Businessman Kevin Stitt campaigned on a simple theme in 2018: Hire me as the state’s CEO and let me show you how to transform state government.
But a multitude of purchasing scandals and revelations of misspending during the coronavirus pandemic has exposed the hazards of running government at the speed of business. Friction with fellow Republicans in the Legislature highlighted other management blind spots. Stitt the CEO morphed into Stitt the governor.
Our State Under Stitt
One in a series of stories looking at Gov. Kevin Stitt’s record as he runs for a second term. Other stories:
Even as he runs for re-election with a record, Stitt still touts his CEO approach to governing. That includes taking positions that might upset Capitol insiders like lobbyists, “special interests” or even members of his own party. His focus on fiscal discipline, along with a rebound in state revenues and tax hikes under his GOP predecessor, Mary Fallin, led to record state savings accounts.
“The only way that you can truly make the right decisions for Oklahomans is not being beholden to any one special interest group over another,” Stitt told Oklahoma Watch in a recent interview. “We need more people in state government that are wanting to focus on that next generation and moving our state to becoming Top 10.”
Nearly all of Stitt’s cabinet secretaries have come from the private sector, with heavy representation from the oil and gas industry. His picks for several agency directors have similar backgrounds. Stitt knows the state can’t match the pay of their private sector jobs, but he recruits them by appealing to their sense of public service.
“I’m proud of the people that we brought into state government because I’m trying to bring a fresh set of eyes, people from all walks of life, from the business world,” Stitt said. “And I constantly tell them, ‘Hey, come give me two years of service.’ It’s really a sacrifice, but that’s what public service should be.
“This shouldn’t be the best job you’ve ever had, because then you hold on and do things for political reasons instead of for the betterment of Oklahoma.”
That short tenure hasn’t always worked out. Legislative investigations, state and federal audits and the media have uncovered millions in misspending during the Stitt administration, much of it from no-bid contracts.
Among the examples:
- A no-bid contract for pandemic school supplies worth $8 million.
- The Tourism Department hiring barbecue company Swadley’s to renovate and run restaurants at state parks with enhanced management fees.
- Privatizing the operations at the state’s relocated public health lab, where much of the new equipment sat unused.
- Paying up front for $5.4 million in personal protective equipment that was never delivered.
- More than $2.6 million spent on hydroxychloroquine, a once-promising treatment for COVID-19.
- A purchasing waiver so the state could make a commitment to buy 1,000 electric vehicles from financially shaky startup Canoo Inc.
In the GOP primary and in the general election, Stitt’s opponents have pointed to that litany of scandals as proof that he shouldn’t be rewarded with re-election. Stitt, meanwhile, decries the millions spent against him this year in so-called “dark money,” where the donors aren’t disclosed.
“The real question is: Find out who’s spending $20 million against me,” Stitt said. “Is my opponent going to be more beholden to that $20 million or the people that are actually voting?
“I would love for Congress to change those laws, or at least make it transparent. If you want to get in and try to influence an election, let’s let ‘em know who they are.”
Stitt’s own record of transparency in government is mixed. In his first year, he revamped the state’s online checkbook and signed an executive order forbidding agencies from hiring any new contract lobbyists. But he refused to provide details as a massive incentive package moved through the Legislature at record speed this year, citing a non-disclosure agreement he signed. More recently, secrecy agreements have been cited as he raised money for a new governor’s mansion, according to TV station KFOR. Oklahoma Watch had to sue the state to get access to billions in requests for federal pandemic relief money under the American Rescue Plan Act.
Stitt can point to economic successes ahead of the Nov. 8 election, including swelling state savings accounts and low state unemployment. Oklahoma ranks No. 3 in the number of days it could fund government using only reserves, according to the Pew Charitable Trusts.
“Historically, the reason we’ve gotten into problems in the past is the Legislature spends every dime of it,” Stitt said. “We had zero money in savings when I got here. We are in a good position because we’ve been fiscally disciplined, and I don’t apologize for that.”
Still, a rebound in oil and gas prices is a double-edged sword for Oklahoma. Energy company profits are up and more drilling rigs are being deployed to the Oil Patch. But gasoline costs more at the pump. Diesel, a key fuel in the agricultural sector, remains high.
An electric utility sector increasingly dependent on natural gas generation is pushing up household expenses for consumers. The price of natural gas averaged $4 per unit last year, but that has risen to more than $7 per unit this year, according to the federal Energy Information Administration. Those fuel costs are passed directly on to Oklahoma utility consumers. That’s in addition to billions in customer charges from the high price of natural gas during the winter storm of early 2021.
