As can be seen from the graph below, the proposed flat funding for public schools in 2013 follows four straight years of cuts in state aid. Since FY 2008, state aid funding has declined by $234 million, or 11.4 percent. During that period, public school enrollment has increased by 19,430 students. This equates to a 15 percent decrease in state support per student, from $3,194 to $2,724. In addition, since the beginning of 2008, inflation has boosted the overall costs of goods and services by 9 percent.

State Superintendent Janet Barresi requested an increase of $78.2 million in state aid funding for FY 2013 to return to FY 2011 levels. More recently, parents and educators had urged the Legislature to boost state aid funding by $50 million to avert further teacher layoffs and loss of programs. The failure to provide any additional money to support schools despite allocating $33 million for cuts to the top income rate, is sure to be regarded by many as a grave instance of misplaced priorities.

share this post

Source: OK Policy Note: Gross production tax revenues are from production months, two months prior to date of tax remittance

This article appeared in the April 2012 edition of the Oklahoma Economic Report, a publication of the Office of State Treasurer Ken Miller. It is reprinted here in its entirety with permission.

It seems that each day brings another story of record low natural gas prices and record high supplies. A warmer-than-normal winter in the United States drove down natural gas demand this year at a time when prices usually rise and supplies are reduced.

As a result, natural gas in storage is at or near record levels while prices are at their lowest in more than a decade. The U.S. Energy Information Administration (EIA) estimated natural gas in storage at the end of March at 2.48 trillion cubic feet, about 57 percent higher than at the same time last year.

According to Bloomberg, the average spot price in April at the Henry Hub in Louisiana was $1.99 per thousand cubic feet (mcf) as of April 27.

Budget concerns

In February, the State Board of Equalization certified estimated collections from the gross production tax on natural gas at $188 million for the General Revenue Fund during Fiscal Year 2013. The estimate assumed an average price for natural gas of $3.64/ mcf.

At that time, board members expressed concerns that the price estimate was overly optimistic, but ultimately agreed to approve the estimate as compiled by the Oklahoma Tax Commission and Office of State Finance using statutory guidelines.

Those urging passage argued the constitutionally-mandated five-percent difference between appropriations authority and anticipated revenues would provide enough flexibility to keep the budget in the black next fiscal year. The five-percent cushion amounts to approximately $250 million.

Tax rates and timing

For most natural gas wells, the gross production tax rate is seven percent. However, if the average price for a month drops below $2.10/mcf, the tax rate is cut to four percent. If the average price falls below $1.75/mcf, the rate is set at one percent.

The rate, however, is set month-by-month and gauging the potential fiscal impact requires an understanding of the difference between timing of production and tax remittance to the state.

Remittance of gross production taxes is made two months after the production occurs, which means, for example, that May collections will reflect production and prices from March.

Spot prices from the Henry Hub are used as a general benchmark of natural gas prices, but don’t necessarily equal prices paid for Oklahoma-produced natural gas due to a number of factors including contracted rates.

However, should the average price paid for Oklahoma-produced natural gas match or come close to the March average price of $2.06/mcf at the Henry Hub, the state would see those reports and remittances in May and the trigger to the lower rate of four percent would be pulled. Assessment of that lower rate would then be made on production during the next month, June, with remittance made in August. The lower rate would remain in effect until reports reflect an average monthly price at or above $2.10/mcf.

Due to the timing of gross production tax reporting, there would be a three-month lag between reports triggering the lower rate and remittances at that reduced percentage.

Ball-parking the impact

Arriving at an exact number of what the impact of low natural gas prices will be on the state budget is nearly impossible. A total of 85.72 percent of collections from regular production wells, taxed at seven percent, is collected by the state with the remainder passed down to counties and schools.

Three-fourths of collections from deep gas wells, taxed at four percent, flow to the state. The one percent collected on horizontal wells provides no funding for the state. Also, revenue estimates are based in part on production volumes, which vary greatly as prices rise and fall.

A glimpse, however, at potential bad to worst-case scenarios shows a budgetary impact is possible if prices don’t rebound.

