Budget & Tax
Jonathan Small | May 15, 2017
Three cheers for 'cost avoidance'
By Jonathan Small
Most Oklahomans know there are really only two ways to deal with the state’s budget shortfall. We can either trim expenses—especially those that can be reduced by some real reforms—or raise taxes.
Of course, every time our state raised taxes in the past, that only delayed confronting the very real issues of overspending and inefficiency.
There’s been an unusual debate over that during this year’s legislative session. OCPA—and if you believe polling, a substantial majority of Oklahomans—are on one side, advocating cost savings and reforms.
Preston Doerflinger, our state finance chief, has somewhat surprisingly taken the opposing view, first “applauding” OCPA’s cost-saving recommendations and then declaring them invalid because, well, because they do not significantly raise taxes.
Let’s review: Oklahoma has $878 million less to appropriate. No one disputes that. The question is how to deal with it.
OCPA did some in-depth research and found ways to save at least $413 million by implementing a series of reforms that included ending wasteful wind cronyism, better verifying who is qualified for state-funded health insurance plans, asking higher education to trim just 10 percent from a bloated non-teaching workforce that is 70 percent above the national average, and shifting some new funds from a tobacco settlement that already contains hundreds of millions of dollars.
Those savings were obvious. For example, the study of higher education non-teaching staffing showed that if we just brought our level of administrative staffing and spending down to the national average, we’d save $328 million. That alone would fill well over a third of the budget hole. We were conservative in our recommendation, suggesting that we start with just a 10 percent reduction.
Sec. Doerflinger initially said those sounded like good ideas, but then went on to downplay them for being “in the category of cost avoidance, not revenue creation.” Let that sink in a moment: Gov. Mary Fallin’s team would prefer to raise your taxes rather than make sensible reforms to save more than 400 million dollars.
No one in the real world talks that way. When things are tight for a family budget, Dad doesn’t call a meeting to weigh the options between “cost avoidance” and “revenue creation.” He says we need to cut out the movies and use more grocery coupons. He might also suggest that the kids mow a few lawns to make some extra money, but he knows that ordinary citizens, unlike government, can’t just vote themselves “revenue creation.”
Of course Gov. Mary Fallin has much invested in a series of proposed tax increases that would, among other things, impose sales taxes on hundreds of services, ranging from haircuts to colonoscopies—taxing us from top to bottom, so to speak.
So our chief state financial guru seems to believe that saving taxpayer dollars is unworkable and bad, while extracting more dollars from those taxpayers is a wonderful thing.
Perhaps he could explain why “cost avoidance” seems too futile when, in the very same week he offered his criticisms of the OCPA plan, the state’s top information technology official proudly told the House Government Modernization Committee that reforms bringing state agencies under consolidated IT plans had saved $129 million per year.
You will have to excuse Oklahomans for believing that there are opportunities for savings when they witness higher education and the executive branch adding new high-paid jobs for former politicos.
Sounds like it’s time for some “cost avoidance.”
Jonathan Small, CPA, serves as President at the Oklahoma Council of Public Affairs. Previously, he served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. He holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.
Jonathan Small, C.P.A., serves as President and joined the staff in December of 2010. Previously, Jonathan served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. Small’s work includes co-authoring “Economics 101” with Dr. Arthur Laffer and Dr. Wayne Winegarden, and his policy expertise has been referenced by The Oklahoman, the Tulsa World, National Review, the L.A. Times, The Hill, the Wall Street Journal and the Huffington Post. His weekly column “Free Market Friday” is published by the Journal Record and syndicated in 27 markets. A recipient of the American Legislative Exchange Council’s prestigious Private Sector Member of the Year award, Small is nationally recognized for his work to promote free markets, limited government and innovative public policy reforms. Jonathan holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.