How much budget cutting is too much?–SQ 744 and this year's revenue shortfall

The House of Representatives Appropriation and Budget Committee recently held hearings on an interim study of State Question 744. State Question 744, also known as the HOPE petition, is an initiative sponsored by the Oklahoma Education Association (OEA) that would require the state to fund education at the regional average of per-pupil spending. Reps. Leslie Osborn and Randy McDaniel asked for the interim study to explore the impact of the initiative on the state’s finances.

When fully phased in, House staff estimated the initiative will cost the state an additional $850 million, or about a 12 percent budget increase. There are three ways to pay for an $850 increase in education funding if growth revenues don’t do it:

  • increase taxes, which could require an increase in the state sales tax from 4.5 to 6.18 percent or an increase in the top income tax rate from 5.5 percent to 7.35 percent;
  • reduce budgets for all services except common education by up to 20.2 percent; or
  • a combination of tax increases and budget cuts.

There is room to question whether this is realistic; the Oklahoma Education Association argues revenue growth in the next four years will eliminate the need to raise taxes or cut other budgets. While there is at least some merit to this claim, it is important to be prepared for a less rosy scenario, as the House staff suggested.

The second day’s hearings allowed the leadership of major state agencies to report on the possible consequences of a 20 percent budget cut. Not surprisingly, the picture was not pretty. It involves significant losses in services like infrastructure, substance abuse treatment, senior nutrition, corrections, and highway patrol. Higher Education Chancellor Glen Johnson said a “new model” would be required for our colleges and universities to operate with 20 percent less. His description seems apt for all state services.

Many House members declared cuts of that magnitude unacceptable. Speaker Chris Benge, R-Tulsa, issued a press release saying, in part:

The level of services to Oklahomans that would have to be cut to accommodate State Question 744 is stark and would be hugely damaging to our state.

This discussion comes at the same time that all state agencies, including common education, are taking five percent cuts to their monthly allocations from the General Revenue Fund. While agencies have generally been quiet about impacts of these cuts, a few more examples of the strains that monthly budget cuts are creating trickled out during the SQ 744 hearings:

  • Terry White, Commissioner of the Department of Mental Health and Substance Abuse Services, described the department as “close to the end of our rope” and suggested it cannot cut its budget five percent for the whole year without affecting services.
  • Neville Massey, of the Department of Corrections, reported that a buyout offer and a hiring freeze has resulted in only 77 percent of the agency’s authorized positions being filled.
  • Kevin Ward, of the Department of Public Safety, reported that troopers are starting to cover more ground and drivers license stations are starting to lose a significant number of staff.
  • Howard Hendrick, director of the Department of Human Services, indicated cuts would be forthcoming in the senior nutrition program. Since this hearing, DHS has taken action to cut this program by 25 percent, reducing the number of meals by 85,000 per year. The agency also is making immediate cuts in sheltered workshops and employment programs for the disabled.

Legislators rightly suggested 20 percent cuts to agency budgets would impose unacceptably damaging effects on our ability to provide essential public services that ensure the state’s security, prosperity and well-being. Are cuts one-fourth as deep acceptable? Do they not also cause real harm? The examples above suggest a deteriorating level of service to the mentally ill, seniors, and all of us who depend on a strong public safety effort. We don’t think these impacts–and more we expect to hear about in coming months–will be acceptable to most Oklahomans.

ABOUT THE AUTHOR

Paul Shinn

Paul Shinn is a Budget and Tax Senior Policy Analyst with OK Policy. Shinn has held budget and finance positions for the Oklahoma House of Representatives, the Department of Human Services, the cities of Oklahoma City and Del City and several local governments in his native Oregon. He's also taught political science and public administration at the University of Oklahoma, University of Central Oklahoma, and California State University Stanislaus. While with the Government Finance Officers Association, Paul worked on consulting and research projects for the U.S. Environmental Protection Agency, the U.S. Department of Transportation, and several state agencies and local governments. He also served as policy analyst for CAP Tulsa. He holds a Ph.D. in Political Science from University of Oklahoma and degrees from the University of Oregon and the University of Maryland College Park. He lives in Oklahoma City with his wife Carmelita.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.