Editor’s Note: This article was written prior to Gov. Mary Fallin delivering her eighth and final State of the State address Monday. The lede of the story was changed to reflect that fact.
On Monday afternoon, Gov. Mary Fallin delivered her eighth and final State of the State address.
It was the two-term governor’s last chance to define the state’s policy agenda as she sees it and inspire lawmakers and citizens to follow her lead.
What happens in subsequent months will help shape her legacy.
During her seven years in office, Fallin has touted a number of initiatives and goals. She has attained some, fallen short on others and largely reversed her thinking on at least one.
Revenue and taxes, criminal justice, higher education, public pensions and the overall health of Oklahomans have been among Fallin’s highest-profile and most-discussed policy areas. Oklahoma Watch sat down with the governor ahead of her speech to reflect on past goals set during her previous State of the State addresses, her current thoughts on those goals and whether they have been met. Taken together, they represent an important part of how history will assess Fallin’s tenure.
Revenue and taxes
What Fallin said then: “Our first priority will be to balance our state budget without raising taxes, which we can do by carefully prioritizing our spending and enacting government reform.” – State of State 2011
What has happened: Fallin favored cuts instead of raising revenues to balance the budget during her first term in office. When she proposed a 5 percent budget cut in 2014, she justified it by saying, “Business worth its salt can find 5 percent cost savings without crippling the services it provides.”
Fallin additionally led a charge to lower the state’s income tax rate during her first years in office. She fell short of her goal, made in 2012, to gradually lower income taxes to the point where no Oklahomans paid any income tax. But she was successful in lowering the top income rate from 5.25 percent to 5 percent.
As revenues have dipped in recent years – including revenue from income, sales and use, and gross production taxes – Fallin’s philosophy has changed, perhaps in response to the times. She now concedes that the state’s budget problems can’t be solved with budget cuts and reforms alone.
For the third year in a row, Fallin is backing tax increases to raise hundreds of millions in new, recurring revenue. This includes raising income taxes that she fought to lower a few years ago.
What Fallin says now: “While we have worked to lower the income rate as a whole to make us more competitive, we also need sufficient revenue to fund core services. We have become more efficient and more effective in government because we have cut budgets, but there comes a point where you cut so much, things become ineffective. So we have two options: We can fix this or we can continue down the path we’ve been on in many years of having a chronic budget crisis and having budget uncertainty in our state.”
What’s left to do: Fallin is supporting the Step Up Oklahoma plan promoted by business and civic leaders to raise taxes on oil and gas production, motor fuel, tobacco products and alcohol, and increase income taxes. The plan would raise about $750 million that could be used for teacher pay raises and to provide stable funding for years to come. But similar to her tax-increase proposals in recent years, the plan will face the challenge of clearing a three-fourths majority vote in the Legislature required for tax increases.
What she said then: “As Oklahomans, we must always place a priority on protecting our citizens and keeping our streets safe. But we can be tough on crime and smart on crime.” – 2011 State of the State.
What has happened: Fallin has routinely spoken of the need for sentencing changes throughout her tenure.
Yet the state’s incarceration count has risen from 26,379 in 2012 to 28,531 of this year. An incarceration rate that continues to grow will make it challenging to reach the governor’s target of reducing the prison count to 25,695 by 2020.
Fallin’s close involvement with criminal justice issues began in 2012 with her Justice Reinvestment Initiative, a grant program that was supposed to reduce violent crime and slow the growth of the prison population. However, under pressure from hardliners in her party, she backed off, forcing former House Speaker Kris Steele and Oklahoma County District Attorney David Prater to withdraw in anger from the planning process. However, as public attitudes toward incarceration began to soften, Fallin supported legislation in recent years that led to a criminal justice overhaul package in 2017.
Fallin’s Oklahoma Justice Reform Task Force released a series of recommendations last year that underpinned the legislation. But only a few of those have been acted upon. Meanwhile, voters have spoken, approving two state questions in 2016 that reduced penalties for low-level drug and property crimes and directed any cost savings toward rehabilitative services.
What she says now: “We are making progress, but the problem is we have sentencing guidelines that give court systems and our district attorneys guidelines of how long to put someone in jail. On the flip side of the coin, I think there is still interest in finding a better way to treat people, especially those with substance abuse problems, but that costs money and we need the programing, the services and funding.”
What’s left to do: Several of Fallin’s proposed criminal justice changes were blocked last year when then-Rep. Scott Biggs of Chickasha refused to let those out of the committee he chaired. But Biggs has since left the Legislature for a job with the federal government, and GOP legislative leaders recently said they plan on forwarding those measures to the floor this session. Fallin said she is hopeful those will pass.
What she said then: “Oklahoma must do a better job of encouraging Oklahomans to pursue higher levels of education and to complete more degree or certificate programs. That’s why we have set a goal to increase the number of college graduates from 30,500 degrees and certificates awarded annually to 50,900 (by 2023).” – 2012 State of the State
What has happened: According to the latest data from the Oklahoma State Regents for Higher Education, the state is on pace to easily exceed that goal. Just under 49,750 degrees or certificates were obtained in 2016. That’s enough to exceed an intermediate goal of increasing the number of degrees and certificates to 47,284 by 2018.
During this time, Oklahoma joined the Complete College America initiative, which included efforts to improve remediation programs, increase degree completion for adults and add incentives by financially rewarding colleges and universities for higher completion rates.
