| April 12, 2012

OCPA Projects Billions in Potential Savings

The Oklahoma Council of Public Affairs (OCPA) has released an outline of what its analysts deem wasteful state government spending. The group, a free-market think tank, circulated the information to members of the Capitol press corps on March 8.

Jonathan Small, the organization’s fiscal policy director, pointed to more than $2 billion in potential savings over a three-year period. With resources redirected to transportation infrastructure spending, OCPA projected net savings to taxpayers of $1,753,737,207.

Small told CapitolBeatOK, “The idea that Oklahoma’s government doesn’t have enough money to operate or fund core services is an idea not based in reality. You can’t support the contention that every dollar being spent is spent wisely or on activities that are useful.”

The broad sweep of the analysis pointed to state expenditures in recent years on things such as golf course losses, roping contests, summer camps, festivals, and programs in the suburbs of Tulsa, including the Jenks Aquarium.

Small noted that the state had, “in the last 10 years, spent $7.9 million on golf courses.” Last year, the government spent $395,000 on a spaceport, he pointed out. And, since 1999, the state has passed out $8 million “on space travel.” Small continued, “And, Burns Flat has a golf course next to it where they built a fence.”

Small contends that not all of the possible savings fall into categories of relatively small expenditures which, added up, reach a substantial sum. Rather, he pointed to a 2010 proposal that had bipartisan support, Senate Bill 2052.

With support from conservatives as well as the Oklahoma Public Employees Association (OPEA) and even the Oklahoma Education Association (OEA), the bill aimed to streamline the state-employee health insurance program.

Small observed, “If that were run again, it could save more than $75 million. As it is, without a law like that, the state agencies don’t bid health insurance options and costs as the private sector does, and, second, the state overpays for benefits allowances.”

At the time that measure was debated in 2010, advocates such as then-Insurance Commissioner Kim Holland, a Democrat, and then-Speaker Chris Benge, a Republican, asserted it could have avoided $75 million in insurance premium increases.

Individual agencies had planned on significant cost savings, including $3.7 million at the Department of Corrections, and $1.2 million at the Department of Human Services, if the measure had been enacted.

At the time, Governor Brad Henry’s veto drew searing criticism from his fellow Democrat, Holland, who had worked with members of both parties to boost the legislation.

In the interview with CapitolBeatOK, Small pointed to such an approach as one that could net the state government substantial near-term efficiencies and savings.

In discussion with CapitolBeatOK, OCPA president Michael Carnuccio said, “State spending is at an all-time high, but to hear some people talk it’s at an all-time low. There is a lot of waste in non-core spending. We are spending way too much money on things that are not core functions. That money should be returned to taxpayers.”

In his prepared remarks for the press briefing, Carnuccio contended, “Combing through state agency budgets and previous appropriation levels, our researchers have identified a huge amount of taxpayer money that is either tied up in wasteful, inefficient bureaucracy, or is being spent on things that are clearly not core functions of government. By redirecting those funds and correcting these mistakes, the state could save the taxpayers $2 billion over the next three years.”

Small said policymakers should be cautious about “revenue neutral” formulations, or a stated objective to return state government spending to levels reached before the Great Recession. In his prepared remarks, Small said, “The desire to get revenue levels back to where they were before the national recession that began in 2008 is based on a false premise that spending at that time should somehow be used as the standard.

“I would caution policymakers about using phrases like ‘revenue neutral,’ because they can be easily misunderstood. When some people hear that phrase or sense a push to get back to previous appropriations levels, they can get the wrong message that every dollar currently spent by state government is justified or that it would not be better spent or invested by the taxpayer who earned it in the first place.”

In addition to the employee-benefit reform Small highlighted, OCPA pointed to other potential changes that could produce hundreds of millions of dollars in savings:

“Several agencies receiving state appropriations are able to operate on their own and stop receiving taxpayer dollars. For example, the Oklahoma Insurance Department under both a Democrat and Republican insurance commissioner has requested to operate entirely without taxpayer funds just like many other regulatory agencies such as the Banking Department, Securities Department, Accountancy Board, and many others.

“The Consumer Credit Commission has requested to operate without taxpayer funds, and that effort is being led in part by Rep. Wes Hilliard [a Sulphur Democrat]. Allowing regulatory agencies that generate enough activity to operate on their own without taxpayer dollars is just common sense. Taxpayer funds should be reserved for the core functions of government. Making several agencies non-appropriated will save $20.7 million a year.”

Concerning a construction division at the Department of Human Services, “This competes with the private sector. Further, with the shift in care for the truly needy to home-based care and private-sector community solutions, it is not the best use of funds to try to maintain and continue to amass infrastructure at a state agency. This reform saves $5 million a year.”

Patrick B. McGuigan (M.A. in history, Oklahoma State University) is editor of CapitolBeatOK and a member of the board of directors of the Society of Professional Journalists (SPJ) in Oklahoma.

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