Should natural gas prices during FY-13 be one dollar lower than the estimated rate of $3.64/mcf, the loss to the state budget would be approximately $70 million. If prices for the entire fiscal year averaged $2.00/mcf, when the top tax rate would be four percent, the negative impact to the budget would be approximately $175 million.

In the worst-case scenario, with prices below $1.75/mcf at a tax rate of one percent for a full fiscal year, the state would be required to pay back to the natural gas industry more than is collected to account for payments due from deferred tax credits.

Spillover effects

Natural gas production doesn’t just provide direct gross production revenue to the state. It provides thousands of jobs and hundreds of millions of dollars of economic activity as well.

Should prices stay in the cellar for an extended time, it could also mean the loss of jobs and economic activity. As a result, income tax collections (personal and corporate) could be impacted, along with consumption taxes such as sales and motor vehicles.

Oil offset

Higher than estimated crude oil prices could make up for some anticipated losses from low natural gas prices. A quick analysis shows it could make a difference.

The FY-13 revenue estimate anticipates an average price of crude oil at $96.92 per barrel with contributions to the General Revenue Fund of $188.6 million.

However, should prices average $10 more per barrel than the estimate ($106.92/bbl) during the coming fiscal year, ballpark calculations show it would add approximately $40 million to the General Revenue Fund.

In April, the spot price at Cushing for West Texas Intermediate crude oil averaged $103.27/bbl.

In brief, it appears that higher crude oil prices could offset some but not all of the losses experienced by low natural gas prices, but by exactly how much depends on too many variables to calculate with any degree of certainty.

Guessing the future

The EIA issues a monthly Short-Term Energy and Summer Fuels Outlook in which it forecasts, among other things, the price of oil and natural gas.

In its March Outlook, the EIA estimated the average natural gas price for 2012 at $3.27/mcf and the price for 2013 at $4.08/mcf. The April report, however, lowered those expectations with the 2012 price forecast at 21 percent less, $2.59/mcf, and the 2013 price reduced by 14 percent at $3.50/mcf. The EIA estimates crude oil at $106/bbl this year and next.

The EIA uses a calendar year for its estimates, while the state’s fiscal year includes the last six months of one calendar year and the first half of the next.

Because the energy industry is one of the bigger drivers of Oklahoma’s economy, many are hoping the EIA estimates are accurate. If so, it means Oklahoma will avoid facing the worst-case scenario. But even so, it appears unlikely the state will realize the gross production collections originally estimated in February and questions linger of what the impact will be overall to the state economy, related jobs and total tax collections.

The opinions stated above are not necessarily those of OK Policy, its staff, or its board. This blog is a venue to help promote the discussion of ideas from various points of view and we invite your comments and contributions. To see our guidelines for blog submissions, click here.

share this post

Rep. Earl Sears

Last week I participated in a StateImpact Oklahoma forum on the state budget with Rep. Earl Sears, the Chair of the House Appropriations and Budget Committee (R-Bartlesville),  and Sen. Tom Adelson (D-Tulsa).  An audience member asked the legislators what they would do to ensure that more individuals with mental illness were provided treatment in the community rather than in jails and penitentiaries.

Rep. Sears responded by saying that he is very supportive of the work being done by Commissioner Terri White and the Department of Mental Health and Substance Abuse Services to raise awareness about the prevalence and cost of mental illness. In particular, Rep. Sears praised the Department’s ‘Smart on Crime’ initiative‘ that uses evidence-based programs to reduce recidivism and decrease demand for correctional beds. By diverting non-violent offenders into programs such as drug court, mental health court, or other similar programs, Smart on Crime can reduce incarceration and ultimately save substantial tax dollars. The initiative, however, requires an upfront investment estimated at close to $100 million. And, Rep. Sears stated ruefully, we just don’t have $100 million to invest in Smart on Crime.

