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Monday, May 04, 2020

OCPA column: COVID chaos requires bold reforms


COVID chaos requires bold reforms
By Jonathan Small

The assault on lives, livelihoods and medical needs of Oklahomans by governments’ response to COVID-19 is going to require bold reforms to reverse the damage. Lawmakers should enact several polices as a result.

First, any regulations waived to deal with COVID-19 should stay repealed. The state is functioning without those regulations and lives and livelihoods have been saved.

Oklahoma government is receiving more than $1 billion in federal funding to recover. As the federal government provides more flexibility, these funds should be used for a mix of purposes, including offsetting of state revenue shortfalls, financing of some strategic projects, and facilitating pro-growth reforms.

Pro-growth tax reform is desperately needed. With two “black swan” events underway—the collapse of the oil and gas industry and COVID-19—Oklahoma must now position itself to diversify with new businesses, preserve existing businesses, and attract business from other states.


It’s time to eliminate the wildly volatile corporate income tax, adopt a revenue-neutral plan to phase-out the personal income tax, and adjust the tax code to protect the most vulnerable from tax increases. That will provide a more stable revenue system for state government and foster job creation and economic diversification.

Lawmakers should use part of federal aid to reform the teacher’s retirement system. Strengthening state finances and pensions and giving teachers an asset that travels with them (that can benefit them and their families) can be accomplished by enrolling all new teachers in a robust defined contribution plan, duplicating the similar successful reform done for other new state employees. This will also help with recruitment since today’s employees are extremely mobile and change jobs throughout their lives.

Policymakers should provide permanent and full expensing for new investments in machinery and equipment, allow faster depreciation deductions, and foster crowdfunding infrastructure to provide more capital to small businesses. Businesses are going to need maximum flexibility to rebuild.

Legislators should delay collection of business property taxes until at least Oct. 1, 2020 and remove the experience rating on unemployment-insurance tax rates related to COVID-19.

In health care, lawmakers need to protect patients from surprise medical bills by requiring advance notice of costs. They need to protect doctors by placing caps on noneconomic damages in the Oklahoma Constitution. And they need to protect the truly needy already on Medicaid and taxpayers by rejecting any sort of Medicaid expansion. The state already faces a $1.3 billion shortfall.

To build the workforce of tomorrow, lawmakers should support tax-credit scholarship programs that increase K-12 educational opportunity and scrutinize tuition rates so colleges focus on productive teaching.

The government response to COVID-19 has done severe damage to Oklahoma citizens’ lives. But lawmakers have the chance to change that trajectory and put Oklahoma back on the path of vitality—if they embrace needed reforms.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.

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