As Oklahoma’s tax debate unfolds, it has been encouraging to hear a rising chorus of influential voices insist that any tax plan must be revenue neutral. Given deep cuts that state agencies have absorbed in recent years and the long-term fiscal challenges the state faces in the years ahead, eroding our revenue base with one-sided  tax cuts would be hugely irresponsible and fiscally unsustainable. One promising approach to ensure that we do not bankrupt the state is for Oklahoma to adopt a pay-as-you-go, or PAYGO, requirement.

State Treasurer Ken Miller recently stated:

Budget writers should adopt a “pay-as-we-go” approach to reducing taxes. To responsibly finance tax cuts, policymakers should eliminate one dollar of spending or credits for every dollar cut in taxes.

This can be accomplished with fiscal discipline, better spending prioritization and a refined approach to budgeting.

Miller’s call for a pay-as-you-go approach was quickly endorsed by both the Oklahoman and Tulsa World. Read the rest of this entry »

Oklahoma is facing serious challenges when it comes to having the resources to provide the sorts of public services that help create jobs and build a strong economy.

Yet while the need to chart a sound, sustainable fiscal course is urgent, our policymakers too often are flying blind. Legislators routinely make spending and revenue decisions that will have long-term consequences without access to key information about the cost of funding existing obligations in the coming years.

Two recent reports from the Center on Budget and Policy Priorities (CBPP) suggest a pair of sensible budget management tools that Oklahoma should adopt .

• Current services budget: This tool would provide lawmakers and the public with the cost of maintaining today’s level of programs and benefits.
• State PAYGO requirement: It would require all new spending and tax cuts be fully paid for. Read the rest of this entry »

This week OK Policy distributed a 4-page memo on the state budget to all candidates for state offices, which we have now released to a broader audience. The memo is intended to offer policymakers a clearer understanding of the budget situation they will face following the November election, while suggesting some guiding principles and specific recommendations for addressing the challenges that lie ahead. Here are some of the highlights of the memo: (Much of the information is contained in our most recent 2-page Budget Trends and Highlights fact sheet).

We begin by stating that:

The state budget crisis of the  past two years has put great strains on the public structures and institutions that Oklahoma families, businesses, and communities count on to help us meet our common goals as a state. Whoever wins the elections in November will face difficult choices in filling large budget holes and balancing the budget over the next two to three years.

Our overview of the past two years emphasizes the historic drop in state revenue collections and the importance that non-recurring revenues from the federal Recovery Act, state Rainy Day Fund, and other sources have had in mitigating the magnitude of budget shortfalls. However:

Even with these funds… this year’s appropriations of $6.714 billion represent an overall cut of 7.2 percent from FY ’09. Over half of all appropriated state agencies have absorbed funding cuts of at least 15 percent, and some cuts have been multiplied by the loss of matching federal dollars. These cuts have weakened the ability of state agencies and schools to fulfill their core missions and have contributed to a corrosion of the public structures and institutions that Oklahoma rely on to promote our well-being and invest in our future. Across state government, shortfalls have forced agencies to serve fewer Oklahomans in need, eliminate programs,  reduce hours of operation to the public, cut payments to private providers, and lay off or furlough employees. Read the rest of this entry »

My decision to take vacation over the final week of July and first week of August allowed me to avoid not only some of the worst of the summer heat wave here in Oklahoma but also much of the heated controversy that followed the release of OK Policy’s issue brief on State Question 744, the ballot measure that would peg education funding in Oklahoma to per pupil expenditures in neighboring states. We set out four main arguments that have led us to take a position opposing the measure, the most compelling of which is the strong likelihood that mandating an estimated $1.7 billion increase in funding for common education over three years without a new revenue source would set the state even  further behind in our other areas of public investment that all Oklahomans, including our schoolchildren and teachers, depend on.

Our position was strongly praised by the Oklahoman in a written editorial and this video editorial by editor Ed Kelly (you’ll first get a short commercial for an investment company):

Read the rest of this entry »