Rep. Sears is a thoughtful and caring legislator who has done solid work chairing the House appropriations committee. But to say we don’t have money to fund the Smart on Crime initiative is misleading. Yes, we’ve had three straight years of budget cuts and are looking at continued shortfalls or flat funding for next year.  But our budget shortfalls are due in part to the policy decisions of our elected officials. In the mid-2000s, the legislature and governor approved the largest tax cuts in Oklahoma history, with a fiscal impact estimated at some $770 million annually in lost revenue. Just this month, Oklahoma’s top personal income tax rate fell from 5.5 percent to 5.25 percent. This tax cut has a revenue impact of $120 million, with most of the benefit going to upper-income households.  Last year the legislature could have decided to repeal or suspend the tax cut based on the ongoing fiscal crisis and the continued cuts to vital public services. They chose not to.

As Senator Adelson noted at the forum, the legislature also chose not curtail tax credits to oil and gas producers that exempt most horizontal and deep well drilling from the gross production tax. These are paid out regardless of the price of oil and gas, so in many cases they are subsidizing production that would already be profitable. They cost the state from $80 million to $120 million annually. The legislature did vote to defer payment on these credits for two years – but the bill is now coming due, adding to the state’s obligations over the next three budget years. Many other narrow tax exemptions, such as the one that makes NBA basketball ticket exempt from the sales tax, have also been left intact.

Now, at a time when the state has some 6,400 persons with developmental disabilities on a waiting list for services, when some 600-900 people each day are on a waiting list for mental health treatment beds, when the legislature has eliminated funding for programs promoting quality teaching and schools, what is at the top of this year’s legislative agenda? Further cuts to the  state income tax- or perhaps its complete elimination.

Legislators may choose to prioritize further tax cuts over securing funds for initiatives like Smart on Crime that would help address our most troubling social problems and save money over the long run. But if they make that choice, they cannot pretend to be blameless when the funds aren’t available. Oklahomans deserve honesty from our elected representatives, not buck-passing.

share this post

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.

Second, the budget “shortfall” was reported as $150 million, the rough difference between revenue growth and loss of one-time budget boosters in the FY ’12 budget. But the shortfall in meeting our public needs is much greater. To determine this, we would have to start with the $600 million difference between the budget for FY ’09, when the recession began, and the estimate for FY ’13. A more realistic calculation would also add at least $100 million for the increase in the cost of providing services over the last four years. So the true budget shortfall is closer to $700 million, not $150 million.  Our recent forecast indicates we won’t reach this level until FY ’15, if we keep the current revenue structure.

And even that calculation is deeply flawed, in that it assumes the FY ’09 level of service should be the target. However, in FY ’08, the most recent available year, Oklahoma state and local governments spent 18 percent less than the national average and ranked 43rd among the states in spending. At least monthly, a new national ranking puts Oklahoma among the bottom states in health, education, transportation, or environment and shows the impact of this chronic under-investment. Our state’s economic and social viability are being eroded by poor budget decisions.

Measuring shortfalls against last year’s budget is a not-so-subtle way of assuming that last year’s budget was the correct one. That could be the case, but probably is not. Instead of letting the available revenue define the budget, Oklahoma should define the budget by the cost of providing the services that are needed to educate children, protect seniors, reduce poverty, maintain infrastructure, and promote economic growth. Current services budgeting and pay-as-you-go policies are used by many states to help define budgetary needs and hold elected officials accountable for whether and how they choose to meet those needs.

Adopting these important reforms would be the right way to begin to get our fiscal house back in order. Cutting income taxes can and should wait until we’ve worked harder at defining what we want and need our state government to do and developed a realistic plan for how to pay for it.

share this post

Before the economic downturn, the income tax brought in more than $2.5 billion a year. In FY 2010, it made up about one-third of all state tax collections. It is the single largest source of support for education, health care, transportation, public safety, and other necessities. The state could not provide basic, essential services without income tax revenue unless other taxes were drastically increased.

The issue brief shows that shifting to greater reliance on other taxes would disadvantage local business, create more risk of revenues not being adequate to needs, and put a disproportionate burden on low- and moderate-income Oklahoma families. Contrary to the claims of its critics, Oklahoma’s income tax is not a hindrance to the state’s business climate or a spur for people to move out of state. In fact, Oklahoma is out-competing most states that lack an income tax.

After three years of repeated cuts to the state budget, the state has fallen further behind in funding teacher salaries and benefits, staffing our prisons and juvenile facilities, and ensuring the safety of children at risk of abuse and neglect, among other vital functions. We face growing obligations to fund our public pensions, protect our water system, repair our crumbling infrastructure, and take care of an aging population. In this context, cutting the income tax is the wrong priority for Oklahoma’s future.

