Tuesday, January 07, 2020

OCPA column: Ignoring the past and financial reality


Ignoring the past and financial reality
by Jonathan Small

Imagine asking your children if they want an increased allowance, and stressing that money is no object. Obviously, the kids will ask for more—probably a lot more.

Unfortunately, it appears some legislators think the above approach is how budgeting should be done. Just ask agencies if they want more money without concern for financial reality. But the end result with agencies will be the same as with children.

Fortunately, Gov. Kevin Stitt is pushing back against this practice.

The 2020 session will involve a flat budget with almost no growth revenue, based on current projections. Thus, Stitt has urged agencies to request increases of no more than 2 percent. Because lawmakers, to their credit, gave Stitt the ability to name major agency leaders, the governor now has the ability to better restrain spending. (By the way, that change aligned Oklahoma with the practices used in nearly every other state.)

Some agencies have responded admirably, and even announced they can maintain services with a smaller appropriation. That’s in marked contrast to prior legislative sessions when agencies normally submitted budget requests that, combined, exceeded available money by hundreds of millions.

But some lawmakers have responded to this change with distress, not praise.

Senate Appropriations Chairman Roger Thompson, R-Okemah, told The Oklahoman he is “concerned that we’re not getting exactly what the needs of the agencies are.” House Democratic Leader Emily Virgin told the paper that agency officials “are doing the governor’s bidding.”

But, as already noted, the old “trust the bureaucrat” system didn’t produce serious financial planning, just spending requests that far outpaced tax collections. Recall that a multi-county grand jury found the Department of Health effectively kept two sets of books for years to hide a slush fund. The grand jury found that system “allowed the OSDH to spend beyond its means for years without running out of money.”

As the agency falsified financial reports, officials later determined it was also involved in “mission creep” through unchecked expansion of programs and services. That’s no surprise. Government officials will always find ways to spend more money. This doesn’t mean agencies really need more money.

Even ignoring the high likelihood of abuse from a “trust me” approach to budget requests, financial reality means agencies should restrain spending this year. Amidst a standstill budget, there are two ways to generate money for new spending—through efficiencies or tax increases.

It’s reasonable to assume those lawmakers upset by government efficiency efforts are instead inclined to raise tax yet again—on top of the $1.1 billion in revenue increases already approved since 2015.

The governor’s defiance of business-as-usual budget practices in state government could therefore not only bring financial sanity to Oklahoma, but also prevent yet another tax-increase raid on working families’ pocketbooks.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.

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