Expenditure Options for Closing the Structural Deficit

Expenditure Options for Closing the Structural Deficit

Controlling budgets is part of the solution to the fiscal gap. In most cases, however, government spending in Oklahoma is too low to meet the demands of the public. Oklahoma already ranks 46th in state and local spending per capita. In 2013, we spent $1,743 less per person than the average state. In most performance measures, Oklahoma public structures rank in the bottom fifth of states. We want more and better paid teachers, more police officers and firefighters, better health care options, and a safer environment. Budget cuts will not move us closer to our goals; they will take us further away. They also hurt the economy and they often fall hardest on low- and moderate-income families. Budget controls that do not harm public services may be possible but could only be a small part of the solution.

One area where costs probably will have to be cut is in employee benefits. State and local governments likely will have to reduce health insurance coverage or continue recent trends of shifting more costs and risk to employees.

Several other options are available to control spending. 

  • Make spending levels more consistent. State spending often has mirrored the boom and bust cycles that are common to Oklahoma’s economy. We can consider creative use of the rainy day fund, including increasing its maximum size, and shifting cyclical revenue, like gross production taxes, away from financing ongoing spending. The creation of a Revenue Stabilization Fund in 2016 could signify an important step in this direction.
  • Spend now to save money later. Education long has been recognized as an area where investing now pays off down the line. There are other areas where we should consider spending smarter now to save later. In criminal justice, for example, providing more effective support systems in prisons and after release can reduce the chances the convicts return to the system and increase the chances they become productive-and tax-paying-citizens. Some Oklahoma agencies and governments have joined the growing movement to encourage healthy lifestyles today to reduce health care costs tomorrow. We should challenge our elected leaders and public servants to find ways to spend smarter now for payoffs down the road.
  • Increase capital spending to make operations more efficient. Many state facilities and much of our state and local infrastructure are aging and need replacing. Governments need to consider using bond and grant financing and other sources to speed up replacement of deteriorated capital. Doing so often cuts or slows the growth of operating costs. Successful examples include replacing three-person garbage collection crews with one person in an automated truck and collecting tolls through the automated PikePass system.
  • Increase oversight and accountability strategies. Expanding strategic planning, performance measurement, performance auditing, and sunset reviews can provide taxpayers and those who benefit from services with information needed to demand that the services be delivered more effectively.

We will not solve our fiscal gap only by cutting expenses; that would endanger already marginal public services and hurt the state’s economy. We must, however, explore ways to control expenditures and to increase efficiency and effectiveness in all of our public services.

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