By State Treasurer Ken Miller
With the primary elections passed, most state lawmakers can now take a deep breath and plan for the next legislative session. Though adjourned only four weeks ago, the last legislative session seems a distant memory. Most pundits have long since weighed in and it seems what didn’t happen will likely overshadow what did.
Regardless of one’s opinion of the many unsuccessful tax cut proposals, most would agree that each was sufficiently bold. Less aggressive were this session’s spending reforms. A thorough review of the FY 2013 budget reveals both good and bad.
Positives include holding the line on spending for most agencies while providing targeted increases into the core areas of education, transportation, public safety and health and human services. This year’s General Appropriations bill increased by 4.9 percent compared to last. Adding FY 2012 supplemental funding to the mix, the 3.2 percent increase is lower than population growth plus inflation.
Negatives include the perpetual problem with prioritization and continued dependence on non-recurring revenue sources. Unnecessary programs continue to siphon taxpayer resources from core areas critical to our state’s success. Simply limiting spending growth is not enough. Non-core functions must be eliminated so funding can be redirected into areas of highest return and responsibility. Perhaps then, budget writers will not need to supplement certified revenues with well over $100 million in one-time funds while working to eliminate recurring funds.
That being said, those who paint current officeholders as the biggest spenders in state history are being disingenuous.
A recent Tax Foundation study cited by critics lists states according to their spending increases, with Alaska and Oklahoma on opposite ends.
The report claims Alaska has the nation’s lowest spending increase. The state leaves little else to emulate. It has the largest government in the country at over 28 percent of its Gross State Product (GSP), a 48 percent tax on energy extraction and a $57 billion reserve, the result of over-taxation more than five times its annual budget.
Thanks to the inclusion of federal dollars, the study shows Oklahoma with the highest spending increase over the last decade. Federal spending is the responsibility of Congress and the President, not state lawmakers; even though many Oklahomans might appreciate more of their tax dollars returning to support transportation and troops. Nonetheless, such spending increases will subside if Washington finally gets serious about taming its deficits.
The total increase in Oklahoma state appropriations since FY 2006 – the first budget written under new party leadership – is, as with this year’s budget, lower than population growth plus inflation. Even so, government size in Oklahoma has crept from 18 percent of GSP in 2005 to the national average of 21 percent. This negative trend will likely worsen with certain federal cost-shifting ahead. Unless serious reexamination of state responsibilities occurs, needed tax reform will prove most difficult.
Each approaching session brings opportunity to tackle problems and build on successes. Oklahoma is already doing a lot of things right, but has room for improvement. Let’s plan to make next session’s spending reforms as bold as the tax cut proposals are sure to be.
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For more information contact:
Tim Allen, Deputy Treasurer for Communications & Program Administration