Oklahoma's new state budget isn’t a disaster. Wheeeee!
Oklahoma’s Legislature recently approved $10.5 billion of spending for the budget year that starts July 1. (Here’s a summary of the main appropriations bill, which excludes nearly $1 billion in other spending bills). Oklahomans can find a few good things in this budget. It improves services for some of our most vulnerable populations and starts to reverse chronic underspending for essential functions of government.
The budget has items that shouldn’t be in there, like hundreds of millions of dollars in corporate handouts, and leaves out things we need, like funding for schools, community mental health, state employee raises, and pension increases for our retired police, firefighters, teachers, and public employees. Fortunately, two unneeded tax breaks were vetoed by Governor Kevin Stitt.
We’ve now endured decades of the war on government, marked by tax cuts, deregulation, privatization, and deteriorating services. Even two decades ago, a budget laden with corporate incentives, no investment in our school children, and further erosion of our tax base could not have passed the Legislature. Now, though, I’m just relieved that this budget isn’t worse.
There is some smart spending in this budget…
Government exists to provide services that the private sector cannot and to make the initial investments in smart programs when others will not. Oklahoma often shies away from this kind of public entrepreneurship, but this year our legislators made some good choices.
Foremost among these is a big investment in home and community-based services for the developmentally disabled. About 5,000 people have been waiting for these services, and the Department of Human Services (DHS) is just now assessing people who have been waiting 13 years. The budget commits $32 million in state funding, which will attract about $70 million more in federal dollars. This is expected to serve all people who qualify for services and increase rates to providers by 25 percent.
Oklahoma’s been a laggard in providing mental health services, but this budget continues recent efforts to close the gap with other states. New funding this year will help expand services for children, veterans, and those involved in the justice system. It will also increase provider rates, make up for lost federal revenues, and fund increasing demands for all services.
Oklahoma also falls behind other states in higher education funding. Even with a seven percent increase for the coming year, our spending as a share of the total budget will be the smallest in state history. Funding of $17 million to encourage students to become teachers is a worthwhile effort. It would be more meaningful if the Legislature had also provided any additional funding for schools, where we’ve fallen to 47th in spending per student.
…and some that’s, well, the opposite of smart
The budget includes roughly a billion dollars worth of additional handouts to corporations. The $700 million for an unnamed factory had already been public information. Earlier I wrote that it will take at least a decade before additional taxes from this factory and related business and employees to add up to $700 million, meaning we’re getting a zero percent return at best. A more realistic accounting suggests nearly all $700 million is purely wasted. The budget adds $250 million for rural economic development through an as yet undefined “Progressing Rural Economic Prosperity” (PREP) Fund. We can and should be directly investing in rural education, infrastructure, health, and connectivity, but this program may just turn out to be new business “incentives.”
Another year of unkept commitments
Oklahoma budgeters routinely fail to spend on basic needs like adjusting budgets for growth in costs and demand for services, and in keeping basic commitments their predecessors have made. As they have for five years running, legislators ignored the demands of the public by failing to spend savings from reduced jail sentences on community mental health services. They also failed to increase pay for most state employees. Average employee compensation is now 17 percent below the market, including supposedly generous benefits, and more than one in six leaves state service every year. It doesn’t get any better for those who retire; they have had just one cost of living increase since 2008. An average retired police officer receives a $2,775 monthly pension and is not covered by social security. An average teacher receives $1,825. Oklahomans know we need to attract and retain great public servants but our legislators seem to have forgotten.
Tax breaks: it could have been worse and might still be
The Legislature debated and ultimately couldn’t pass many costly, ineffective, and unneeded cuts in the individual and corporate income taxes and the sales tax on groceries. The fact that none of these cuts made the cut is a welcome relief to those who believe in public services and those who depend on them (that’s everyone).
The Legislature did approve two poorly conceived tax breaks, but Stitt vetoed them. One was a one-time $75 rebate ($150 for a couple), through the “Inflation Relief Stimulus Fund.” The second was an ongoing $190 million loss from eliminating the 1.25 percent sales tax on buying a new or used car. Since most Oklahomans would have saved a few hundred dollars every four or five years, this wouldn’t change anyone’s decision as to if or what to buy.
While we can be grateful for Stitt’s recognition that these were stupid and unnecessary giveaways, we can be concerned that it was because he wants bigger reductions. He called a June special session for the Legislature to look at more dramatic and permanent cuts in the state sales and personal income taxes.
Low expectations are the key to a happy(?) life
We’re conditioned to expect tax cuts and deteriorating public service and we usually get both at budget time. Years like this, where the revenue losses are not horrific and the cuts are minimal, actually count as victories. The same is true of school funding. We were expecting a costly and potentially crippling school voucher program to further the dismantling of our treasured public education system. The fact that it failed makes flat funding for schools and a token incentive for future teachers looks like a win, pending potential games in the special session.
As in past years, this year’s budget process was an affront to democracy. The budget flew through both houses of the Legislature in three days. It would have been even faster had some members not insisted on having time to read the bill before voting on it. There’s nothing new in this lack of public deliberation over the budget. There’s nothing normal about it either. Other states publish budget requests from agencies and hold public hearings; nearly every state takes longer than three days for the public to review important spending plans.
Most Oklahomans are unaware of or satisfied with the current state of affairs, even though most suffer from our continuing failure to invest in children, families, community, and the bright future we deserve. We can change this, but it will take patience, determination, and a compelling vision. It can and will happen; politics and policy are cyclical, and we’ve clearly hit bottom. Oklahomans who want better must follow the coming special session and demand that wasteful and ineffective tax cuts come to an end now. Until we figure out how to climb out, we’ll have to be satisfied with the least worst budgets and public services. And that’s what our “leaders” gave us this year.
An earlier (pre-veto) version of this article appeared in the Oklahoma Observer, our state’s boisterously liberal voice on politics and policy. You can subscribe and donate here.