Oklahoma isn’t alone with challenging budgeting issues (The Oklahoman)

By The Oklahoman Editorial Board

IN recent years, critics have noted Oklahoma’s state government budget has increasingly relied on one-time funds as an ever-smaller share of money is run through the formal state appropriation process. A recent article in Governing magazine shows Oklahoma isn’t alone in that dubious category.

Earmarking of funds has reduced the amount of money going through the state appropriation process. In 2007, Oklahoma lawmakers controlled 55 percent of revenue through the budget process. It’s hovered closer to 44 percent more recently.

Other states have similar problems. Citing data from the National Association of State Budget Officers,
Governing reports the general fund made up just 41 percent of total states’ spending in 2014 compared with
52 percent in the early 1990s.

Officials at the Fiscal Futures Project at the University of Illinois at Chicago argue that increasing use of special funds plays a major role in that trend. Those funds “may bypass the appropriations process,” Governing notes, and their account balances can increase year to year, making them “an appealing target when tough budget times hit.”

But when lawmakers transfer money from those funds to the state’s general fund, the use of those one-time funds creates a structural shortfall for the subsequent year. David Merriman, a professor at the Institute of Government and Public Affairs at UIC, also contends the practice “has reduced the transparency of

Legal problems can also arise. The Wisconsin Supreme Court struck down the transfer of $200 million from a malpractice fund into the state’s general fund.

Oklahoma has experienced similar legal problems. In 2014, opinions issued by the office of Attorney General Scott Pruitt declared that Oklahoma lawmakers had illegally diverted millions from some dedicated accounts to other areas of government. This included $5 million diverted from the Trauma Care Assistance Revolving Fund to the Special Cash fund, which was then tapped for other uses, and $7.9 million diverted from the Oklahoma Higher Learning Access Program.

Money in both funds was generated by fee revenue that was supposed to support specific activities under the Oklahoma Constitution.

In New Mexico, Governing notes the state auditor determined there was $4.4 billion in unused balances in various special funds in 2015. Yet due to legal restrictions, much of that money could not be tapped for other uses.

Similarly, The Oklahoman’s Paul Monies reported in 2011 that Oklahoma agencies had a combined
$1.2 billion hoarded in revolving funds.

Lawmakers have since better scrutinized those funds and have used them for other needs when legally possible. This year, Oklahoma legislators generated nearly
$1 billion in various “revenue enhancements.” Included in that $996 million total, $391 million was obtained by transferring money from agency funds, $200 million came from bonds and $66 million came from the Rainy Day Fund.

The Oklahoma Policy Institute estimates that overall, $560 million to $690 million in budget funding came from “one-time revenues which will need to be replaced in developing the FY 2018 budget.”

Use of some of that agency money was prudent. But, as Merriman noted, it obscures budget transparency for the public, and the associated structural challenges seem to only grow with each passing year.

As Governing notes, Oklahoma isn’t the only state engaged in such practices. That doesn’t mean it’s is the best way to operate, or that Oklahoma lawmakers shouldn’t seek to improve the system.


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