OCPA column: A Better Plan

A Better Plan

by OCPA President Jonathan Small

It’s easy for insiders to support tax increases–much easier than it is for low- and middle-income families and small businesses to pay higher taxes.

That’s why the Oklahoma Council of Public Affairs has offered a revenue and reform plan. Our plan even received the endorsement of former U.S. Sen. Tom Coburn.

What’s missing from our plan? A messy income tax hike on those who can’t afford it. Included is the same $5,000 teacher pay raise that big government advocates keep using for their bait-and-switch games. It’s time to give teachers the pay raises they deserve and stop the rest of the bureaucracy from using teachers as pawns while state agencies refuse to reform.

“It’s time for the circus to end,” Sen. Coburn said, noting that “teachers, the most vulnerable, working Oklahomans, and small businesses are being held captive and will suffer damaging tax increases that will harm families and ruin future efforts for pro-growth tax reform.”

Our alternative plan would set gross production taxes to 5 percent on new wells for 36 months. It would increase cigarette taxes by 75 cents a pack. Wind tax credits would be capped at $10 million. Voters would be asked to approve shifting new settlement payments from the Tobacco Settlement Endowment Trust to the state’s Medicaid program, surely a worthy way to spend money earmarked for health. And, the Indian tribes would be asked to forgo $67 million in rebates on tobacco sales since they are also citizens of Oklahoma.

Those measures would pump $505.4 million into the state treasury to fund a $5,000 teacher pay raise. They wouldn’t make the tax code more complex or make revenue promises that are unlikely to materialize. And, they avoid burdening most families and working Oklahomans with more taxes.

If lawmakers are dead set on raising taxes, at least they should do it in the least damaging way. The more challenging but vital work remains: reforming and restructuring state government to prevent this annual exercise in panic budgeting from ever happening again.

We could start with rigorous audits of every state agency, questioning outcomes rather than just accounting for inputs, and by passing some real reforms like work requirements for able-bodied Medicaid recipients and allowing schools to use local revenues for top priorities like teacher pay. We should also end Oklahoma's Hollywood film handout that paid millions to Harvey Weinstein.

As Sen. Coburn said, “It’s time for politicians to do their number one job, which is tough and accountable oversight.”

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

OCPA: Did Harvey Weinstein Benefit From Oklahoma's Hollywood Handout?

Trent England, OCPA Executive Vice President

Did Harvey Weinstein Benefit From Oklahoma's Hollywood Handout?

Businesses mostly maximize profits. Big businesses often discover one way to do this is to get special tax deals for their particular industry. Hollywood is a big business, and has followed this game plan in state capitols, including in Oklahoma City. Current state law provides “a cash rebate of 35-37% on qualifying Oklahoma expenditures to film and television productions filming in the state,” plus a sales tax exemption.

To put this into perspective, Oklahoma every year gives a handout to Hollywood equal to enough money to pay for nursing home care for over 200 Oklahomans.

The argument goes like this: filming movies costs money, some of that money gets spent in the community where filming takes place, and so politicians should pay off these companies in order to stimulate the economy. Now it is true, of course, economic activity is good for an economy. But when Hollywood moguls get checks from Oklahoma, someone still has to pay that bill. Oklahomans pay that bill.

We’ve written before about the principled case against these Hollywood handouts. But what about how these handouts are actually used, and who gets them?

It turns out that Harvey Weinstein was a beneficiary of Oklahoma’s largesse. His company produced and distributed "August: Osage County," which was filmed near Bartlesville. The movie’s director described the search for subsidies as a “Weinstein Company edict.” In fact, “August: Osage County” received $4.6 million of the total $5 million in rebates available in 2013—or 92% of the total subsidies available.

At least Weinstein’s film made it to real theaters. Other subsidized movies never reach wide release. Taxpayers wind up subsidizing unheard of films by local filmmakers who almost certainly would shoot here anyway.

One of these is "Pax Masculina," a 42-minute, straight-to-video film about scantily-clad female “freedom fighters.” Oklahoma Film and Music Office Director Tava Maloy Sofsky said she was “thrilled to have "Pax Masculina" utilize our rebate program…. We look forward to seeing this ‘steampunk’ spectacle come to life on-screen.”

Some films may also portray Oklahoma in a negative light, or graphically celebrate behavior that many Oklahomans find repugnant and destructive. By its own description (this is not on our watch list), "Pax Masculina’s" plot includes “Seduction and murder of policemen and government officials” and “televised executions of captured soldiers.”

A larger-budget film that did achieve wide release in theaters and was filmed in Oklahoma is "American Honey." According to IMDB, the movie includes a “disturbing” scene of sexual abuse and includes “strong sexual content, graphic nudity, language throughout, drug/alcohol abuse—all involving teens.”

Interestingly, while "American Honey" received the smaller sales tax exemption, a timing issue prevented it from benefiting from the rebate program. The movie was filmed in Oklahoma anyway.

Should Oklahomans have helped make Harvey Weinstein richer? What about subsidizing local filmmakers on projects almost no one will ever see? And should Oklahomans pay people to make movies normalizing, or even celebrating, anti-social behavior?

The current rebate allowed each year by state law is $4 million. That might not sound like a lot within state government, but it would be enough to prevent nursing homes from taking the provider rate cut currently threatened by the Oklahoma Health Care Authority. In fact, the state could pay for nursing home care for 213 elderly Oklahomans every year, or for mental health services for 1,402 Oklahomans each year, with $4 million—but no, that money is earmarked as a handout for Hollywood.