Saving works. What a surprise (to government “experts”)!
By Jonathan Small
Some special-interest groups suggest tax increases are the only way to deal with budget shortfalls. But Oklahomans are benefitting from a far better, preemptive solution: Saving money during boom years.
Last year, when the state had around $600 million in growth revenue, legislators were analyzing proposed ideas to increase spending. Gov. Kevin Stitt recommended setting aside $200 million of that total, a goal many lawmakers embraced.
Most families, upon receipt of an unexpected financial windfall, see the wisdom of cubby-holing some money rather than using it to increase ongoing expenses. No one buys a new house on the theory that a one-time bonus will cover the higher annual costs of a larger house payment. Yet that’s how government often operates.
Thus, Stitt’s proposal left some officials in shock.
Sen. J.J. Dossett, D-Owasso, argued, “I don’t believe we’ll have another economic downturn over the next few years. It’s just too early to start creating new savings accounts and putting money in new savings accounts.”
Sen. Allison Ikley-Freeman, D-Tulsa, said, “People are dying in the state of Oklahoma, and we’re putting money in savings for another day, for ‘just in case.’”
The Tahlequah Daily Press reported in July that Rep. Matt Meredith, D-Tahlequah, was negatively referring to the $200 million as “the governor’s slush fund.”
Oklahoma Education Association President Alicia Priest declared it was “discouraging that the budget puts $200 million into savings when we could have made a bigger investment in our schools, our students and our future.”
Despite those complaints, the bill setting $200 million into savings passed the Oklahoma House of Representatives 92-0 and cleared the Senate 37-9.
Today, due to falling oil prices and the COVID-19/coronavirus event, the state faces large shortfalls. The current-year budget may fall up to $200 million below what was appropriated. Projections suggest lawmakers will have around $600 million less to appropriate next year than what was originally appropriated for 2020 (and things may get worse).
As Stitt recently noted, being “very fiscally responsible” even when “everything looked rosy” last year has left the state with “the largest savings account” in Oklahoma history—a total of $1 billion in savings.
“That’s significant,” Stitt said, “and it’s going to help us get through this down time.”
Yes, it will. The savings decried by the teachers’ union may now protect teachers from mid-year budget cuts at schools and avoid education cuts next year. The “just in case” money decried by some may now preserve funding for Oklahoma’s health needs during a pandemic. And Oklahomans will be protected from another round of tax increases at a time when thousands are losing their jobs.
So-called “experts” often claim government financing isn’t comparable to household budgeting. The benefit of last year’s saving effort proves the “experts” are wrong, and Oklahomans should thank the policymakers who embraced savings.
Jonathan Small serves as president of the Oklahoma Council of Public Affairs.
