The Journal Record
July 2, 2018
OKLAHOMA CITY – The chances of a veto referendum that would nix about $400 million in tax revenue have dropped to zero, catching the attention of a credit rating agency.
During a special legislative session this year, lawmakers passed House Bill 1010, which raised taxes on several sources to generate hundreds of millions of dollars in new spending, including an across-the-board teacher pay raise. Oklahoma Taxpayers Unite, an anti-tax organization, argued that the pay raise was necessary, but the tax hike wasn’t. It began organizing a referendum petition to repeal the tax increase. Education organizations filed legal challenges listing a few complaints. After oral arguments, the Oklahoma Supreme Court nixed the petition, deciding that its summary was misleading.
Moody’s, one of the country’s top credit rating agencies, included the event in its most recent Weekly Credit Outlook for Public Finance, which it released on Thursday. It said the court’s decision was a boon to school districts, which often depend on bond issues for improvements.
The organization’s declaration of credit positive or credit negative doesn’t trigger a rating or outlook change, the report states. It indicates the impact a distinct event or development causes as one of many credit factors affecting the issuer.
“The ruling is credit positive for school districts because it preserves state funding for the teacher pay increases, which came as teachers threatened to strike earlier this year and eventually did,” the report reads.
It is likely that districts would have been on the hook for increases regardless whether state funding disappeared, and the ruling reduces the likelihood that districts will have to make more midyear cuts to fund those salary increases, the report states.
The group organizing the petition drive could have restarted the process. The law allows veto referenda until 90 days after the initial law was passed. The court said in its decision that the group had until July 18 to complete its second attempt, which would have included repairing the text within the petition and collecting signatures.
State Sen. Ron Sharp, R-Shawnee, is the vice chairman of the Senate Education Committee. He said that when House Bill 1010’s fate was in the air, he talked with Senate fiscal analysts about his concerns, and they were validated: The uncertainty would plague the state’s schools, which have already been in stormy financial waters for years.
Sharp said that unfunded mandates had already make financing difficult, and that this new salary increase would become another one unless the uncertainty about HB 1010 cleared.
“This provides the stability, and we’re very pleased,” he said. “We have to make sure we do this from now on.”
Oklahoma Taxpayers Unite announced on Monday that it would not seek to repeal the bill.
Several education organizations praised the decision and said that it ensured some certainty for educators and administrators moving forward. The Oklahoma State School Board Association focused on the repeal effort ending’s effect on the ongoing teacher shortage.
“The pay raise isn’t a silver bullet, but it is key to stemming the hemorrhage of teachers out of the state and to other professions and to recruiting well-prepared educators to our classrooms,” OSSBA Executive Director Shawn Hime is quoted in part in a news release.