You can download the full 8-page issue brief here. Find more presentations, fact sheets, blog posts, op-eds and newspaper articles addressing Oklahoma’s tax reform debate here.

share this post

Highway 51 Bridge between Wagoner and Coweta. Photo by flickr user doug_wertman used under a Creative Commons License.

Last week, Gov. Fallin announced a plan to fix the state’s decaying bridges by 2019. The proposal involves putting more money in the ROADS fund, which receives a portion of income tax revenues that would otherwise go to the state’s General Revenue Fund.

OK Policy released a statement on the Governor’s plan that was mentioned by both The Oklahoman and The Tulsa World:

We welcome Governor Fallin’s focus on fixing Oklahoma’s crumbling bridges. However, we must note that her proposal would be paid for entirely by diverting more income tax revenues from an already cash-strapped state budget. At the same time, Governor Fallin and other state leaders are promoting further cuts or outright abolition of the income tax. This should remind us that the income tax remains vital for funding Oklahoma’s needs and that we cannot meet our obligations to pay our bills while undermining our revenue base.

The Oklahoman included a response from the Governor’s spokesperson that the effort to fix bad bridges “does not reflect a lack of commitment to other areas of government.” Fallin’s office told The Oklahoman, “much of the additional transportation funding would come from growth revenue, and Oklahoma has enjoyed nice growth in revenue this fiscal year.”

It’s true that state revenues are increasing, and there is a broad, bipartisan consensus that the state needs this growth to meet all of our obligations. In a discussion of Oklahoma’s long-term water infrastructure needs, which are estimated to cost $81 billion over the next 50 years, Sen. Brian Crain (R-Tulsa) said:

I absolutely believe that the Waters Resources Board needs this additional money. We need more money for monitoring and to gather data. … The problem is we also need more money for health insurance for our teachers; we need more money for our mental health system in order to provide some alternatives to incarceration; we need more money for our roads and bridges.

That is on top of large, unfunded pension obligations and increasing costs due to an aging population.

We don’t disagree with the Governor that decaying bridges are a serious problem for Oklahoma, and we’re glad she has decided to make them a priority. We’re also glad that the Governor recognizes bridges are just one of several areas that need government support. Increasing revenues give lawmakers breathing room to make some of these longer-term investments.

However, we should also remember that the growth is only a partial recovery from historic shortfalls. Budgets have been cut for three successive years, and almost every state agency has seen funding reductions of at least 10 percent. Per-pupil K-12 education spending has gone down 18.7 percent, the 5th largest drop in the nation. Far from having extra money, we’re still playing catch-up.

Meanwhile, increasing revenue brings another temptation: tax cuts. We’ve been here before. During the last boom economy in the mid-2000s, Oklahoma passed large, permanent income tax cuts. These were an easy sell when we had plenty of funds to go around. But when the recession hit, the tax cuts contributed to huge revenue shortfalls.

Then as now, we shouldn’t expect revenue growth to last forever. We need a tax system that is adequate to our state’s needs in both good years and bad. Unfortunately, we don’t seem to have learned from recent history, and the tax cut refrain has begun again. Our constitution and politics make it much easier to lower taxes than to raise them, so tax cuts tend to be permanent. But “growth revenue” never is.

share this post

The report, titled “Flip It to Fix It: An Immediate, Fair Solution to State Budget Shortfalls,” attributes a large part of states’ current deficits to regressive tax structures that are designed to fail.

Current vs. Inverted State and Local Tax System in Oklahoma (click for larger image)

“Trying to raise adequate revenue through a regressive tax structure—where a greater percent of income is demanded of the poor than the well-off—is like trying to squeeze water from a stone,” said Karen Kraut, coordinator of state tax policy at United for a Fair Economy and co-author of the report.

[See OK Policy's press release announcing the report here.]

