Archive for 2013

Revenue forecast confirms need for continued caution

by | January 3rd, 2013 | Posted in Blog, Budget | Comments (1)

In late December, the Board of Equalization certified a preliminary estimate of the revenues available for next year’s budget. The numbers confirm that while the worst of the fiscal crisis is now far behind us, the state remains in the midst of a slow and incomplete recovery and will continue to struggle to restore services to adequate levels.

The preliminary FY 2014 estimates, developed by the Oklahoma Tax Commission and Office of State Finance, will form the basis for the Governor’s Executive Budget to be delivered in early February. As we see in the chart below, collections to the General Revenue (GR) fund are expected to continue to recover from their collapse during the recession of 2008-09. Next year’s GR is estimated at $5,938 million, which is 29 percent higher than in the depths of the recession in FY 2010.  Yet next year’s revenues are expected to remain slightly below their levels of six years ago (FY 2008), even as the cost of providing services rises due to inflation, population growth, and increased caseloads and school enrollment.

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Cliff, slope, or hostage crisis?

by | December 11th, 2012 | Posted in Budget, Economy, Taxes | Comments (0)

Since the election, Washington DC has been consumed by debate over the “fiscal cliff,” a number of large spending cuts and tax increases set to take effect at the beginning of next year.

Due to the spending cuts, Oklahoma would receive about $100 million less in federal funding, with education programs for high-poverty, special education, and very young students from low income families especially affected. One estimate projects the spending cuts would eliminate 16,000 jobs in Oklahoma over the next 15 months

On the tax side, income tax rate increases would cost a median-income Oklahoma family of four (earning $63,100) about $2,200. That’s on top of a payroll tax increase and reductions in the federal Child Tax Credit and Earned Income Tax Credit that would especially harm low-income families. The Congressional Budget Office reports that not acting to avoid the fiscal cliff would send the economy back into recession.

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What the coming federal budget cuts mean for education in Oklahoma

by | October 11th, 2012 | Posted in Blog, Education | Comments (0)

Last summer, Congress agreed to automatic budget cuts as part of a deal to increase the federal debt ceiling. Commonly known as sequestration, these cuts would eliminate $1.2 trillion in spending over the next decade. The cuts will be divided evenly between domestic and defense spending. Instead of prioritizing which programs to cut, they would make across the board reductions to most discretionary and non-critical defense programs.

We discussed earlier what these cuts could mean for all of the federal funds going to Oklahoma. Now, new analyses from the White House’s Office of Management and Budget (OMB) and the National Education Association (NEA) break down what they could mean for common education in the state. The programs that stand to lose the most funding are those that help Oklahoma’s most vulnerable students — high-poverty, special education, and very young students from low income families.

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Oklahoma's per pupil spending has plummeted

by | September 4th, 2012 | Posted in Blog, Education | Comments (2)

Oklahoma’s economy has performed relatively well over the course of the Great Recession, compared to the nation as a whole. We’ve had lower unemployment numbers and decent income growth. Yet you wouldn’t know it to look at the state of school funding.

A new report by the Center on Budget and Policy Priorities shows that per pupil spending in Oklahoma has dropped more than 20 percent since FY 2008. This was the third largest percentage decrease in the nation, behind only Arizona and Alabama. In FY 2013, Oklahoma is spending $706 less per student in inflation-adjusted dollars than we did in FY 2008.

Total state appropriations for common education have fallen by $220 million since FY 2008. From 2009 to 2011, more than 4,000 jobs were lost from Oklahoma’s elementary and secondary schools, according the the Bureau of Labor Statistics. The result is larger class sizes, fewer course offerings, and less support from librarians, counselors, special education specialists, and others.

The recession has thankfully ended and the economy is growing again, but cuts to schools have not stopped. Because schools received flat funding with increasing enrollment, spending per student declined by 1.7 percent, or $49, from FY 2012 to FY 2013.

A strong education system is essential to creating and maintaining a thriving economy. Businesses need a well-educated workforce, and education cuts undermine the state’s ability to produce workers with the skills needed to compete in a global economy. Our economy is performing well today, but if we do not recommit ourselves to adequately fund education, we put our children and our future prosperity at risk.

For Oklahoma voters, education funding cuts are a major concern

by | August 22nd, 2012 | Posted in Blog, Education | Comments (0)

As students head back to school this month, they will encounter an education system facing a crisis in funding. Over the past four years, state support for public schools has been slashed by $220 million, or  11 percent, while school enrollment has increased by some 25,000 students. This equals a 14 percent decline in state support per person. In schools across the state, class sizes are larger, course offerings are fewer, and many school services have been reduced or eliminated. At the same time, schools are wrestling with new mandates for student testing, teacher evaluations, and reading proficiency that must be implemented with reduced resources. Meanwhile, Oklahoma voters this fall will vote on two state questions that would reduce local property tax revenues for schools, while federal education support could be cut by roughly one-tenth to one-fifth under various deficit reduction plans.

Oklahoma voters are paying attention and expressing their discontent.  Eight-eight percent of Oklahoma voters are very concerned (64 percent) or somewhat concerned (24 percent) about cuts to local public schools, according to a new Oklahoma Poll published in the Tulsa World. More than three in five voters (61 percent) believe that the state Legislature is not doing enough to fund public schools in Oklahoma. The poll also found that more than nine in ten voters said that a candidate’s position on funding for public schools is very important (65 percent) or somewhat important (29 percent) in determining their vote in November’s elections.