But Oklahoma continues to rank 43rd in the nation for postsecondary education and training attainment, according to a 2017 report from the Lumina Foundation, a private group that focuses on post-high-school learning opportunities.
What she says now: “We are trying to bring the business community together with educators to make sure we are focusing on what the local economies need in terms of skill sets. So we have made some great progress, especially with science, technology, engineering and math degrees, which are up 32 percent, and that is critical for aerospace, the energy sector and certainly any type of health care or manufacturing professions.”
What’s left to do: Fallin signed an executive order in December 2016 to establish a new initiative, Launch Oklahoma, to get 70 percent of Oklahomans aged 25 to 64 to complete a postsecondary degree, certificate or credential by 2025.
As of 2017, only about 40 percent of residents in that age bracket had that level of education.
Meanwhile, a state report in late 2015 noted that despite the “substantial gains’” there are “growing challenges we face in mainlining this significant momentum” due to less state aid to higher education, which dropped from about $1 billion when Fallin first took office to $773.6 million this current fiscal year.
What she said: “We’ll also need to … address one of the most serious long-term budget problems facing the state: our underfunded and unsustainable pension systems. Currently, Oklahoma has an unfunded liability of $16 billion.” – 2011 State of the State
What has happened: Oklahoma’s seven public pension systems were 55.9 percent funded, with unfunded liabilities of $16 billion, shortly before Fallin came into office. The has improved significantly to 75 percent funded, with an unfunded liability of about $9.7 billion as of July 2016, according to the latest available data.
The credit rating agency, Standard & Poor’s states that a funded ratio of 90 percent is excellent, 80 to 90 percent is good, 60 to 80 percent is relatively low and 60 percent or below is weak.
The Oklahoma Teachers Retirement System, the largest and least funded of the plans, stands at 65.7 percent funded. A state report projects that if current funding and benefit levels continue, the plan’s unfunded liability would be funded after 23 years. Prior to 2011, actuaries projected the time needed to fully fund the account as “infinite,” meaning if the same contributions and assumptions continued as existed in 2011, the plan would never reach fully funded status.
This change to the pension system largely came after Fallin signed bills that included deferring cost-of-living adjustments for retirees and establishing a defined-contribution pension plan for new employees as a way to manage costs.
What she says now: “Being able to reduce the unfunded liability is a huge accomplishment for our state and we have one of the lowest liabilities in the nation, which makes us very attractive to businesses. I think we are on the right track now.”
What’s left to do: The Oklahoma Retired Educators Association and the Oklahoma Public Employees Association have unsuccessfully lobbied for years for a cost-of-living adjustment, which hasn’t changed since 2008, for retirees.
Rep. Avery Frix, R-Muskogee, filed a bill for this session that would give retirees an 8 percent cost-of-living increase. But conversations about an increase have largely been overshadowed by proposals to give teachers and state employees a pay raise.
Fallin said she doesn’t see the need for any major pension changes this coming year. But she said a cost-of-living adjustment could be possible as the pension funds recover.
What she said then: “Studies now rank Oklahoma 46th in the nation for the health of our citizens. That ranking is unacceptable.” – 2011 State of State
What has happened: Oklahoma is now ranked 43rd in the nation, according to the annual America’s Health Rankings report that Fallin has previously cited.
The slight improvement, however, hasn’t come without a cost. The state Department of Health is now under intense scrutiny after accusations of mismanagement of funds. The expansion into nontraditional public health programs that helped cause the department’s financial problems were part of strategy endorsed by Fallin to improve health outcomes.
Fallin’s 2012 rejection of Medicaid expansion under the Affordable Care Act remains a watershed moment in her administration’s health-care policy. She has steadfastly argued that the federal government couldn’t be trusted to meet its obligations and that the state would end up assuming the cost of insuring an additional 150,000 uninsured Oklahomans.
Some specific benchmarks Fallin set have yet to be met.
Since Fallin took office in 2011, the infant mortality rate has fluctuated between 7.6 and 7.2 deaths per 1,000 live births. The latest statistic, as of 2015, show the rate at 7.4 per 1,000 births, above her target of an average of 7.0 from 2017 to 2020.
Fallin also stated in 2013 that the number of Oklahomans dying from the abuse of prescription drugs was unacceptable.
Since then, Oklahoma has been ranked as one of the worst-hit states from the opioid epidemic. A recent report from the state Commission on Opioid Abuse found that in 2016, there were 899 drug-overdose deaths in Oklahoma, representing a 68 percent increase since 2007.
What she says now: “We still have a long ways to go when it comes to health. Our smoking rates have dropped, but I still hope we can reduce smoking in Oklahoma because its costs affect Medicaid and affect the general cost of the workforce. We are also really tackling the opioid abuse problem we have in our state and substance abuse issues … but there are still a lot of challenges.”
What’s left to do: For the third year in a row, Fallin is calling for a $1.50-per-pack cigarette tax increase. The governor has repeatedly said increasing tobacco taxes will not only provide revenue but is good policy since it will lead to fewer smokers.
Meanwhile, the opioid commission’s 31 recommendations include increasing funding for mental health and drug courts, limiting the amount of opioids someone under 21 can receive and preventing criminal penalties from calling 911 to report an overdose.
It’s not clear whether Fallin and the Legislature will endorse these proposals.
Reach Trevor Brown at firstname.lastname@example.org or (630) 301-0589.