A recent report released by the Trust for America’s Health and the Robert Wood Johnson Foundation announced the latest alarming figures about the spread of obesity in America. They found that last year in 31 states, including Oklahoma, more than one in four residents was obese  (obesity is measured as a BMI, or Body Mass Index, >30, or 30 pounds overweight for a 5’4″ person). Last week, this new study from the Economic Research Service of the United State Department of Agriculture (USDA) examined one solution to the obesity epidemic that is gaining increasing attention: a tax on sodas,  similar to the tax on cigarettes that governments have long imposed at least in part to discourage unhealthy and costly behavior.

The USDA study suggests that a tax on “caloric sweetened beverages” – which have been found to be the single most significant contributor to obesity -  would be an effective tool for reducing consumption and fighting obesity:

This study estimated that a tax-induced 20-percent price increase on caloric sweetened beverages could cause an average reduction of 37 calories per day, or 3.8 pounds of body weight over a year, for adults and an average of 43 calories per day, or 4.5 pounds over a year, for children. Given these reductions in calorie consumption, results show an estimated decline in adult overweight prevalence (66.9 to 62.4 percent) and obesity prevalence (33.4 to 30.4 percent), as well as the child at-risk-for-overweight prevalence (32.3 to 27.0 percent) and the overweight prevalence (16.6 to 13.7 percent). Read the rest of this entry »

A new poll from the Pew Research Center presents interesting findings about the state of public opinion regarding the state fiscal crisis.  A late June poll of 1,001 adults found a majority of respondents saying that states should fix their own budget problems by cutting services or raising taxes,  rather than relying on additional help from the federal government (In the poll, just 26 percent agreed that,”The federal government should give more money to states, even if it increases deficit,” compared to 56 percent who said, “States should take of this, by rising taxes or cutting services). However, when asked about the actual options for balancing state  budgets, solid majorities of Americans said no to everything:

Pew Research/National Journal Congressional Connection Poll, June 2010

The message from the American public couldn’t be clearer: balance the budget, but don’t cut services and don’t raise taxes. With such a strong popular mandate from the voters, is it any wonder that our elected officials are so eager to make the tough political choices?

 Earlier this year, we explored the question of what does and does not fall under the supermajority provisions of SQ 640. In these final days of the legislative session, this question has assumed renewed relevance with the introduction and passage of HB 2437, which levies a 1 percent asssessment on health insurance claims and which opponents argue falls under the Constititional definition of a revenue raising bill. Our blog post, which we’re reposting verbatim, can’t provide any definitive answers, but may at least help clarify the questions. 

With Oklahoma facing a gaping budget hole for the upcoming fiscal year of anywhere from $850 million to $1.6 billion,  depending on one’s calculations, the search for new revenues to fill the gap and avoid devastating cuts to services has assumed real urgency. The Governor in his FY ’11 Executive budget proposed a long laundry list of revenue enhancing proposals that were estimated to generate over $700 million in additional revenue for FY ’11. His proposals ranged from appropriating unused balances in agency revolving funds and issuing bonds to raising fees, eliminating tax credits, and collecting taxes on online purchases.

But what about SQ 640? Few discussions of revenue options in Oklahoma get very far before being met with: “But what about SQ 640″?. Last week, for example, House Democrats tried unsuccessfully to argue that a bill containing a fee increase should be ruled out of order due to SQ 640. But while the specter of SQ 640 casts a giant shadow over policy discussions, its actual scope is not always well understood. Read the rest of this entry »

With Oklahoma facing a gaping budget hole for the upcoming fiscal year of anywhere from $850 million to $1.6 billion,  depending on one’s calculations, the search for new revenues to fill the gap and avoid devastating cuts to services has assumed real urgency. The Governor in his FY ’11 Executive budget proposed a long laundry list of revenue enhancing proposals that were estimated to generate over $700 million in additional revenue for FY ’11. His proposals ranged from appropriating unused balances in agency revolving funds and issuing bonds to raising fees, eliminating tax credits, and collecting taxes on online purchases.

But what about SQ 640? Few discussions of revenue options in Oklahoma get very far before being met with: “But what about SQ 640″?. Last week, for example, House Democrats tried unsuccessfully to argue that a bill containing a fee increase should be ruled out of order due to SQ 640. But while the specter of SQ 640 casts a giant shadow over policy discussions, its actual scope is not always well understood. Read the rest of this entry »

Our friends at the Center on Budget and Policy Priorities (CBPP) have put out a new paper addressing the acute fiscal crisis facing states across the nation. As shortfalls reach a level where they are seriously compromising the ability of state government to provide core public services, the Center calls for a balanced approach that “ensures that no one segment of residents and businesses bears the brunt of recession-induced deficits.” Their seven components of a balanced approach are:

• Efficiency – focusing on the goals of expenditures and whether there are better ways to reach those goals;
• Using all available resources – employing reserves, rainy day funds, and federal fiscal relief funds responsibly and wisely;
• Scrutinizing all spending, not just what is appropriated through the budget – including programmatic expenditures made in the form of tax breaks;
• Improved collections – aggressively seeking taxes due that are not being paid;
• Tax increases – particularly those that have a more positive impact on the economy than spending cuts;
• Prioritization – making careful decisions based on goals and effectiveness when budgets must be cut; and
• Paying close attention to future impact while fixing today’s problems.

Read the rest of this entry »

A new report by our friends at the Center on Budget and Policy Priorities shows that the approach Oklahoma policymakers are taking to the current fiscal crisis – implementing budget cuts without drawing down reserves or looking at raising revenues – is increasingly out of step with the nation as a whole:

The current recession has taken a heavy toll on states’ ability to meet public needs. The combination of declining revenues and increasing demand for services has created budget shortfalls in 47 states.

To begin closing the gaps between the cost of programs and the amount of money available to pay for them, so far at least 34 states have cut services to families and individuals, including services that benefit vulnerable families. But these cuts have not solved state budget problems, because the sheer size of state budget shortfalls is so great – estimated to exceed $350 billion over the next two and a half years. Were states to rely on spending cuts alone to close their gaps, it would require unprecedented reductions in such essential public services as health care, education, and assistance for the elderly and disabled.

Instead of a cuts-only approach, states increasingly are employing a combination of budget solutions that also involves drawing down reserve funds, maximizing the use of federal dollars, and raising taxes. A number of prominent economists have pointed out that budget cuts are more harmful to state economies during a recession than properly structured tax increases, so it is good policy to use tax increases to fill a substantial portion of deficits that exceed the amount that can be closed with reserves or federal funds.

So far, in 2009, 16 states have raised new revenue through tax measures. Another 17 are giving serious consideration to doing so. These actions are in addition to revenue actions taken by 10 states in late 2007 and 2008 as the recession’s effects began to be felt. Although some of these measures are relatively small in terms of the amount of revenue raised, others — such as packages enacted in California and New York and under consideration in Illinois — are very significant.

The paper also shows that states that enacted significant tax increases over the course of the last state fiscal crisis (2002-04) saw growth rates in personal income, employment and the median wage from 2004-07 that were virtually indistinguishable from the national average.

In Oklahoma, the constitutional constraints of SQ 640 and political realities have effectively kept tax increases off the table as revenues have collapsed in recent months. However, the unwillingness even to tap into our Rainy Day Fund has left Oklahoma with few tools other than budget cuts at our disposal to manage the fiscal crisis.

You can find full coverage of the state fiscal crisis from the Center’s state budget and tax website.