In 2007, the poorest 20 percent of Oklahoma households paid 9.9 percent of their income in sales, property, and income taxes, which is nearly twice as much as the 5.9 percent of income paid by the wealthiest 1 percent. The cut to the top income tax rate set to go into effect next year will worsen the disparity, as the wealthiest 20 percent of Oklahomans will take home nearly three-fourths of the tax cut while the bottom 60 percent of Oklahomans together receive only 9 percent of the benefit.

In the debate over tax cuts in Oklahoma, some defenders of policies that primarily benefit the wealthiest argued that the rich will necessarily benefit much more from tax cuts because they pay more in taxes. In fact, tax cuts do not have to be regressive, and this report reaffirms the evidence that Oklahoma already puts an unfair burden for supporting state services on low- and middle-income Oklahomans. If we instead enacted a more progressive tax structure, we could restore badly needed funding to our schools and other public programs while reducing or keeping taxes the same for the bottom 60 percent.

We could make Oklahoma taxes fairer in numerous ways, such as: raising the personal exemption, which has been left unchanged since the early 1980′s; stretching out and indexing tax brackets so that more income is taxed at a lower rate; expanding the grocery sales tax credit; and providing a renter’s property tax credit for low- and moderate-income renters. Public services can ill afford to be deprived of more revenue, but the funds lost from these measures could be easily replaced by taxing higher income Oklahomans at the same rates as we currently tax the bottom 20 percent.

The full report and state-by-state information is available at http://www.faireconomy.org/flipitreport.

share this post

This is a red herring. Perhaps education will be cut 5 percent, compared to, say, a 10 percent cut to the Department of Environmental Quality. But those areas identified as core services (education, health and human services, public safety, and transportation) already make up almost 90 percent of state appropriations.

The real issue is not how the vast majority of the budget is treated compared to a few of the smallest state agencies. Speaker Steele and other lawmakers cannot claim in good faith to be protecting core services while ignoring revenue options and voting to make the problem worse.

OK Policy has long called for a balanced approach to the state budget that recognizes the serious and lasting harm being done by cuts and uses every available tool to preserve our public sector resources. Lawmakers do seem to be considering tapping into revolving funds and 5 percent money, but they have not pursued other good ideas, such as requiring online merchants to collect their fair share of taxes, revisiting unnecessary oil and gas tax breaks, limiting itemized deductions, suspending other tax exemptions, and approving bond issues for long-term efficiency gains.

We staved off total collapse during the worst of the recession by using stimulus and rainy day funds and putting a moratorium on some tax credits. Yet successive years of cuts have left most agency budgets reduced by 15 percent or more. And despite continuing shortfalls, legislators are already restoring tax credits and pushing new income tax and property tax breaks that will further reduce revenues.

We are all affected by the steady corrosion of our public resources. Oklahoma’s private sector depends on transportation infrastructure and an educated workforce. The most vulnerable Oklahomans depend on public support for basic needs. We all depend on the vital role of the state in public health and safety.

A budget deal is imminent, but it’s never too late for lawmakers to take a more responsible approach to funding Oklahoma’s critical needs. As details of the eventual agreement come out, we should not forget that what matters is not just how cuts are distributed, but whether lawmakers make the hard choices that recognize good government needs to be paid for.

Lawmakers may claim that the recession has forced their hand, but we always have a choice. We can pay what is needed to tackle public problems today. We can invest in the infrastructure and sound budgeting practices that will make a foundation for future prosperity. Or we can let our problems fester, let our public sector fall apart, and hand off the hard decisions to our children.

The choice is ours.

share this post

The impact (of budget cuts) is being felt by Oklahoma families, businesses and communities in far-ranging ways… Deeper cuts will further impinge the ability of state agencies to fulfill their core missions and may seriously affect the well-being of schoolchildren, seniors, persons with disabilities, correctional and public safety officers, and other members of our communities.

In this context, the Governor and legislative leaders are actively considering additional ongoing or one-time revenue sources that could avert truly catastrophic cuts to core services. One option being discussed is appropriating this year’s “5 percent money” for next year’s budget.  This post explains the “5 percent option” and suggests why, on balance, we think a portion of this money should be used, along with other revenue solutions.

