Oklahoma’s path not taken: Many ways to trim state spending, analysts say

OKLAHOMA CITY – Facts are stubborn things, they say. So, just the facts, folks:

As has been the case every year during the administration of Republican Gov. Mary Fallin — with Republicans in firm control of both the House and Senate and, in fact, with the GOP holding every statewide elective office – Oklahoma state government spending will increase.

The projected increase in spending came even though money available for direct appropriation by the Legislature was $188 million less than a year ago, due in large measure to the impact of “off-the-top” predetermined spending.

After consistent references from state leaders to “a budget hole,” spending actually increased

When it comes to achieving what Fallin and other conservatives called “right-sizing” of government in the 2010 campaign, there is actually no shortage of ideas to nip-and-tuck a few hundred million dollars from a more than $7 billion annual legislative appropriation.

Potential cuts have been suggested by the Oklahoma Council of Public Affairs (OCPA), and Americans for Prosperity (Oklahoma), among others.

As for the latter, AFP-OK executive director John Tidwell points out that the state would save billions over the next 20-30 years by extending to all six government pension programs the “defined contribution” reform enacted this spring for new hires in the Oklahoma Public Employee Retirement System (OPERS, about 40 percent of the workforce).

As for the former, OCPA’s vice president for fiscal policy, Jonathan Small, renewed his annual tradition of listing Letterman-style “Top 10” recommended budget cuts, this year totaling $239.2 million.

That includes $95 million that could be captured for state taxpayers (or alternative expenditures) by reforming public employee insurance offerings and duplicating the Oklahoma County government’s shift to lower cost surgical procedures, $100 million from a shift to patient choice in Medicaid,
a whopping $20 million from elimination of tax funding for entities performing non-essential functions (the horse racing commission, state insurance department), $8 million now being spent rodeos, fairs, aquariums, festivals and other non-essentials, $5 million in special legislative earmarks and other cuts.

Wait – that’s not all.

Line-by-line, OCPA’s comprehensive alternative budget, circulated this spring, included $346.2 million in possible reductions in state spending. 

As for these paths not taken in Oklahoma state government spending, last week — along with the state’s largest newspaper, The Oklahoman — Oklahoma Watchdog laid out the many ways in which state government spending will increase in Fiscal Year 2015.

The Fiscal Year 2014 general appropriation for Oklahoma was $7.11 billion. The projected total for FY-2015 is $7.12 billion. David Blatt of the state’s most influential liberal think tank, the Oklahoma Policy Institute, sketched the broad sweep of how “less” became “more,” writing:

“The budget tapped $254 million in one-time revenues that were transferred from a variety of accounts, including the Cash Flow Reserve Fund ($101 million), the Unclaimed Property Fund ($40 million), and more than two dozen agency revolving funds ($108.2 million).”

The projected increase in spending came even though money available for direct appropriation by the Legislature was $188 million less than a year ago. After consistent references from state leaders to that sum as “a budget hole,” spending actually increased, because the state essentially robbed Peter to pay Paul.

Analysts sympathetic to tax consumers in and outside of government posit that Oklahoma government spending cannot be reduced, that spending is too low and that the steady upward pressure on state spending is immutable. 

Oklahoma’s state government spending of $3,230 per resident compares unfavorably with Texas ($2,310 per resident), but favorably with Kansas ($3,626 per resident).

Both Oklahoma and Kansas compare unfavorably with both the average for the nine American states with no state income tax ($2,604 per resident)
and the average for the ten states with the greatest fiscal freedom ($2,578 per resident, in an analysis from the Mercatus Institute of Virginia). 

Despite his frustrations with the annual march to higher spending in Oklahoma, OCPA’s fiscal guru remains consumed with big ideas: making government smaller, more efficient and more limited, and lowering the personal income tax from 5.25 percent to 4.75 percent (sooner, as in next year, rather than later in current law, i.e. 2016 or 2017).

Small contends Oklahomans should demand fulfillment of the campaign promises of the past, including the lower income tax:

“Oklahoma citizens would see an average tax cut of $150 as a result of this proposal. This will allow more capital to remain in the private sector. It also fosters a more attractive climate for entrepreneurs, job creators, families and individuals. This will boost the local economy and would allow Oklahoma to remain competitive in the race for jobs and economic growth.”

You may contact Pat at patrick@capitolbeatok.com