Emails and interviews detail what really happened to state budget

The Oklahoma Capitol, in the early morning, on the last day of the regular legislative session on May 26, 2017 (Phil Cross KOKH)

It was a nearly billion dollar hole that followed years of other massive shortfalls. Lawmakers and other state leaders knew the session would be tough.

RELATED: State can't or won't find records that could detail budget decisions

However, the situation facing the state should not have been a surprise to anyone watching Oklahoma’s financial situation closely. According to an email sent to the state Secretary of Finance Preston Doerflinger economists was told that Oklahoma had commissioned a study of taxes and revenue as far back as 2002.

The email from Howard Barnett, the President of OSU-Tulsa wrote that he co-chaired the task force in 2002 that he was surprised to see what was done with his work. “In one sense, what the legislature has done since our report was issued is adopt many of the tax cuts we recommended without adopting the revenue raising measures we recommended.”

“If we keep lowering some taxes and never broaden the base structurally then you're antiquated,” said Representative Leslie Osborn (R, Tuttle). Osborn was the House’s chief budget negotiator until the final weeks of the session when the Speaker took over upon the acceptance that Republicans alone would not be able to pass the legislation needed to raise enough money to fill the budget hole.

Osborn said through all the years of budget shortfalls the legislature has taken the wrong approach. Each session sought to patch a hole, Osborn said what is needed is a complete overhaul of the state’s tax code, which remains essentially the same as it was when it was put in place in 1936.

“If you modernize and totally did a restructure of your tax code, which it is time to do, then you might be able to lower the grocery tax,” Osborn said. She believes many people, even those in middle or lower classes could pay less in overall taxes with a shift from income taxes to service based and property taxes.

Reforming the tax code would take extraordinary cooperation between the House, the Senate and the governor.

“Nothing changes until we have the two majority leaders, the two minority leaders, the governor and the secretary of finance sit in a room, roll up their sleeves and find a solution,” Osborn said.

The House and Senate did not have the best relationship this past session. In fact, many factions of the legislature seemed to communicate with each other via press releases and news conferences.

In one email from Governor Fallin to her senior staff she simply wrote “Good Grief” as a comment over a press release from the House Speaker’s office blaming the Senate for failing teachers by not passing the House version of a pay raise bill.

Fallin’s spokesperson, Michael McNutt said the governor’s comment was an expression of frustration.

“For the last several years, Governor Fallin has called upon the Legislature to fund a teacher pay raise and has proposed ways to fund a raise,” McNutt told FOX 25. “We must find a way moving forward to retain and attract new teachers.”

Other emails obtained by FOX 25 show the governor’s office was concerned about how to control or contribute to the public narrative of the budget battle.

“Yes. Like it and share it,” the governor wrote about an article that quoted State Representative Mark McBride’s comments on the budget. The email was sent to, then, Senior Communications Adviser Jana Miller just days before Miller posed in a “selfie” social media picture with the governor’s, now former, personal assistant Travis Brauer with the caption “F*** the House.” That picture was released as part of the Department of Public Safety’s investigation into Brauer which resulted in criminal charges related to alleged destruction of evidence.

“What they ended up doing is instead of getting something done they would rather play the blame game,” said Representative and House Minority Leader Scott Inman (R, Del City). “That ended up costing us and sending us into special session.”

Representative Inman led the Democratic opposition to the budget, insisting on raising the gross production tax. He said during the negotiations corporations played too large a role, pointing to a phone call made during meetings held in the final days of the session when the governor called an executive of an oil company to weigh in on the gross production tax debate.

“They [corporations] certainly have a role to play because a lot of what happens at the capitol affects them, but it is when leadership gives them more power and more influence than they give the voters of this state that's when we have problems,” Inman said, “And that's what Governor Fallin did this year.”

The influence of corporations is also seen in the emails obtained by FOX 25. Shortly after delivering her State of the State address which laid out a proposal to move to begin taxing dozens of services, Fallin received an email from the head of one of Oklahoma City’s largest corporations. The email went to Fallin’s personal email account, but was captured because it was forwarded to Doerflinger’s state email account.

The corporate leader wrote “I want a seat at the table to help you move forward with your agenda in a way that is palatable to the larger organizations who would pay millions more in services.”

The governor asked Doerflinger to set up a meeting. He agreed but warned the governor about not letting parts of her tax plan be “picked off.” Ultimately no service taxes were passed by the House or Senate.

Osborn said she believes service taxes could work, but they would have to be coupled with a complete overhaul of the tax code and with the current makeup of the House it would mean brining Democrats into the negotiations long before the 11th hour.

“I think what we need is to have a really strong executive branch that is working well with the legislative branch that will be able to actually do this,” Osborn said, “But you're talking about a very serious reform.”

Inman, not surprisingly, agrees his caucus should have been invited to the table from the beginning of the session.

“When I brought that up to the governor she was very frank with me,” Inman told FOX 25, “She said 'Scott I appreciate your concerns we probably should have brought you in earlier but in reality' but the reason she said she didn't bring us in earlier was because she couldn't get the House and Senate Republicans on the same page.”

By the end of the session, the governor's chief negotiator Doerflinger said of Inman "his ego and unquenchable thirst for power cloud good judgement. He has no business being a governor. Period.”

“That's the way he [Doerflinger] was trying to spin it because it became apparent that what the folks in charge cared more about was not about funding government, not about balancing the budget, but making sure they could get a win,” Inman said after FOX 25 read Doerflinger’s email to him, “Making sure myself as a candidate for governor and my caucus got a loss that was what was more important to them.”

Inman said it is “laughable” to blame the entire budget crisis on the handful of Democrats in a House that has more than 70 Republican member. However, as we learned this session Democrats did control enough votes to block new taxes from being constitutionally passed.

Now those same parties will have to re-negotiate in special session and test the theory as to whether or not time can heal the political wounds left from the budget battle.

Osborn said she has hope that negotiation and actual compromise can still happen.

“That means we come together and do what is right for our state and our future instead of just doing the next press release.”

Osborn said the state’s budget, which is the way we fund core services and take care of the elderly, children and the less fortunate, isn't about scoring political points; or about keeping the other side from scoring political points.

The solution, it seems, to the state’s financial crisis will not come from being a Democrat or Republican.

It will come when all sides realize they are working together as Oklahomans.

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