ANALYSIS -Economic Growth, Health Scandal, Cost Drivers, A Left Turn, Process Failures and More: Top 10 state government news stories for 2017

Patrick B. McGuigan

OKLAHOMA CITY – There’s good news and there’s bad news in Oklahoma.

The good news is that the year 2017 began with state Treasurer Ken Miller’s report that after a 20-month slide in gross tax receipts, Oklahoma government’s income (gross receipts, derived from the taxes paid by workers and businesses) had reversed course and begun to grow

Eight months later, those revenues were “higher than collections during the prior 12 months for the first time since August 2015, and monthly gross receipts topped collections from the same month of last year for a seventh time since January.”

With the November 2017 report from Miller, some might have said happy days were here again: Gross receipts jumped 12 percent in a single month. At the pre-Christmas meeting of the Board of Equalization, state officials ratified a projection of some $450 million in growth revenue for the coming year.

However, all that good news is “only” the second biggest state government news story of 2017, in CapitolBeatOK’s annual analysis. First and third are the crises facing Oklahoma government as a result o pooor management of resources, including the biggest scandal in Oklahoma politics since the County Commissioner prosecutions of the 1970s-80s, which led to 230 convictions.

The top story of the year is the burgeoning scandal at the Oklahoma Department of Health.

As personnel costs and salaries increased from 2011 to 2016, top agency staffers were robbing Peter to pay Paul. Even as low energy prices put recurring pressure on state finances — preventing the big budget growth of earlier years — millions of dollars were mis-allocated at the agency.

The most egregious decisions diverted money intended to benefit Oklahomans suffering from HIV and full-blown AIDS to cover recurring expenses. The money in question flowed from federal programs, meaning the explicit avoidance of guidelines connected to the federal dollars is a serious, and possibly criminal, matter.

In all, at least $30 million was mis-allocated by agency officials. The abuse of a federal program puts $115 million in U.S. aid at risk.

Top agency leaders, including Commissioner Terry Cline, have resigned. A multi-county grand jury is investigating. Speaker of the House Charles McCall, R-Atoka, established a special investigation committee, hoping to get all the facts.

The Federal Bureau of Investigation and the U.S. Department of Health and Human Services is at the door.

The third top story is closely related to the top one, namely the practical result of methodical – at times even prideful – inability or unwillingness of state officials to manage always-limited government resources efficiently. Mismanagement is one thing, but it appears to have been enhanced by waste, fraud and abuse discovered at a time when total state government spending is higher than ever.

The primary cost-drivers in state government have been, for many years, expenditures relating to Health, Corrections and Education at all levels.

Lots of attention is being devoted to the first, and that will no doubt continue to dominate news coverage in the near-term. An inexplicable veto of a budget fashioned in 2017’s first special session exacerbated a crisis in governance.

In the area of Corrections, a broad popular and political consensus for reform has existed at least since 2012, when the Justice Reinvestment Initiative program was enacted – then ignored for several years by legislative leaders and the state’s chief executive.

Some modest progress toward criminal justice reform was made in 2015-16, including several positive reform recommendations made by the governor’s task force. Then, in November 2016 voters approved two crucial statewide ballot measures to reclassify many non-violent offenses and flatten (in the model of several states) incarceration rates and, over many years, ease pressures on the prison system.

But forward motion was impeded at the state Capitol through the power plays of majority-party legislators, particularly one committee chairman.

Education at all levels (PK-12, Higher and CareerTech) gets 51 percent of the state budget in good times and in bad, and at all times little has been done to restrain administrative costs or shift existing resources from non-instructional purposes into the classrooms.

What might have happened if both health and education had been subjected to regular audits (every two-to-four years) to identify and correct mismanagement, let alone outright fraud?

For one thing, the Health Department shenanigans would have been documented as long ago as 2012 – one year after they started, instead of over the past three months.

The fourth top state government story of 2017 is the steady transformation of lifelong conservative Republican Mary Fallin into an advocate of higher taxation and government expansion.

Fallin has shifted from promising “right-sizing” of government into a supporter of tax hikes and higher spending. In one recent week, she pressed both for tax hikes on the state energy industry (emerging from depressed prices that lasted several years) and expressed strong support for the federal tax reforms moving through Congress. Her rhetoric aimed at fellow Republicans at times echoes the advocacy coming, more understandably, from former House Democratic Leader Scott Inman, D-Del City, and his allies.

