Oklahoma Vision Fund
State Question 800—formally known as the Oklahoma Oil and Gas Development Tax Revenue Investment Fund Amendment—is also called the Oklahoma Vision Fund. The purpose of the measure is to establish an additional investment/savings fund for the state.
Oklahoma has a Rainy Day Fund, created in 1985, that holds surplus funds taken in by the state. Also in 2016 the Legislature created the Revenue Stabilization Fund to help the state save more money for economic downturns.
The Oklahoma Vision Fund is intended to serve as more of an endowment fund than the Rainy Day Fund and Revenue Stabilization Fund. It would receive 5 percent of the state’s oil and gas production tax revenue, and the Legislature could direct money from other sources into the fund. The State Treasurer would invest those monies in stocks and similar securities and the fund would be subject to the prudent investor rule, which requires the appointed fiduciary to invest monies as a reasonable and cautious person would.
Four percent of the Oklahoma Vision Fund would be transferred annually to the state’s general fund. The transferred amount is calculated on the average balance of the fund over the previous five years. This constitutional amendment would prohibit more than 5 percent of the fund’s principal from being used to pay bond debt or to pay back other financial obligations incurred by the state, state agencies, or local governments.
The measure rose out of House Bill 1401, which was approved by the Legislature but was vetoed by Gov. Mary Fallin. Under a Senate joint resolution, the Legislature referred the measure for placement on the Nov. 6 statewide ballot as State Question 800.
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PROPONENTS SAY: YES
- The measure would create a reliable revenue source that endures even if oil and gas production tax receipts experience a long-term decline or go through more boom-and-bust cycles.
- As the fund grows, it could eventually reduce the need to raise other state taxes or could allow for tax reductions.
- This proposal appropriately places a limit on use of the trust fund to pay off government indebtedness.
OPPONENTS SAY: NO
- The state already has a Rainy Day emergency fund, available during bad times to help pay for state operations. The money is held in the state’s investment portfolio, and interest earnings go to the general revenue fund.
- The state needs more revenue for core services, and this measure diverts taxes into a permanent fund from which only a small fraction of the money can be tapped each year. The fund could later be used to supplant, rather than grow, funding for state services.
- The state should not pay obligations that are not its own, such as debt service payments by local governments.
This measure would add a provision to the Oklahoma Constitution creating a new trust fund. This fund would consist of (i) legislative appropriations, (ii) deposits from other sources, and (iii) investment income. Beginning July 1, 2020, 5% of revenues from the gross production taxes on oil and gas will be deposited into the fund as well. The percentage of gross production tax revenues deposited into the fund will then increase by 0.2% per year.
Monies in the fund will be invested by the State Treasurer. The fund is exempt from constitutional restrictions on the State owning stock. The State Treasurer is required to make prudent investment decisions and diversify the fund’s investments to minimize risk.
After July 1, 2020, 4% of the fund’s principal will be deposited each year into the State’s General Revenue Fund. Principal will be calculated by using an average of the fund’s annual principal for the five years before the deposit. No more than 5% of the Fund may be used to pay interest on bonds issued by the State or local governments. The fund will be called the Oklahoma Vision Fund.