OKPOLICY.ORG
Oklahoma lawmakers are considering a proposal, HJR 1011, that would change the state constitution to lower the amount by which legislative appropriations can grow from one year to the next. After looking at state spending patterns in recent years, it’s clear this is an ill-advised solution in search of a problem.
Oklahoma’s constitution (Article 10, Section 23.1) already limits state spending. Appropriations can grow 12 percent above the prior year’s total appropriations, adjusted for inflation. HJR 1011 would substantially lower the appropriations limit to the prior year’s total appropriations plus 7 percent, adjusted for inflation.
But as the chart below shows, this constitutional amendment is unnecessary [click here for the data used in creating the chart]. In only one year has the state come close to hitting the current spending limit – FY 2006, when spending grew by 14.6 percent, just under the limit of 15.4 percent. Under the proposed limit, the state would have exceeded the limit just twice in 15 years.
While the proposed spending limit might only kick in rarely, it is likely to do so at the most inopportune times. We can see from the chart that spending follows a cyclical pattern, with downturns followed by one or two years of more rapid growth that then levels off. Coming out of a downturn, it is appropriate and healthy that state spending grow more robustly so as to allow funding levels to recover and to address unmet needs that have accumulated over the downturn. Imposing a tighter spending cap could make it impossible to regain the ground lost during the downturn once the state’s economy and revenue collections recover. Following the most recent recession, HJR 1011 would have prohibited state spending from returning to pre-downturn levels in FY 2012 and FY 2013.
The reality is that spending on state services in Oklahoma is low and has shrunk as a share of the state’s economy over time. The chart below shows state appropriations as a share of total state personal income – a common measure of the size of a state economy – since 1980. As it turns out, state appropriations have been 6.5 percent of personal income or less for over 20 years. In the aftermath of the last recession, state spending has fallen to historic lows. This year’s state appropriations would be a full $2 billion higher if state spending were at its historical average of 5.8 percent of personal income.
If our legislators want to keep spending low, they already have the power to do that through the annual appropriations process without tinkering with the state’s constitution.
Creating a tighter spending limit addresses a problem that simply doesn’t exist while creating others. It takes decision-making responsibility out of the rightful hands of our elected officials, who are accountable to the voters, and gives it instead to a formula – one that can’t be adapted to changing circumstances. And the proposed limit could keep us from fully rebounding from a downturn or taking advantage of new resources.
Oklahoma’s elected officials should focus on our real challenges, which include making sure that our tax dollars are well spent and that we are making the investments we need to educate our children, maintain our infrastructure, protect our communities, and assist those in need. New spending limits won’t solve any of these problems but will surely create new ones.
