Last week we reported that next year’s revenues are expected to be 7 percent below their levels of six years ago (FY ’07), even though costs are higher due to inflation, population growth, and increased caseloads

Elsewhere, people seem to have read a different budget estimate than the one we saw. Two elements of the discussion show a growing disconnect between Oklahoma’s budgetary politics and reality.

First, Governor Mary Fallin and many others continue to advocate for reduction or elimination of the state income tax. A closer look at the budget shows that, of the $400 million forecast revenue growth from FY ’11 to FY ’13, fully  half comes from the income tax. Overall, the income tax is expected to provide $2.5 billion next year for General Revenue, the HB 1017 Education Reform Fund, and the ROADS Fund, which has helped restore the worst of our roads and bridges. Cutting this vital revenue support makes no budget sense. It also makes no economic sense. Read the rest of this entry »

Today we published “An Incomplete Recovery: The State Budget Outlook 2012-2015.” This is the third of our annual series of forecasts for the state budget. Our goals for this project are both to inform leaders and citizens about the state’s likely fiscal path and to advocate for better fiscal policies and decisions.

“An Incomplete Recovery” sums up the forecast part of the story. These are the key findings:

• The General Revenue Fund (GRF), which makes up 76 percent of the state’s budget in FY ’12, will continue its slow recovery. As we discussed here, GRF revenue has now grown over the prior year for 18 straight months. Unfortunately, revenue still remains 15.9 percent below the peak levels of FY ’09. Our forecasts indicate it will be two more years, FY ’14, before GRF revenues reach pre-recession levels.
• Much of the revenue decline and subsequent slow recovery can be attributed to the severe economic downturn, but not all. Read the rest of this entry »

Once again, OK Policy is getting in touch with its inner dweeb (as if the outer dweeb wasn’t scary enough) and beginning work to develop new four-year forecasts of revenue and budgets for the state of Oklahoma. We’ve written elsewhere of our concerns (and others’) about Oklahoma’s official revenue forecasting and how we’ve designed fiscal policy to depend on poor forecasting. We won’t repeat those arguments now, though we certainly reserve the right to do so later.

Good forecasting starts with a sober look back at previous efforts. We first undertook the forecasting project in 2009, in response to rapidly falling state revenues. Our first forecast brief, released in November of that year, used six different models to forecast state General Revenue Fund (GRF) revenues for four years (here’s a summary of how those forecasts are developed). With the books now complete on FY ’11, we can look back to judge how we did and compare our performance with the official projections certified by the Board of Equalization. Read the rest of this entry »

Last year we published OK Policy’s (and possibly the nation’s) first Online Budget Guide, a primer for Oklahoma state and local government finance. We were pretty excited about the online approach. It allowed us to save paper and printing and distribution costs, add new material as it made sense, and update as new data became available. We’re still excited, in part because we have new data. We’re currently updating our comparison of Oklahoma taxes with those paid by other Americans. The numbers have changed, but the story is the same: Oklahoma has among the lowest taxes in the nation. Read the rest of this entry »

Ron Haskins, Senior Fellow at the Brookings Institution, was this month’s speaker at DHS’ Practice and Policy Lecture Series. Haskins looked at causes and offered solutions to the persistence of poverty in the United States. He attributed poverty to four main causes:

1. Low rates of working and low wage rates. Only 83 percent of working-age adults had full-time jobs in 2008, down from 89 percent in 1980. The rate is dramatically lower, 42 percent, for African-Americal males. Haskins attributes the increase for that group in part to higher incarceration rates and blames relatively generous welfare and retirement systems for some of the general decline in working rate. At the same time, low- and middle-income workers are not seeing meaningful gains in wages.
2. Changing family composition. The marriage rate has declined greatly, mainly for less-educated women. Forty-one percent of births are now to single mothers, almost all of them with less than a college education. Given the clear link between single-mother family status and child poverty, Haskins suggested higher marriage rates would reduce poverty. Read the rest of this entry »

Today OK Policy released “A New Fiscal Reality for Oklahoma: The State Budget Outlook, 2011-2014,” our second annual multi-year budget forecast. Click here for the full 10-page brief or here for the 1-page summary. Dangerously nerdy readers also can check out the 17-page technical memorandum that describes our assumptions and methods.  If you just want the elevator speech, here it is:

We can choose to keep on emptying the revenue stream, spending on favored programs without demanding results, and taking life one fiscal year at a time, as we have through many years. Or we can choose to reevaluate our environment and craft a new fiscal approach that values good planning, effective spending, and generating sufficient revenue to make Oklahoma smarter, safer, and more competitive. We must choose wisely. Read the rest of this entry »

Last year at this time, OK Policy began a revenue forecasting project. Our efforts stemmed from the limitations of official revenue forecasting efforts, which are limited to two annual forecasts prepared for the Board of Equalization, issued in December and February, each covering only the remainder of the current year and the year ahead. In stepping into this void, we had several goals:

1. To help state leaders, agencies, and citizens better understand and prepare for the impacts of the FY ’10 budget shortfall;
2. To encourage the legislature and governor to develop a cohesive plan for managing the shortfall while minimizing impacts on  services that Oklahomans depend on;
3. To better understand how long the revenue downturn would last and the path back to normal revenue levels; and
4. To encourage the state to build better forecasting and financial planning into the budget process.