Under Article X, Section 23 of the Oklahoma Constitution, the Legislature may appropriate no more than 95 percent of the estimated revenue for the upcoming year certified by the State Board of Equalization. There are seven certified funds, of which the largest and most important is the General Revenue (GR) Fund. The “5 percent money” refers to the balance, or cushion, between 100 percent of the certified GR estimate and the amount the Legislature can appropriate. If GR comes in above 95 percent of the estimate, the 5 percent money becomes available on July 1st of the next year. Normally, that money stays in the GR Fund and is then appropriated for the year after.  GR above 100 percent of the estimate all goes to the Rainy Day Fund.

The certified GR estimate  for the current year, FY ’11, was $4,888.6 million. The Legislature appropriated $4,6444.2 million in GR, leaving 5 percent money of $244.4 million. Through the first nine months of FY ’11, GR has come in at 104.2 percent of the certified estimate, and monthly collections are on an upward trajectory. It is now highly likely that GR for the full year will come in above 100 percent of GR. This means that on the first day of FY ’12, $244.4 million of GR will become available. The question facing those negotiating the  budget is whether to appropriate some or all of that $244.4 million in FY ’12, or whether to hold it in the GR Fund for appropriation in FY ’13.

The idea of using the 5 percent money, first proposed by then-Treasurer Scott Meacham in December, has been endorsed by several elected officials. As House Appropriations and Budget Committee Chair Earl Sears said:

There are (Republican legislative) members out there that say those funds should not be used at this time… That philosophy is there, and what has pre-empted that philosophy is we’ve got a $500 million shortfall.

However, Senate leaders seem less open to appropriating this year’s 5 percent money for next year’s budget.

While opponents of using the 5 percent money haven’t formally laid out their position, three concerns seem to be involved.  The first involves the legality of appropriating the 5 percent dollars, especially since those revenues will not become available until the start of next fiscal year. However, while it hasn’t been done before, there seems to be nothing that expressly prohibit the use of this year’s 5 percent money for next year’s budget.

A second concern is that revenue collections could end up falling short of 100 percent of this year’s estimate  by year’s end. This could be addressed by appropriating less than the full $244.4 million of 5 percent money in case of a late-year collapse in collections. Since we’ll have nine to ten months of actual collections to go on, budgeting this year’s 5 percent money in next year’s budget actually involves less uncertainty than the normal practice of appropriating next year’s budget based on estimated collections.

The final concern is that including up to $244 million in 5 percent money in next year’s budget is short-sighted policy in light of the state’s ongoing fiscal challenges. The state is already staring at shortfalls for FY ’13  due to the end of federal stimulus dollars and Rainy Day Fund money,  the full phase-in of the cut to the top income tax rate, and deferred payments on tax credits owed to the oil and gas industry and others.  Together, these factors mean $300 to $400 million of this year’s budget will not be available next year. This gap may equal or exceed revenue growth, even assuming a continued economic recovery. Using all of the 5 percent money in FY ’12 could thus create dependence on money that may not be available in the future.

Given the tension between the need to avert truly catastrophic budget cuts next year and the prospect of continued shortfalls on the horizon, the right answer regarding the 5 percent money should be neither all nor nothing. We believe the best approach is to use a portion of this year’s 5 percent money in next year’s budget while adopting other measures that would bring in additional revenues for next year and beyond. Balancing the budget with a portion of the 5 percent money is, quite simply, preferable to balancing the budget by endangering the core service in public safety, health care and education upon which Oklahomans’ prosperity, security and well-being depend.

share this post

Over the past two years, most agencies have lost 15 percent or more of their funding. Even though state appropriations as a share of the economy is at a 30 year low, next year’s shortfall is projected at $500 million. The Governor’s proposed budget for next year would eliminate some agencies and take another 3 to 5 percent from the rest.