Stitt remains frustrated with the Legislature, and particularly the Senate, for not passing tax cuts or inflation relief this year. He blames President Joe Biden and Democrats in Washington for inflation, a global macroeconomic factor affecting numerous countries with all stripes of political parties in power. Rising energy costs and pandemic-related supply chain issues are increasing the risks of a global recession.
Making Change: ‘That’s What Drives Me’
Stitt said he’s proud of his record and relishes shaking things up. In his first term, he’s picked high-profile fights with several tribes over gaming compacts and the fallout from the U.S. Supreme Court’s McGirt decision that ruled tribal reservations were still in effect in Oklahoma for major crimes. He also drew the ire of medical groups over mask mandates in the first year of the coronavirus pandemic and frequently criticized Tulsa public school leaders over their decision to keep schools closed for public health reasons.
“In politics, what you guys have to understand is, you’re rewarded not to do anything,” Stitt said. “You’re rewarded to not make waves, you’re rewarded to go along to get along. When you see me moving the needle and trying to change stuff, it’s not good for me politically in getting beat up by everybody — the insiders primarily. But I tell you this, the 3.9 million Oklahomans out there, they want their governor there making change, (asking) how can we do better? That’s what drives me.”
John Budd was the state’s chief operating officer until summer 2021. He said Stitt is quick to make decisions and wants to get things done quickly. Despite a public perception that the governor digs in when challenged, Budd said Stitt appreciates alternative viewpoints. Still, the governor expects his decisions to be carried out once a policy is hashed out.
“The governor and I disagreed on a number of policy points, and we knew that going into our working relationship in 2019,” Budd said. “I didn’t always change his mind when we disagreed, but I always felt my view was listened to. When someone has as strong a personality as he does, it’s not always easy to challenge that person, but I think the governor relishes going toe-to-toe.”
What He Did With Expanded Powers
Stitt’s desire to be the state’s CEO differs from many of his predecessors’ approaches. Stitt is just the second governor in the last 50 years to come directly to the office from private business. Oklahoma’s constitution at statehood was designed to disperse power, with appointed boards picking the directors of most agencies and direct votes on statewide elected officials. That governing philosophy has evolved over the years.
The Legislature bears some responsibility for the latest changes in executive authority. In Stitt’s first year in office, Republican lawmakers gave additional powers to the governor, allowing him to directly appoint the leaders of some of the largest state agencies. In exchange, the Senate got new powers to vet those agency leaders through the confirmation process.
Then, for two months in 2020 at the outset of the pandemic, lawmakers triggered the Catastrophic Health Emergency Powers Act, giving Stitt, his cabinet secretaries and agency directors expanded powers.
The emergency powers law gave Stitt and his administration almost king-like control over state spending. Gone were purchasing provisions that require competitive bidding. State-issued purchase card spending limits could be discarded in the name of a public health emergency.
Much of the misspending highlighted by auditors or the media stem from that first year of the pandemic. But some, like the Swadley’s barbecue renovations at state parks, pre-dated the pandemic and only came to light this year.
It’s not that state purchasing rules are particularly beloved. Ask any state employee, and they’ll likely have long stories about how it was so hard to buy supplies or equipment needed for their job. Or the months or years it took for their agency to make a major purchase. But all those purchasing rules were put in place because someone, somewhere, at some time, messed up.
Oklahoma history bears witness. In the last century, Oklahoma claimed two of the largest government corruption scandals in U.S. history.
In the 1960s, the Oklahoma Supreme Court was a den of corruption and bribery, leading to significant reforms of the state’s judicial branch. Among those reforms was the Judicial Nominating Commission and the imposition of nonpartisan judicial retention elections. Then, in the 1980s, the county commissioner scandal led to the enactment of many of the state’s purchasing laws. More than 200 county commissioners and their vendors across the state were implicated in that scandal, which involved purchasing road-building materials.
Campaign Promise Kept Using Federal Funds
In the last two years, billions of dollars came into the state from the federal government for the coronavirus pandemic response. An alphabet soup of federal pandemic relief programs, from the CARES Act and GEER Funds to ARPA and PPP, popped up to send more than $30 billion to Oklahoma since 2020, according to the Pandemic Response Accountability Committee. Much of that relief went directly to businesses and individuals, but the state government got billions to spend from the CARES Act under the Trump administration and the American Rescue Plan Act under the Biden administration.
That federal money allowed the Stitt administration to check several boxes from a 2018 campaign promise to modernize state government. The state used $110 million in CARES Act money for a Texas-located backup to the state’s data center. Millions in ARPA funds will go toward electronic health records for county health departments and OU Health.