Our forecasting brief summarized our forecasts and recommendations. This post looks back at how well those forecasts worked.

The graph below suggests that our efforts were generally on target. The graph shows our six forecasts, along with the “middle scenario” and the actual revenue the state received. (Our technical memorandum describes how each forecast was devised.) Read the rest of this entry »

On January 1^st, tax cuts with a revenue impact exceeding $100 million, which include the full repeal of the state’s estate tax and a steep increase in the standard deduction, will take effect in Oklahoma.  Do these tax cuts reflect our priorities at a time when budget shortfalls are leading to layoffs of school personnel, cuts in Medicaid benefits, and the closing of treatment facilities for people suffering from mental illness? If Oklahoma legislators, and the voters they represent, were asked to make these choices today, most would likely decide to target scarce resources to limiting the magnitude of cuts. But because of multi-year revenue commitments made by the Legislature several years ago, during very different economic and fiscal circumstances, these tax cuts will take effect automatically next month.

As state leaders grapple with the short-term challenges of bringing the budgets for this year and next into balance, it is not too early to draw lessons from the current state fiscal crisis to design policies that will allow us to respond better the next time the economy falters. This post, the third in a series that will recommend changes to our budget and tax system, looks at options for putting multi-year commitments on hold during downturns. Our first post recommended enhanced and expanded budget forecasting; the second looked at strengthening reserve funds. The final piece will consider tax expenditures. Our proposals are all intended to enhance the Legislature’s ability to manage budget downturns without having to implement deep cuts to vital state services or enact tax increases. Read the rest of this entry »

There’s been a lot of news about stimulus reporting the last few weeks. A lot of it has focused on jobs created or saved; that’s understandable since that was a major point of the American Recovery and Reinvestment Act, which is the stimulus’ grown-up name. The federal stimulus web site, Recovery.gov,  has posted the first compilation of stimulus grants, loans, and contracts, which covers the first six months under the act. The reports exclude funds allocated directly to individuals through such mechanisms as increased food stamp benefits, extended Unemployment Insurance, Medicaid payments, and tax cuts.

The STAR Coalition of organizations promoting accountability in the recovery praised this effort:

Our groups can now follow the money in ways they never could before and will use it to engage their policy-makers and build a recovery that benefit communities. We will also use the data to actively engage the public to better understand how the Recovery Act is impacting our communities, and how taxpayers can advocate to improve the Recovery Act and other government investments in the future. Read the rest of this entry »

In October, federal agencies, grantees, and contractors who are getting some of the stimulus (American Recovery and Reinvestment Act or ARRA) money are required to submit six month reports. This post points you to places you can see reports or summaries of them and includes some analysis and further thoughts. Read the rest of this entry »

We’ve recently joined with CFED, a national organization dedicated to expanding economic opportunity, and the Oklahoma Asset Building Coalition, in releasing the 2009-2010 Assets and Opportunity Scorecard. Our earlier post summarized the Oklahoma results, as did several media reports.

One area where Oklahoma needs to do better is our 529 college savings plan. Section 529 of the federal tax code allows families to set aside savings in a special account overseen by the state government. Interest earnings on the account are not subject to the federal or state income tax. CFED points out that: Read the rest of this entry »

From time to time we publish guest blog posts that help illuminate a policy issue or advance the discussion of public policy in Oklahoma (see our guest blog guidelines). This post was written by Laura Dempsey-Polan of Life Senior Services, a Tulsa senior service care provider. Laura may be reached at (918) 664-9000 X267 or LDPolan@LIFEseniorservices.org. The opinions stated below are not necessarily the opinions of OK Policy, its staff, or its board. This blog is a venue to help promote the discussion of ideas from a variety of different points of view.

Oklahomans and their families prefer in-home supports over institutionalization and we know these supports offer marked savings with much better outcomes. Over two decades, Oklahoma developed five in-home support Medicaid programs (i.e., 1915C Waivers) now serving 31,000 eligible citizens, and 2 more are in the works. Yet, in-home programs are increasingly squeezed by nearly eight years of stagnant reimbursement. Read the rest of this entry »