Last year we surveyed some of what’s been lost. Here’s an update:

• With personnel costs making up 93 percent of its budget, more cuts to the Public Safety Department will mean furloughs and possibly laying off troopers. The Department already has 110 fewer employees than 2 years ago, and more than half of the drivers’ license testing sites across the state have been closed. A portion of these funds are being replaced by increasing the fee to reinstate a driver’s license.
• Oklahoma prisons are at 99 percent capacity with 8,000 more inmates and fewer staff than in 1995, which creates a dangerous situation where one officer can be supervising as many as 276 offenders. County jails have gone over capacity, with 1,348 state prisoners backed up in county jails at the end of 2010. Community sentencing, sex offender and substance abuse programs, and education and job training programs have all been cut or eliminated. Family visitation was cut to two weekends per month.
• To prevent additional furloughs, the legislature authorized taking $5.3 million from the Oklahoma Correctional Industries operating fund, which will end programs that make a profit and provide job training for inmates, reducing recidivism rates by one half compared to inmates not in the program. Cutting the program also leaves prisoners idle, which compounds problems of overcrowding. Longtime Board of Corrections member David Henneke said he is “very fearful something drastic or bad will happen, and we can end up with injuries and people hurt.”
• A projected shortfall of $7 to $9 million in the court system next year will mean layoffs of special judges, deputy court clerks and secretary-bailiffs. It also means inflated fees for anyone in need of court services as they increase to partially make up for inadequate tax dollars.
• Reductions in mental health services are putting more of the burden of handling the mentally ill on state and local police. From 2009 to 2010, calls for police to help the mentally ill increased by 50 percent. Police spending hours to transport mental health patients across the state to find treatment. In the past 18 months, the Department of Mental Health and Substance Abuse Services has eliminated164 mental health and substance abuse beds. Even before the cuts, Oklahoma was ranked 46th in the nation for mental health services.
• Oklahoma’s county health departments have begun charging $25 for flu shots because they can no longer afford to offer the vaccinations for free.
• The Health Department has been pared back to the point where it is unable to sustain further across the board cuts without imperiling public health and epidemic disease response. Health Commissioner Terry Cline stated if the agency is cut more he would have to eliminate the Office of Child Abuse Prevention, which oversees 21 different provider contracts and is a primary source of services aimed at preventing abuse and neglect in families at risk for such outcomes. Cuts already implemented include $200k cut from Tobacco Use Prevention services, about a thousand people no longer screened for HIV in Oklahoma County Jail, 880 fewer Hepatitis A and B vaccines, $28k taken from five community-based teen pregnancy prevention projects, and more.
• Buildings owned by the state are in need of more than $200 million in repairs. That includes $90 million in repairs at the state Capitol, which has rusted water pipes, some electrical wires insulated by cloth, and water leaking into the building.
• The House voted to suspend the Art in Public Places Act, which dedicates 1.5 percent of the construction budget on nonhighway projects to public art. The suspension will not improve what is available for appropriations since these projects are already largely funded through bonds.
• The Tourism and Recreation Department is closing 7 state parks, including Adair State Park in Stilwell, Beaver Dunes in Beaver, Boggy Depot in Atoka, Brushy Lake in Sallisaw, Heavener Runestone in Heavener, Lake Eucha in Jay, and Wah-Sha-She in Copan.
• Class sizes are going up across the state. At Tulsa Public Schools, elementary and secondary school class sizes rose by more than 8 percent, and other districts in the area saw class size increase of more than 5 percent. Tulsa Public Schools cut 225 teaching positions, while Union, Broken Arrow and Jenks cut 53, 32 and 22 positions, respectively. The 3 percent cuts proposed for next year will mean even more teachers laid off. In Norman, the school board voted to freeze pay and benefits for all district employees. School districts everywhere are cutting back in ways large and small, such as an end to field trips in Washoe County Schools.
• Appropriations for Oklahoma community colleges have decreased almost 9 percent while enrollment is up 34 percent over the last decade. At the same time, cuts in federal aid through Pell Grants threaten to take away hundreds of Oklahoma students’ access to a college education.

These are just a sample of the toll that successive rounds of budget cuts are taking on our state. Obviously some wasteful spending can and has been eliminated, but the examples above show that we have gone far beyond simply eliminating waste. With state leaders ready to cut taxes again and refusing to consider any ways to substantially increase revenue, we are looking at serious and lasting harm to the core public services that promote our health, education and safety. Refusing to pay for a solution to dire public needs today only makes them more difficult and expensive to solve in the future.

For OK Policy’s most recent information and materials on the state budget, click here.

share this post