OCPA unveils budget proposal to lower spending, cut income tax rate

by Patrick B. McGuigan

Published 04-Feb-2011

The Oklahoma Council for Public Affairs has unveiled a budget proposal that would take state government spending slightly below $6 billion, allowing acceleration of income tax rate reductions from 5.25 percent for this year to 4.25 percent next January. While state agencies have requested significant increases in spending, the OCPA budget would fashion a 10.28% cut, from $6,691,837,225 in Fiscal Year 2011 to $5,991,239,999 in FY 2012.

Jonathan Small, fiscal policy analyst for the free market think tank in Oklahoma City, made the case for the budget in an interview with CapitolBeatOK. He said: “Our broad goals for OCPA’s FY-2012 Budget are to above all else remember that any money spent by state government is the people’s money, and government is just a steward of their money.

“Second, for FY-2012 and future state budgets, we want to carefully consider the limited purposes of government, to focus funds for those purposes, and to fund nothing else.

“Third, we want government programs to really encourage and promote freedom and personal responsibility.”

Small notes Oklahoma state government appropriations grew 32 percent between FY 2005 and FY 2009, a total of $1.7 billion. Arguing from the results in the 2010 general election, OCPA’s budget document contends the alternative offered “returns government spending to reasonable, pre-spending-spree levels while providing much-needed tax relief for Oklahoma’s overtaxed families.”

Small expanded on the argument in the interview, observing, “You know, people call lowering the income tax, a tax cut, but really lowering taxes is just deciding to take less of people’s hard earned money from them and their families.

“At a time when people are facing rising costs in health care, rising health insurance costs of about 3% alone due to ObamaCare, the doubling of costs for things like cotton, and food and other commodity prices increases from 3%-11%, it is just completely reasonable to take less of people’s hard earned money from them and their families.”

On the spending side, the OCPA proposal would re-order some categories of state spending. While agency heads have gone to the Legislature asking for significant spending hikes in a year when government revenue is projected to come in roughly $600 million below already-projected spending, the budget Small helped craft would actually reduce expenditures. A sketch of the spending cuts follows.

Programs facing zero direct funding, in the OCPA approach, include the Arts Council, Educational Television Authority, Physicians Manpower Training Commission, Teacher Preparation Commission, Space Industry Development Authority, Human Rights Commission, Conservation Commission, Consumer Credit Commission, Horse racing Commission, J.M. Davis Memorial Commission, Will Rogers Memorial Commission, and the Rural Economic Action Plan Fund.

No direct state appropriations would go to the following agencies, meaning they would have to rely on fees to finance operations: the Insurance Department, Workers Compensation Court, and the Secretary of State. In the latter case, the office could draw on its revolving fund for operations, Small said.

Discussing the 100% reductions for scattered programs and other fiscal disciplines in the budget, Small commented:

“You know it was reported a couple weeks ago in The Oklahoman that combined over 50 state agencies asked for over $1.5 billion more dollars to spend next year, and for about 1019 new state employees, even though they know that estimates are that there will be about $400 to $600 million less this year.

“This would be like your boss coming in and telling the entire company that revenues are down for the whole year, and that everyone in the company needs to make cuts, and then you turned to your boss and said ‘hey, can our division spend about 25% more?’

“Or better yet, it would be like if you or your spouse lost a job, or had to take a pay cut, and your spouse turned to you and said, ‘You know, I would like to do all of our shopping at Saks Fifth Avenue and would like to eat all our meals at The Mantle.’”

Small continued, “Even when you consider cuts from last year, FY-11 appropriations are still about $1.1 billion more than just in FY-2005. You have to really ask yourself. If they know funds are limited, but yet their requests are at that level, maybe that thinking and approach has also filtered its way into day-today operations and inefficiencies as well?”

Other major spending reductions include nearly 68% for the Department of Libraries, nearly 70% for the Commission on Children and Youth, nearly 87% for the Department of Agriculture, Food and Forestry, 79.4% for the Department of Mines, and 95.67% for the Water Resources Board.”

Small explained the overall approach: “We arrived at our cut amounts by recommending proven reforms that can be implemented quickly, like the state employee health insurance review working group’s reforms, that would have been implemented were it not for Brad Henry’s veto of SB2052. That and other state employee health insurance reforms which that bill allows would save the state at least $73 million annually.

“We also accounted for the fact that lawmakers have been asking agencies to give recommendations on how they would adjust to cuts of 5%, 7%, and 10%, so in the agencies where we did not recommend major structural reforms, we recommend a 5% cut. This results in annual savings of about $260 million.”

In all, the spending projection in the OCPA budget comes to 95% of projected revenues, or $5,991,262,800.

Small told CapitolBeatOK, “We believe that if lawmakers take hard and thorough looks at state agency budgets and spending, just as Oklahomans are doing with their own personal budgets during changing times, they will find our recommendations reasonable, and will probably find even more areas to save.”