OKPOLICY.ORG
We are at a truly critical time for Oklahoma. The state faces its most severe budget crisis of the past quarter century, perhaps the most severe in its history. As revenues have fallen, successive rounds of budget cuts have created hardships for those whose health, security and livelihood depend on state-funded services. However, as bad as things have already gotten, we are only now approaching the eye of the full budget storm. In the absence of additional revenues, the state’s budget shortfall for the upcoming year is equivalent to cuts of an additional 11 to 12 percent across every agency of state government beyond what has already been cut this year.
In recent blog posts, we have laid out the potential toll that cuts of this magnitude could have on Oklahoma families, businesses and communities. The Oklahoma Health Care Authority is considering the elimination of prescription drug coverage, diabetes supplies and kidney dialysis treatment for adult Medicaid recipients. The State Health Department warns of an inability to respond in timely fashion to man-made disease occurrences and natural disasters. The Department of Human Services confronts rate reductions that could push private sector providers of services to Oklahomans with developmental disabilities out of business. Similar stories are being told across the spectrum of state government of cuts that would undo progress made in recent years and set our state back years, if not decades.
The argument that OK Policy and others have made over recent months is that balancing the budget through an exclusive reliance on deeper spending cuts is a choice, not an inevitability. A balanced approach to the budget gap includes new revenue sources along with budget cuts, efficiencies, and the use of reserves. The Governor initiated the discussion by proposing over $700 million of revenue enhancements in his FY ’11 budget proposal, including eliminating and suspending selected tax credits, increasing tax enforcement capacities, and expanding our bonding capacity. With this revenue, agencies would still be facing additional cuts of 0.5 to 3 percent in FY ’11 – still painful, but far from the most devastating scenarios. Other revenue ideas have surfaced from other quarters, including one that OK Policy has promoted to do away with the deduction of state income taxes for those who itemize on their state tax returns.
With the end of the legislative session fast approaching, the budget remains unsettled. We know that various revenue options are being discussed by legislative leaders and the Governor, but that nothing has been decided. While there is general agreement that the consequences of not generating additional revenues would indeed be dire, it is still unclear whether there is sufficient political will to adopt revenue solutions. There are some at the Legislature who seem positively excited by this opportunity to shrink the size of government, and others who declare themselves open to new revenues in principle, but are quick to oppose any specific attempt to raise a fee or close a tax loopholes that risks being politically unpopular. Some seem eager to stand aside and let the worst happen so they can blame the consequences on their opponents.
In short, if the ultimate budget decisions are left to the mercy of political calculations, the outcome is likely to be little or no additional revenue and the full-fledged budget catastrophe that agencies and advocates have warned of. But that is not the only, or inevitable, outcome. Our elected officials need the political will and courage to make the difficult decisions necessary to pull us back from the abyss. In this time of crisis, we need our elected officials to lead.
