Oklahoma’s economic outlook slips from 14th to 21st


By Patrick B. McGuigan | Oklahoma Watchdog

OKLAHOMA CITY – Is Oklahoma in the midst of good times and headed for better?

OKLAHOMA OPPORTUNITY: Dr. Arthur Laffer is a co-author of “Rich States, Poor States” for the American Legislative Exchange Council. While Oklahoma remains competitive, the state’s forward-looking “outlook rank” has slipped from 14th in 2012 to 21st in the newest analysis.

Or, are residents enjoying a strong economy, but standing on the verge of retrograde motion in competitiveness?

In the seventh annual assessment of economic competitiveness from the American Legislative Exchange Council, released Tuesday, the state garners a good ranking of ninth best state in the nation.

However, the state’s “economic outlook rank” is eroding in the analysis, dropping from 14th best in 2012 to 21st in the new ALEC report, Rich States, Poor States: ALEC-Laffer State Economic Competitiveness Index.

“These rankings reveal that policymakers have significant work to do to make sure that Oklahoma is best positioned to diversify its economy and compete for the location of entrepreneurs and job creators,” said Jonathan Small, policy vice president at the Oklahoma Council of Public Affairs.

The higher ranking for performance comes from a blend of three equally weighted factors in the ALEC assessment, guided by economist Arthur Laffer — state gross domestic product, absolute domestic migration and non-farm payroll employment.

The “outlook” rank, where Oklahoma comparatively declined in 2013, is derived from a blend of 15 variables.

The Sooner State continues to score a first-place ranking for three variables — keeping the state minimum wage at the federal floor, for the absence of a state estate and inheritance tax and as a right-to-work state.

The state also gets high marks for its low property tax burden (second) and tax expenditure limits (third).

Oklahoma falls into the broad middle of the spectrum on income tax progressivity (27th), marginal personal income tax rate (22nd), tax burden other than income, property and sales (16th), recent tax changes (29th) and debt service as a share of tax revenue (at 6.9 percent, ranking 14th best in the nation).

Oklahoma’s sales tax burden yields a poor ranking of 36th, historic tort liability costs kept Oklahoma at a low ranking of 42nd, and workers compensation costs (at $2.77 per $100 of payroll) led to an abysmal rank of 45th out of the fifty states.

Small warned that a slippery slope could be on the horizon.

“Oklahoma’s outlook has slipped because other than very recent workers’ compensation reform, Oklahoma policy makers have been distracted with the usual outcries for more spending from Oklahoma tax consumers,” he said. “Oklahoma’s abysmal ranking for public employees and top personal income tax rank hold the state back and limit opportunities for Oklahoma citizens. The public employee ranking is not surprising given Oklahoma trails the nation when comparing the share of state private sector income to total state income.”

Contact Patrick McGuigan at pmcguigan@watchdog.org.