Budget & Tax

Oklahoma state government spending is higher than ever

September 14, 2017

Curtis Shelton, Dave Bond

By Curtis Shelton and Dave Bond

In discussions about taxes and state government spending in Oklahoma, some advocates insist that available funding has been slashed to the bone for important public services.

The claim is simply not true. While state appropriations in Oklahoma have fallen below previous years, total state government spending in Oklahoma is higher than ever—more than $3.83 billion higher than it was 10 years ago.

It’s important to understand the difference between state appropriations and total state government spending. State appropriations make up “the state budget” that lawmakers at the state Capitol vote on every legislative session in order to provide a portion of the funding for specific state agencies.

Total state spending, on the other hand, is the sum of all the many different sources of funding that flow to—and are spent by—Oklahoma’s state government agencies each year. This includes state appropriations, as well as federal grants, non-appropriated spending, “off the top” apportionments, and more. For the last several years, state appropriations have made up only about 40 percent of total state government spending in Oklahoma.

There are some key economic factors we need to keep in mind. In fiscal year (FY) 2008, the price of West Texas Intermediate crude oil topped $133 per barrel, an all-time high, dramatically benefiting Oklahoma’s economy—and tax collections.

Oil prices were also very high in 2013 and 2014, benefiting Oklahoma tax collections, and appropriations, considerably. Then, as 2014 progressed, oil prices plummeted as Saudi Arabia and other OPEC member nations in effect imposed economic sanctions on U.S. shale drilling states, including Oklahoma. Over the next two years, tens of thousands of Oklahomans lost employment in the energy sector. A number of Oklahoma-based energy companies declared bankruptcy.

These developments hit the state’s economy—and tax collections—hard. With this in mind, it shouldn’t be a surprise that appropriations for Oklahoma’s state government today are less than when oil prices regularly exceeded $100 per barrel.

What may surprise some, however, is that, except for a small blip downward in FY 2015, total annual spending by Oklahoma’s state government has consistently risen.

In FY 2007, total spending by Oklahoma’s state government was $14.13 billion. In FY 2016, the most recent fiscal year for which full data is available, total state government spending in Oklahoma topped $17.96 billion.

In other words, total state government spending in Oklahoma is $3.83 billion higher today than 10 years ago, an increase of more than 27 percent.

Some will note that, despite the increase in total state government spending, state expenditures for public education are presently below previous years. Fortunately, thanks to rising collections in ad valorem taxes—i.e., property taxes, which are collected and spent by local governments, rather than by state government—total revenues for Oklahoma public schools have consistently grown over the past 10 years and are now at record highs.

Curtis Shelton is a policy research fellow at OCPA. He holds a B.A. in finance from Oklahoma State University and previously served as a staff accountant for Sutherland Global Services.

Dave Bond is vice president for advocacy at OCPA. Since 2011, he has advocated at the Oklahoma state Capitol on issues of free enterprise, individual initiative, and limited government. He has been referred to in the Tulsa World as “a prominent Oklahoma anti-tax lobbyist.”