| March 30, 2012

State could save millions by making Insurance Department non-appropriated

Following is an excerpt from OCPA’s Proposed State Budget for the Fiscal Year ending June 30, 2013.

With Oklahoma government spending at an all-time high (see chart), the time has come to set priorities and to exercise spending discipline. One such opportunity exists with regard to the state Insurance Department.

According to its website, “the Insurance Department is responsible for enforcing the insurance-related laws of the state. We protect consumers by providing accurate, timely and informative insurance information. We promote a competitive marketplace and ensure solvency of the entities we regulate. We also license and educate insurance producers and adjusters, funeral home directors, bail bondsmen and real estate appraisers.” These products are used by many and not used by others, but are not a core function of government and should not be supported by general taxes on all Oklahomans.

The Insurance Department can be operated completely from fee revenue of those producing, selling, or utilizing these products. The proof of this is the Legislature’s constant raiding of the Insurance Department’s revolving funds (for $8 million in the last two fiscal years alone). It is time for lawmakers to stop playing games with the Insurance Department’s budget and (unconstitutionally) using dedicated fees for completely unrelated purposes. Clearly there are adequate fees available to operate the Insurance Department without taxpayer appropriations.

Operating the Insurance Department completely from revenues from regulatory activity is no different from the multiple state entities that currently operate without taxpayer funds, such as the Banking Department, Securities Department, Accountancy Board, Wheat Commission, Wildlife Commission, Construction Industries Board, and numerous other state agencies.

Agencies that operate without taxpayer appropriations are known as “non-appropriated” agencies, and must follow the same budgetary requirements as appropriated agencies. They can be controlled and monitored by lawmakers just like agencies that receive taxpayer appropriations.

The analysts at the John Locke Foundation, a free-market think tank in North Carolina, have developed what they call the “9 R’s of Fiscal Responsibility,” which OCPA has gladly adapted in developing a state budget for Oklahoma. When considering the Insurance Department, the most relevant “R” is “require more user responsibility.”

The potential savings from implementing such reforms would be more than $1.8 million annually.

Submitted each year by the Oklahoma Council of Public Affairs, Inc. to the taxpayers of the State of Oklahoma and their elected Officials, the OCPA “Budget Book” is carefully crafted by Fiscal Policy Director Jonathan Small to help lawmakers set priorities and exercise spending discipline while creating a state budget that respects your family budget. Offering unmatched fiscal policy analysis and recommendations, Small draws on his experiences as a former budget analyst for the Oklahoma Office of State Finance, former fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and former director of government affairs for the Oklahoma Insurance Department to provide perspective on the state budget that you cannot find anywhere else.

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