These findings that education funding is a major concern for voters reinforces an earlier poll conducted while Oklahoma legislators were considering proposals for major income tax cuts. Only 16 percent of Oklahoma voters said they would “favor cutting funding to Oklahoma’s public schools so that the savings can be passed along to taxpayers in the form of a tax cut”, compared to 81 percent who disagreed, including 67 percent who disagreed strongly.

In recent years, education has not been a priority of Oklahoma legislators. Most areas of state services absorbed cuts when the state was grappling with large budget shortfalls. But even though total appropriations has increased this year by $253 million, education funding has remained flat. Common education’s share of total appropriations has fallen to 34.1 percent, the lowest level since at least FY 2000. These polls results show that voters are paying attention and aren’t happy about the Legislature’s priorities. Whether legislators and the Governor heed the message remains to be seen.

Getting what we pay for

by | August 20th, 2012 | Posted in Blog, Budget | Comments (1)

We’ve seen plenty of examples of cuts to our state’s core services in recent years, as well as chronic underfunding that is causing us to fall short of many of our common goals. One of the most dramatic examples is the plight of the state Medical Examiner’s office.

The Medical Examiner is responsible for investigating homicides, suicides, and other violent or suspicious deaths. They also investigate deaths from diseases which may pose a risk to public health. Recent reports have brought to light the extent of our failure to provide this important service and the real human costs.

The Medical Examiner’s Office lost its accreditation in 2009, after inspectors assigned it the lowest score a state agency has ever been given. Dr. Collie Trant, the Chief Medical Examiner at the time, cited a “chronic lack of funding and support for the agency.” He wrote, “The core of our problem is lack of money. A new, state of the art facility has been talked about for years. That is certainly a need, but the immediate crisis is people, training, space, and equipment. The immediate crisis cannot wait on a new building sometime in the future.”

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Federal aid to Oklahoma under the ax in Ryan budget plan

by | August 8th, 2012 | Posted in Blog, Budget | Comments (0)

Without new revenue, federal deficit reduction efforts will lead to devastating cuts in federal support for education, transportation, law enforcement, the social safety net,  and other state and local programs, according to a new report from the  Center on Budget and Policy Priorities. Oklahoma faces a loss of $345 million in discretionary state and local aid in 2014 alone, and over $3 billion from 2013-2021 under the House-approved budget plan developed by Congressman Paul Ryan, which illustrates the kind of approach Congress likely would take if it rejects significant new revenues.  Cuts of this magnitude would lead to a significant reduction in the quality and reach of core public services in Oklahoma and would threaten the state’s economic recovery.

Under the Ryan plan, federal support for discretionary non-defense spending would be slashed by over 20 percent compared to 2012 levels, according to the Center’s estimates. That part of the federal budget funds grants to state and local governments to support services that states and localities provide, such as education, law enforcement, water treatment facilities, and disaster response.

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The shrinking state employee workforce

by | June 25th, 2012 | Posted in Blog, Budget | Comments (1)

In the wake of three consecutive years of steep budget cuts, the number of state employees staffing correctional facilities, inspecting restaurants and nursing homes, serving victims of abuse and neglect, and performing other public functions has declined sharply.

Source: House of Representatives Fiscal Staff based on Office of State Finance data

In FY 2012, state government employed 35,504 Full-Time Equivalent (FTE) employees. (The FY 2012 numbers are the year-to-date average for the first nine months of the fiscal year.) This is a drop of 3,804 workers, or 9.8, percent, since FY 2009. Oklahoma’s total population has grown by some 330,000 since 2001, while the state employment has dropped by 1,633 workers, a decline of 4.4 percent.

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Why total spending has gone up as budgets are cut

by | June 11th, 2012 | Posted in Blog, Budget | Comments (2)

OK Policy has spent a lot of time focusing on the real and continuing damage caused by repeated state budget cuts over the past three years, as well as the fact that state tax collections are at historic lows. Meanwhile, the folks at the Oklahoma Council on Public Affairs have chosen to emphasize that total state expenditures continue to increase each year.

How can both be true? Here’s how:

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STATEMENT: Failure of tax cuts is great outcome for Oklahoma

by | May 25th, 2012 | Posted in Blog, Taxes | Comments (1)

Oklahoma Policy Institute released the following statement in response to the announcement that there will be no tax cut this session:

The failure of every tax cut proposal that was debated this session is a victory for Oklahoma. The Legislature heeded Oklahomans from all walks of life who have spoken out against income tax cuts. After three straight years of budget cuts that have seriously weakened core services, Oklahomans have stated clearly that their top priorities are restoring funding for education, fixing the child welfare system, repairing our roads and bridges, and making other critical investments that will promote our prosperity and security. We have not made sufficient progress towards these goals, but preserving our largest revenue source leaves us in much better position to tackle our challenges in the years ahead.

The decision to reject tax cuts this year was especially responsible given the uncertainties in the energy industry and the broader state economy. We applaud those leaders who insisted that tax cuts must be paid for and who rejected efforts to tie the hands of future legislators with automatic triggers.

We know, however, that this is just a brief intermission in a long battle over the right tax policy for Oklahoma. Going forward, we must have a more honest and well-informed debate about what we expect from state government, how much our obligations will cost, and how we will pay for them. We need to look with renewed seriousness at our outdated tax system and do away with unnecessary tax preferences. And we must improve tax fairness and not allow middle- and low-income families to shoulder a larger share of the load.