OK: For the 2014 budget — $200 million more, or $200 million less?

OKLAHOMA CITY – Every year, the assumption, whether tacit or explicit, among planners in most of state government is that public spending must increase over time. The assumption is for some the equivalent of a law of nature.

Jonathan Small, who has helped fashion budgets for both government executives and legislators, is among the minority of knowledgeable analysts who quarrels with that proposition.

Small’s latest slap at conventional wisdom is distilled into the annual “budget book” from the Oklahoma Council of Public Affairs (OCPA), the Sooner State’s leading free market “think tank.”

The new OCPA alternative state budget, released March 25, makes the case for possible state spending cuts for Fiscal year 2014 of $132,794,767 — or 1.94 percent of the FY 2013 total. 

After sorting out all the line items of their alternative approach to budgeting, Small and his OCPA colleagues say the state could reduce this year’s appropriations by nearly $133 million — and still carry $277,208,015 in surplus funds into the following year (Fiscal Year 2015).
Thanks to the state’s comparatively healthy economy, state government revenue available for appropriation is projected to grow by a little more than $200 million in the current fiscal year.

However, state agencies submitted spending increase requests for more than $1.1 billion this year. Many analysts and even Republican leaders in the House and Senate have assumed appropriations will increase by the end of the legislation session in May, even if the Legislature approves a modest personal income tax cut.

The OCPA budget — and support for its assumptions by some the Legislature’s leading conservatives — makes it likely that any spending growth will, at the least, become a debatable proposition during the last two months of the 2013 session. 

At a briefing for members of the state Capitol press corps, Small, OCPA’s fiscal analyst, pointed out that total state government spending has never, ever, decreased, even during the “Great Recession” that began in 2008. 

Small also stressed that the $6.6 billion available for appropriation in the current cycle is less than half of total expenditures, which reached $16.70 billion in Fiscal Year 2012.

Among the choices Small asserts would yield major gains for the fiscal bottom line would be to implement state employee health insurance reforms which passed the Legislature in 2010 (with bi-partisan majorities), only to be vetoed by then-Gov. Brad Henry.

Small fielded challenging questions from reporters, stressing again and again that budgeting involves choices – and that choices typically made at state agencies are not inevitable, but reflective of management preferences. 

State employee health insurance proposals Small helped fashion as an aide to former Insurance Commissioner Kim Holland (a Democrat) might yield $2-3 million in administrative savings, for starters.

Big ticket savings could come from offering state government employees Health Savings Accounts, empowering employees, shifting away from the self-insured plan (HealthChoice) to provide savings of $37.8 million (half year for FY 2014), but thereafter $75.6 million on an annual basis.  

The state alternative budget overview Small unveiled along with OCPA President Michael Carnuccio details varied annual savings, including through telecommunications efficiencies ($3 million), performance evaluations and hiring reforms ($23.4 million to $41.4 million), retirement and pension reforms with potential savings worth hundreds of millions of dollars, major asset sales ($50 million to $200 million), modest savings from new reforms of agencies, boards and commissions, federal funding oversite, and privatization of state services.

Joining the OCPA unveiling were Republican state Reps. Lewis Moore (Arcadia), Tom Newell (Seminole), Elise Hall (Oklahoma City), Mark McCullough (Sapulpa), Jon Echols (Oklahoma City), Mike Turner (Oklahoma City), Jason Murphey (Guthrie) and David Brumbaugh (Broken Arrow). Each promised to advocate for some or all of OCPA’s vision. 

The OCPA analysis reflects insights from the John Locke Foundation, a “sister” free-market think tank in North Carolina. Small and other contributors to the alternative budget adapted to Oklahoma the North Carolina group’s “9 Rs of fiscal responsibility.” These include:

Reform entitlement programs to counter a 72.9 percent spending increase in just seven years. 

Require more user responsibility from agencies involved in activities outside the core functions of government. 

Redirect spending to “higher-priority uses,” including steps to secure the right of Oklahomans to enjoy what the state’s constitution characterized as “the gains of their own industry.”

Reorganize state government to accelerate modest agency consolidations that began during Gov. Mary Fallin’s first two yeas. 

Revive free enterprise by bringing down overall tax rates – along the lines of the moderate personal income tax rate cut OCPA recommended for this year.

Restore Civil Society through the “third” or “independent” non-government sector provision of charity and other services.

Remove advocacy, waste and race-based programs financed through government action — including implementating the November 2012 State Question 759 barring race consciousness in public programs. 

Reshape the state-local government relationship to leave local issues under local control (and financing). 

Reduce biases in the tax code to “build a coherent and efficient system.”

You may contact Patrick B. McGuigan at Patrick@capitolbeatok.com and follow us on Twitter: @capitolbeatok.