In a recent column for the Journal Record, Oklahoma Council of Public Affairs President Michael Carnuccio discussed Oklahoma’s latest Comprehensive Annual Financial Report (CAFR). The column was headlined “Fact are stubborn things.” Unfortunately, it left out many of the facts.
Carnuccio points out that total state expenditures have increased every year since 2001, even during the recession. Yet other than making for a convenient ideological talking point, this number does not by itself tell us whether our government is growing, nor does it help us to understand why.
To answer those questions, the numbers must be put into context. Due to inflation, the same number of dollars can provide fewer services each year, and population growth divides these among more Oklahomans. Adjusting for these factors gives us a better idea of the real size of our state government. Here’s what that looks like over the past decade:
By this metric, our state government has shrunk for the past two years. In some ways that is good news, because it signals a recovering economy that is taking pressure off of safety net programs. Spending on social services jumped significantly in 2009 and 2010 but since then has been on the decline.
Less good news is another big reason for the decrease: a huge drop in funding for education. After adjusting for inflation, total state spending on common and higher education has dropped 11 percent since 2009, even as schools are tasked with educating thousands more students. That’s why Oklahoma has seen the third largest drop in per-pupil spending in the nation.
Another notable item in the above chart is the jump in spending on health services. Carnuccio’s column tries to turn that into an argument against accepting federal funds to expand Medicaid, echoing Governor Fallin’s claim that joining the expansion would take money away from other core services.
However, putting these numbers into context shows just the opposite. The latest Oklahoma Health Care Authority Annual Report reveals that state spending on Oklahoma’s Medicaid program (SoonerCare) actually decreased last year, from $1.30 billion in 2011 to $1.21 billion in 2012. The rise in total spending was covered by the new hospital provider fee (which brought in $342 million in 2012) and increased federal support ($206 million). Rather than an argument against joining the Medicaid expansion, the increase is a clear example of how we can accept federal funds to cover uninsured Oklahomans without burdening other core services.
The final argument made by the column is that tax cuts of the past decade have led to revenue increases. Again, adjusting for inflation debunks this claim. Since large income tax cuts went into effect in the mid-2000s, tax collections have at best barely kept pace with inflation, even during good economic times. Collections cratered during the recession and are now recovering. Even so, they remain below every year from 2006 to 2009 after adjusting for inflation. Below you can see Oklahoma revenues from state taxes, federal grants, and other sources over the past decade. Federal funding rose sharply from 2008-2010 due to the stimulus but has since declined.
Putting our state’s budget numbers into their real-world context creates a very different picture from what those pushing more tax cuts want us to believe. When making policy decisions, we can only hope lawmakers use all the facts rather than a cherry-picked few meant to further an ideological agenda.