As a small-government conservative, Stitt said he sees no irony in using federal money to modernize state government. Instead, he sees it as putting it to good use. Sending the money back to the federal government so it can be re-distributed to other states wouldn’t make sense, Stitt said.
Stitt said his attempt to modernize the way driver’s licenses and car tags are issued and renewed ran into a very powerful lobby of tag agents at the Capitol, with many lawmakers initially resistant to the changes he wanted to make. Coronavirus-related office closures also meant long lines, as did the state’s long-delayed transition to federally required Real ID licenses. A lack of available appointments made the process incredibly frustrating for residents. This year, the Legislature agreed to combine some functions of the Tax Commission and the Department of Public Safety into a new entity called Service Oklahoma.
State agencies are reverting to a non-emergency posture for state purchasing. At a recent expo for state suppliers hosted by the Office of Management and Enterprise Services, officials touted the state’s gains in technology and promised a more-responsive state government for residents and vendors alike. Break-out sessions went over the minutiae of state purchasing regulations for various agencies. The agency debuted a new supplier portal for vendors.
“We kept hearing how difficult it was to deal with the state of Oklahoma,” said Steven Harpe, the former executive director of the agency and the state’s former chief operating officer. “In some cases, it was taking two years to get companies signed up on statewide contracts, and that was unacceptable. We discovered there was a massive divide between state government and private providers, especially local providers.”
From Drawing On Exclusive Network to ‘Thinking Outside the Box’
Stitt, whose first run for public office was for governor, had no government experience or networks of allies with government experience to draw upon as he set up his administration. His early appointments for cabinet secretaries drew from his network of business leaders, particularly an executive mentoring group called YPO, or Young Presidents Organization.
In his first year in office, Stitt picked three cabinet members and two agency directors who shared his membership in the YPO, an exclusive, invitation-only network of executives. Among them were Jerome Loughridge, Justin Brown and David Ostrowe. Only Brown remains in the administration as secretary of human services. He recently stepped down from his role heading the Department of Human Services.
A handful of Stitt appointees have resigned under pressure, including former Tourism Director Jerry Winchester. He left over misspending allegations under a contract with barbecue company Swadley’s at state parks. Gino DeMarco, who was Winchester’s chief lieutenant, also came under fire for his role in buying personal protective equipment as Stitt’s coronavirus “PPE czar.”
Meanwhile, two former oil and gas executives who ran the Commissioners of the Land Office resigned after revelations about alleged self-dealing and firing whistleblowers. The Oklahoma State Bureau of Investigation is looking into the latest allegations at the request of outgoing Oklahoma County District Attorney David Prater. Just last week, a Stitt appointee and architect of a hospital surge plan for coronavirus response was charged with several counts of drug trafficking over his role in finding “ghost” owners for commercial medical marijuana licenses.
In the last few months, Stitt made several agency- or secretary-level personnel moves. Earlier this month, he named Harpe to head the Department of Corrections, one of several agencies where the governor has direct appointment power. Harpe replaces Scott Crowe, who announced his retirement in the summer. The Corrections Department is overseeing the state’s resumption of the death penalty, with more than 20 executions scheduled in the next two years.
Other recent appointments also draw from the energy sector. John Suter, who has a background in oil and gas, was named by the governor to run OMES and be the state’s chief operating officer. He is a former CEO of SandRidge Energy and was a vice president at American Energy Partners. Stitt appointed another oil and gas executive, John Laws, to be secretary of budget and the state’s chief financial officer. Laws previously held executive-suite positions at Enable Midstream LP.
Stitt said the failed confirmation of one of his former health commissioners, Gary Cox, was the perfect illustration of how he’s trying to transform state government. Cox had a master’s degree, a law degree and decades of experience working at health departments in Tulsa and Oklahoma counties. But he didn’t have a master’s of science degree, and the Legislature was unwilling to change the statutory requirements for the position in 2020. (The Legislature later changed the law to allow current Health Commissioner Keith Reed to stay in the job.)
“He was the most knowledgeable guy in the state,” Stitt said of Cox. “So when I became governor, I appointed him as the director of the state health department. Little did I know that I had to go play ‘Mother, May I’ with 140 different people (in the Legislature) before I made that appointment to make sure they were OK with it.
“Those kinds of ridiculous things keep you from actually putting the best people on some of these boards and commissions. I’m constantly trying to explain to the Legislature that we’ve gotta think outside the box.”
Paul Monies has been a reporter with Oklahoma Watch since 2017 and covers state agencies and public health. Contact him at (571) 319-3289 or email@example.com. Follow him on Twitter @pmonies.