The continued turmoil for the death penalty is Oklahoma government’s fifth top story for 2017.

For more than two years, after a series of shocking botched executions at the state prison in McAlester, Oklahoma has not tried to put anyone to death. A lengthy process reviewing protocols for the process continues, with some state officials saying new standards may come in 2018. However, the bipartisan Death Penalty Review Commission last spring encouraged reforms in legal procedures that would, if implemented, have the practical effect of keeping the unofficial moratorium in place for the foreseeable future.

The long delay has given time to lawyers for some death row inmates – most notably Richard Glossip (http://www.capitolbeatok.com/reports/killing-richard-glossip-world-premiere-to-be-held-in-oklahoma-city) and Julius Jones– to continue making the case for actual innocence.

Turmoil under the dome (at the State Capitol) reached historic levels led, this past year, to ten announced (and one recanted) departures from the Legislature. While some resignations were due to normal circumstances (individuals seeking greener pastures in the private sector), many were due to personal misbehavior, including sexual misbehavior. Thus, the year’s sixth top story was the most resignations departures in a given legislative cycle since the 1920s – and that’s with a year of that cycle still ahead.

Democratic gains in legislative races, the year’s seventh top story, may seem unsurprising in light of the turmoil outlined above. Still, the impact in Oklahoma City and Tulsa has been notable.

In and around Oklahoma’s Indian Country, there was also good news and bad news — the eighth top story of the year. Casino gaming has fueled an expansion of economic activity for the state’s tribes, including into areas beyond gambling. In the case of the powerful Chickasaw nation, gaming revenues reached $1.44 billion in the fiscal year that ended September 30.

However, compared to smaller Indian nations, the tribe devotes a relatively modest percentage of its economic clout to tribal programs ($200 million of the $1.44 billion). And, at least some of its gaming power has flowed from the the federal government awarding disputed lands to the Chickasaw jurisdiction for gaming purposes – to the detriment of smaller tribes and, sometimes, the state governmen.

Future challenges for Native interests, and relations with the state government, will no doubt include disposition of a murder case headed to the U.S. Supreme Court that exempted from government prosecution a crime committed on land arguably under tribal jurisdiction.

The budget failures and poor management of the legislative special sessions (see some of the details above) comprise the past year’s ninth top story. Some analysts would rank this higher, but in this analyst’s view the process problems of 2017 were a result of, not the cause of, the underlying failure of state leaders to follow through on efficiencies promised in past elections, particularly the transformational (in partisan terms) campaign of 2010 and the 2014 ratification of the same.

Under the state’s populist-infused Constitution, governors are relatively weak, by design. Still, the power of the veto cannot be denied. Perhaps more significantly, governors impact public policy through their appointments to executive and judicial positions. It took six years for Mary Fallin to get her first state Supreme Court appointment, and finally having the opportunity is our tenth top story of the year. She had a real impact through her choice, Patrick Wyrick.

Within weeks of taking the job, the youngest justice began to pull the Court in new directions through majority decisions making distinctions between taxes and fees, and in other important areas. With another resignation submitted, the governor will get a second state High Court appointment.

Just outside the top 10 is a moment that came with only modest attention from news organizations. After roasting politicians and other powerful people for decades (beginning in 1928), the Oklahoma City Gridiron folded its tent and passed into history.

The robust exercise of the liberties guaranteed in the First Amendment – in the form of an annualtheatrical parody of state politics and culture – was unable to survive changing consumer tastes in live entertainment and the aging of a volunteer workforce of journalists and their associates.

Still, the Gridiron troupe went out with a bang, not a whimper. In its final formation action, the Oklahoma City Gridiron Foundation disbursed a total of $128,171 to three state journalism programs – $42,723.80 each to the University of Oklahoma, Oklahoma State University and the University of Central Oklahoma.

Also left out of the top 10, but worthy of mention, is Oklahoma’s wide-open 2018 governor’s race. Two of the Republican candidates (Gary Richardson and Gary Jones) have long advocated recurring and consistent audits of state agencies, long before that became conventional wisdom. Whether they get credit or political advantage for that in the months ahead is an open question.

Plenty will be said about the governor’s race and other statewide campaigns in the months ahead. The results next November – good, bad or indifferent – will no doubt hold a notable place in the coverage of Oklahoma state government here, and elsewhere, in the next 12 months.

www.CapitolBeatOK.com