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GOP confronts another failed tax experiment in Oklahoma

Sean Murphy, Associated Press

FILE - In this Feb. 12, 2018 file photo, Oklahoma state Rep. Leslie Osborn, R-Mustang, debates a budget bill on the House floor in Oklahoma City, "Without new recurring revenue, we can't fix these problems," said Osborn, who was ousted as chairwoman of the powerful House Appropriations and Budget committee for her outspoken support of tax increases. (AP Photo/Sue Ogrocki, File)

OKLAHOMA CITY (AP) -- When the GOP took full control of Oklahoma government after the 2010 election, lawmakers set out to make it a model of Republican principles, with lower taxes, lighter regulation and a raft of business-friendly reforms.

Conservatives passed all of it, setting in motion a grand experiment. Now it's time for another big election, but instead of campaigning on eight years of achievements, Republicans are confronting chaos and crisis. Agency budgets that were cut during the Great Recession have been slashed even deeper. Rural hospitals are closing, and teachers are considering a statewide strike over low wages.

"I'm not scared to say it, because I love Oklahoma, and we are dying," said Republican state Rep. Leslie Osborn. "I truly believe the situation is dire."

Oklahoma's woes offer the ultimate cautionary tale for other states considering trickle-down economic reforms. The outlook is so grim that some Republicans are willing to consider the ultimate heresy: raising taxes to fund education and health care, an idea that was once the exclusive province of Democrats.

"Without new recurring revenue, we can't fix these problems," said Osborn, who was ousted as chairwoman of the powerful House Appropriations and Budget committee for her outspoken support of tax increases.

The crisis has also placed the oil and gas industry, a sacred cow in Oklahoma, in an awkward spot since it sought the huge tax cut that is one of the biggest factors in the budget mess.

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Gov. Mary Fallin and GOP leaders have been unable to reverse course because of a constitutional quirk that says any tax increase needs a three-fourth's majority vote of the Legislature. Despite broad GOP support for tax hikes, a small number of fiercely anti-tax Republicans have joined with the minority Democrats to derail attempts to raise revenue. Democrats complain that most of the tax plans unfairly target the poor.

While state leaders bicker over how it went wrong and what to do about it, a half-dozen Republicans are jockeying to succeed Fallin, who cannot seek re-election because of term limits.

Although the candidates represent different wings of the party, all of them agree about the depth of the problem. And while none of them want to use the word "tax," several talk about replacing some of the revenue that has been cut in recent years. That replacement money could scarcely come from any other source except taxes.

The only GOP candidate for governor who openly advocates for a tax hike is Auditor and Inspector Gary Jones, an accountant and former chairman of the state Republican Party. He's been particularly critical of the Legislature's decision to make permanent a generous tax incentive on new oil and gas production. Fallin signed that bill just before the price of oil plummeted in 2014. The price drop dealt another major blow to the energy-dependent economy.

The drilling industry now pays an effective tax rate in Oklahoma that is far lower than in any other state, a factor cited by the teachers threatening a strike.

"We've got to face the truth," Jones said. "We need somebody who's willing to tell the truth about how we got here, where we're at and has a plan to get out."

Since 2009, more than two dozen state agencies have seen their budgets slashed by more than 30 percent. The cuts have been especially painful in public schools, where funding has dipped since 2015, even though enrollment has climbed by about 10,000 students statewide.

Teachers are in shorter supply too. There are about 1,500 fewer teachers in Oklahoma than in 2010, according to a recent study, and nearly 20 percent of districts have shifted to a four-day school week to save money.

The GOP made massive gains in the 2010 midterm elections, flipping 20 legislative chambers nationwide and netting six Democrat-held governor's offices, including Oklahoma's. Those victories offered the opportunity to put into practice tax-cutting economic theories that Republicans espoused for decades.

In some cases, the experiments proved successful, particularly in Indiana and North Carolina, where the rate reductions were gradual, said Scott Drenkard of the Washington-based Tax Foundation, a nonpartisan think tank that promotes simple and transparent tax policies.

But in other places, where the effort was especially zealous, notably Oklahoma and neighboring Kansas, Republican leaders were forced to backtrack. Kansas lawmakers had to reverse most of the cuts last year after the state struggled to balance its budget.

Still, those running to replace Fallin are forced to tiptoe around the tax question as they reach out to GOP voters who may be fiercely opposed to any measures that raise taxes.

"I'm opposed to tax increases, period," said Lt. Gov. Todd Lamb, who resigned from Fallin's cabinet after she unveiled her tax plan. Despite his tough anti-tax talk, Lamb has left the door open to removing some exemptions and deductions from the tax code.

Longtime Oklahoma City Mayor Mick Cornett, who has overseen a transformation of the state's capital city funded in large part with a 1-cent sales tax, says he doesn't have much of an appetite for tax increases.

"It's never been my first instinct," Cornett said.

Political newcomer Kevin Stitt, a Tulsa businessman who has poured more than $1 million of his own money into his campaign, is also hammering an anti-tax message on the stump.

"I don't buy the dialogue that just raising taxes is the right thing to do, because I don't think the government knows how to spend money better than us," said Stitt, the founder of a mortgage company who is making his first run for public office.

Other anti-tax GOP candidates, Tulsa trial attorney Gary Richardson and fiery pastor Dan Fisher, have argued that government waste and corruption is the cause of the revenue problems. They have called for audits of state agencies.

Those positions don't sit well with many teachers and state workers who are counting on policymakers to increase funding and salaries.

"It's the idea of having support and resources," said Billy Elles, a speech and debate coach at Westmoore High School who moonlights as a waiter at Outback Steakhouse. "I'm tired of having 34 students in a classroom. I'm tired of buying my own copy paper and my books."

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Follow Sean Murphy at www.twitter.com/apseanmurphy .

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