OCPA Developing a State Budget That Respects Your Family Budget

November 7, 2011

According to recent survey data (see here), Oklahomans want lower taxes and a smaller state government that provides fewer services. OCPA will provide the roadmap.

We are currently working on a model state budget for Fiscal Year 2013 which returns government spending to pre-spending-spree levels while providing much-needed tax relief for Oklahoma families.

It’s a budget which allows private businesses and families the opportunity to use their hard-earned money according to their priorities, not state government’s priorities.

In short, it’s a state budget that respects your family budget.

Now you may have noticed that our friends on the Left like to say Oklahoma is a “low-tax state.” To which one must reply: By what standard? Certainly not by the standard of the American colonists, for example, or the ancient Israelites, as University of Oklahoma historian J. Rufus Fears reminded us in these pages in May. The average Oklahoman was forced to work more than three months this year before he was able to enjoy the fruits of his own labor. “Tax Freedom Day” arrived on April 2, 2011—that’s the day the average Oklahoman had finally earned enough money to be able to pay the federal, state, and local tax collectors. This tax burden is inappropriate for a free people.

Accordingly, the OCPA budget provides for a significant reduction in Oklahoma’s individual income-tax rate—another step toward eliminating the tax altogether and replacing it with nothing. This will put money back into the hands of Oklahoma’s private sector, thus spurring economic activity and even providing some offsetting revenues for the state. But make no mistake, the goal is not to be “revenue neutral.” The OCPA budget provides what Oklahomans want: a smaller government that provides fewer services.

In light of the irresponsible spending spree of FY 1996 to FY 2002 (wherein state appropriations increased more than $1.9 billion—or 49 percent) and the irresponsible spending spree of FY 2004 to FY 2010 (wherein state appropriations increased more than $2.1 billion—or 41 percent), the OCPA budget returns government spending to a level more appropriate for a state with Oklahoma’s level of capital, job creation, and population.

This is necessary. For despite legislative and executive branches filled with professed conservatives, Oklahoma government spending is at an all-time high (see chart on page 8). According to the Office of State Finance, total state expenditures have increased every year from FY 2001 ($9.6 billion) to FY 2010 ($16.6 billion).

Much of this spending is devoted not to “maintaining core services” but rather to maintaining bureaucratic overhead. Using Census Bureau data, OCPA adjunct scholar Russell Jones, a marketing professor at the University of Central Oklahoma, shows that Oklahoma ranks 14th among the 50 states in the number of government employees as a percentage of the population. “Oklahoma [state and local] governments have 18,048 more full-time equivalent employees than our population justifies,” he writes. “These employees are paid $709,018,036 per year.”

Moreover, according to a news report on March 2, 2011, in USA Today, Oklahoma’s public employees earn higher average pay and benefits than Oklahoma’s private-sector workers. Using data from the Bureau of Economic Analysis, USA Today reported that average public-sector compensation (including salaries and benefits) in Oklahoma in 2009 was $47,258, which was $1,667 greater than the compensation of Oklahoma’s private-sector workers.

How did Oklahoma manage to pile up all this government? “In good times, I do think that it’s true that government is subject to ‘mission creep,’” former state treasurer Scott Meacham once observed. “When the revenue is flowing maybe there’s a trend to drift into areas that are outside of the core mission or missions of government. What happens when things are going well is that things that are ‘nice to do’ become new programs, but in hard times or tight times, it’s time to look at maybe pruning the tree of government.”

What is the core mission of government? This, of course, “is the debate at the heart of government budgeting,” says the John Locke Foundation (JLF), a free-market think tank in North Carolina. “What should government do? What does the constitution allow it to do? What does it do well? What can it reasonably hand off to other sectors of society?”

Government is like Microsoft before broadband, handing down a proprietary operating system (law) for everyone with little ability to fix bad lines of code. It assumes that a few people running “government-modified organizations (GMOs)” can make better decisions than the natural, organic interaction of millions of service users and providers. This setup results in, among other things, a Medicaid program that provides less health care than promised, schools that graduate half of African-American males, colleges and universities that graduate less than a quarter of their students in four years, and targeted tax incentives that fail to create or keep jobs.

Oklahoma, with 3.75 million people and a Gross Domestic Product of $148 billion, is too complex for 149 legislators and several thousand bureaucrats to manage. Oklahoma has a vibrant private sector, and it makes more sense, as JLF points out, to leave more activities in the hands of “individuals and companies who can be contractually bound to produce results, instead of spelling out the methods to state employees and allowing them to choose the results they will achieve.”

Government exists to secure our rights to life, liberty, and property. It does not exist to own and operate a third-rate motel chain, to bribe poor women to leave the fathers of their children, to give people food stamps to buy cigarettes, or to provide employment for termed-out state legislators.

It’s time for government to be smaller and for your taxes to be lower.