What about the $597 million in spillover funds?

January 19, 2012

The weeping and wailing from the left and from various tax users about the state’s “crumbling infrastructure,” which is cited as proof of a shortage of state revenue, is an oft-told sob story. What they don’t want you to know, however, is that state spending is at an all-time high.

Yes, it is true that some of the state’s infrastructure has reached the point where it needs to be repaired or retired. But make no mistake: lack of contributions by taxpayers is not the culprit. To find the real parties responsible for the state’s “crumbling infrastructure,” one need only look at the diversion of funds to hundreds of millions of dollars in waste, inefficiency, and non-core spending, lack of planning by lawmakers, and the squandering of revenues.

Rep. T.W. Shannon and others are trying to resolve part of the problem with an extensive, long-overdue effort to review, streamline, and liquidate unnecessary state assets to help repair remaining assets. Listening to the loud chorus of angst and taxpayer condemnation about the condition of the state Capitol, you would think that overnight, a nearly 100-year-old building, with a recently added $25 million dome, magically developed more than $100 million in infrastructure needs. But the condition of the state Capitol isn’t the taxpayers’ fault; it is the fault of lawmakers, who for decades have neglected to establish a maintenance plan to keep the statehouse and other assets maintained. And this was long before any discussion of tax cuts or phasing out the state’s personal income tax took place.

Arguably, the most sinister culprit for the state’s “crumbling infrastructure” is the squandering of revenues. Here’s one example: During the 2006 special legislative session and the 2007 legislative session—a period of record high revenues for the state—lawmakers demonstrated again their ability to squander revenues. Due to the robust economic activity of taxpayers, activity in the energy industry, and the positive dynamic effects of tax cuts, the state’s “rainy day fund” twice reached its constitutional cap, which resulted in a windfall of more than $597 million (“rainy day spillover funds”) in unplanned and undedicated extra revenue becoming available for the legislature to spend. In a manner more resembling drunken sailors than those with “a solemn duty” to spend taxpayer dollars wisely, lawmakers spent every last penny. Now, financial counselors will tell you that you should not use one-time or unplanned funds on ongoing or new, cost-increasing commitments. But in the “pre-downturn level” years, what is wise and prudent did not stop lawmakers from spending hundreds of millions of rare, non-recurring revenues on ongoing operations, new buildings, new programs, and good old-fashioned “pork.” Rather than allocating the funds towards future critical infrastructure needs or planning for future “crumbling infrastructure,” lawmakers deliberately chose to waste the money. Instead of asking the question, “What about the crumbling infrastructure?” everyone should be asking “What happened to the $597 million in spillover funds?”

The misuse of the “rainy day spillover funds” and the resulting “crumbling infrastructure” is like mom and dad getting a surprise inheritance, using it to buy unnecessary items that can’t be maintained or that don’t last, and then complaining to their employers several years later that they need a raise because the house needs repairs or their retirement benefit isn’t large enough.

So hopefully all the talk about the state’s “crumbling infrastructure” will result in something productive—like elimination of the hundreds of millions of dollars in waste, inefficiency, and non-core spending; a comprehensive plan by lawmakers to maintain assets; and action by lawmakers that demonstrates a commitment to spend every taxpayer dollar wisely.

Nearly 100 years of progressive control of Oklahoma's state government has left us in the shape we're in. Now, with our state's lawmaking process being guided by self-professed conservatives, it is incumbent upon the new guard to change the way Oklahoma state government operates.