starting in June 2015, new wells would only be taxed 2% for their first 3 years, afterwards climbing to 7%. Oil plays a key part of Oklahoma’s Gross Production revenue, which is the state’s 3rd largest source of revenue. By the end of 2014, however, the price of oil plummeted to half its value. Starting the New Year, oil is under $30 a barrel. This compounded the existing economic woes caused by low top tax rates. In response, the State of Oklahoma forced massive budget cuts across almost every department. Already ranked one of the worst states for education, the Oklahoma Department of Education was hit even harder by another round of budget cuts this January. The excessive tax breaks to both individuals and companies have created the opposite effect of their purpose.
The lower tax rate for drilling is not without its backers. Supporters are quick to point to oil price’s ebb and flow. The bill makes sense when oil prices are high and when residents are pouring into the economy. Advocates don’t want to make knee-jerk reactions in the event prices should rise again. The problem is that the entire bill relies on the accuracy of estimates, which have proven over and over to not be reliable.
The combination of income tax cuts and tax breaks to the oil industry has crippled Oklahoma’s departments. This includes almost $47 million cuts from the Department of Education. A 3% reduction is mandated this year across the board. School lunch matching loses 30%. AP teacher training, AP test fee assistance, and staff development funds are halved. The STEM program (Science, Technology, Engineering and Math) is completely defunded. It’s predicted some schools will be forced to close.
Oklahoma is caught in a downward spiral with its tax breaks and budget cuts. Education leads to prosperity. By defunding education efforts, Oklahoma will fail in creating leaders and industry pioneers. It’s self-damning to cut STEM programs that would produce future engineers and scientists. Oklahoma’s taxes must be revised for any recovery to occur.
Renewable energy is gaining more attention as oil’s appeal wanes. Despite push back from oil lobbyists, Oklahoma should focus its tax incentives for the emerging wind and solar industry. While oil will always remain in constant flux, wind and solar energy would provide a stable market. The State is poised to be a national leader in renewable energy if it would make the commitment. Along with revisions to income tax rates, the Gross Production revenue from a diverse energy portfolio would put Oklahoma’s education back on track, ensuring a brighter future.
It was Benjamin Franklin who said, “An investment in knowledge pays the best interest.”