Best budget reform is to quit gambling on tomorrow’s revenue (Steve Lewis Capitol Update)

Photo by Niklas Morberg.
Photo by Niklas Morberg.

Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol. You can sign up on his website to receive the Capitol Updates newsletter by email.

Recently Governor Fallin has been including in her remarks a statement to the effect that the state’s budget process needs to be “reformed.” The topic has become timely because of frustration with the fact that there seems to be less money available to the legislature for meeting the state’s needs even while the economy is perceived to be expanding — at least this was the case before the present budget hiccup contributed to by the downturn in oil prices.

As always, reform is in the eye of the beholder. Before embarking on reform it might be helpful to try to determine what has caused the problem. The two main reasons for inadequate funding in the next session are first, about $300 million in “one time” funding was used to meet this year’s budget needs, and, second, a tax cut was passed to go into effect in the event of an increase in state revenue.

In lean years the legislature has historically scraped together whatever cash was lying around unused to help prop up the budget. But last session, as recommended by the governor in her budget, they went beyond scraping together the last few dollars needed and instead raided the state’s revolving funds as the main, if not the only, source of funds to meet a sizable budget gap.

In addition to raiding the revolving funds, legislators re-passed an income tax cut that had been passed in an earlier session and held unconstitutional. Knowing they had created a potential budget hole with the one-time funding, legislators made the tax cut effective in the future when the state’s projected revenue increased. But they failed to take into account what would happen if the revenue growth was not enough to pay for both the budget hole and the tax cut. Sure enough it wasn’t, so we are now facing another year of budget cuts. And we have a movement for “reform.”

Instead of a substantive solution, the governor has been talking about process change. Her idea seems to be that if the legislature just had more time to think about it, uninterrupted by other issues, they (and she) would do a better job on the budget. Her solution is to make every year a budget year and every other year a year to pass substantive legislation. This is not a good idea. For one thing, society moves faster than ever nowadays and it’s a positive thing to be able to meet each year’s challenges each year. For another, nearly every law change with any degree of complexity needs to re-visited and “fixed” the following year. Think worker’s compensation.

In addition, the governor’s suggestion would create a huge power shift from legislative to executive by requiring her to call a special session for legislative fixes, but only when the governor thinks it’s necessary. No longer could a citizen call her senator or representative, except in the right year, to propose a legislative solution to a problem. She’ll need to get in touch with the governor. I think Republicans especially would oppose this since it’s way more likely we’ll have a Democratic governor from time to time than that the legislature will change the majority any time soon.

The simplest and best budget reform would be for the state to quit betting on the come and building future growth revenue into current year budgets by excessively using “one-time” money. If there’s not enough money, either generate some revenue or cut the budget to fit the funds on hand. And second, the legislature could quit passing tax cuts to take effect on some future occurrence that may not account for what else is occurring at the same time.

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Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.

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