Throughout this year’s regular legislative session, we heard sky-is-falling rhetoric from politicians, bureaucrats and lobbyists. Oklahomans were told our state has a “revenue problem” and needs more “recurring revenue” (a clever phrase that means “higher taxes”) or else we all face dire consequences.
But in reality, state government spending is at an all-time high. The state is on track to spend more in this fiscal year — more than $17.9 billion — than at any time in state history. Over the last 10 years, total state government spending has increased by $3.83 billion.
Whether Oklahomans know these facts or just recognize that government isn’t getting any smaller, it’s no wonder many ask: What “revenue problem”? And why do we need to raise taxes if the government is already spending more than ever before?
The truth is that Oklahoma doesn’t have a “revenue problem,” and doesn’t need to raise taxes. What we have is one manufactured budget crisis after another, created by too much spending with too little accountability.
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Every year, ideas to trim spending or to shift dollars away from lower priorities toward important services are presented to the Legislature. But every year, various special interests back pet projects and block these cost-saving measures. The cumulative effect is obvious: Only once in the last 20 years has state spending actually declined, and then just a little and only because of an economic downturn.
What about taxes? Perhaps surprisingly, federal data show that Oklahoma has historically had taxes higher than the average among the states. More recently, Oklahoma’s state taxes as a share of our economy have finally come into line with the average. Many states impose lighter tax burdens on their citizens but somehow manage to provide the same public services that Oklahomans expect.
Oklahoma’s current budget challenges have two causes — an extended recession spread from the oil and gas industry across most of our economy and the failure of state leaders to address convoluted, wasteful structures within government.
When oil prices plummeted in 2014, Oklahoma was knocked into a recession. Oklahomans lost 21,800 energy and manufacturing jobs in just one year and $13 billion in taxable income. Working Oklahoma families reduced their purchases subject to sales and use tax by $4.1 billion as they struggled to balance their family budgets.
When Oklahoma is hurting, it’s because Oklahomans are hurting. When times are tough, it’s only appropriate that state government do everything possible to adjust spending to match income, just like the rest of Oklahomans have to do.
Also, despite grim narratives from state agencies, core agencies and services are actually spending more than they were in recent years while others have seen only minimal impact from the budget downturn.
How do they claim their budgets have been cut? It turns out that the budget passed each year by the Legislature is only a portion — in some cases, a small one — of the total amount spent by many state agencies.
Some of these agencies receive most of their funding from other sources, usually fees, special dedicated taxes, or federal tax dollars. For the last several years, state appropriations have made up only about 40 percent of total state government spending in Oklahoma.
In a tough economy for Oklahomans, we deserve tax and spending debates based on facts and the full picture. The first way to fix any budget is to prioritize spending and find ways to be more efficient, not just to demand a pay raise. As legislators work to patch up Oklahoma’s current budget, hopefully they will do exactly that.
Curtis Shelton is a policy research fellow and David Autry is a communications manager at the Oklahoma Council of Public Affairs (www.ocpathink.org), the state’s leading free-market think tank.