Oklahoma State Budget

To see OCPA's proposed state budget visit: www.ocpathink.org

Henry's Proposed Spending Spree

By Steve Anderson (OCPA research fellow)

OCPA recently pointed out that Gov. Brad Henry is proposing a startling increase of $1.11 billion - or 18.4 percent - over the current year's appropriation of $6.03 billion. In the governor's FY-2007 executive budget (which, by the way, doesn't balance), he recommends spending:

-$6.6 billion in authorized appropriations;
-$117.7 million in lottery money; and
-$392 million in excess general revenue funds.

This amounts to $7.15 billion. It's likely that he also wants to spend excess gross production oil funds, though that line on his summary sheet was left blank.

In a subsequent analysis published by the Alliance for Oklahoma's Future, public policy analyst David Blatt, a former staffer for Sen. Stratton Taylor, took issue with OCPA's assertions. The Alliance, as my colleague Brandon Dutcher describes it, is "an assortment of labor unions, education bureaucrats, abortion promoters, public employees, members of the religious left, self-described 'progressives,' and various appendages of the welfare state."

According to the Alliance, "This claim of an 18.4% spending increase is inaccurate, based on both a mistake in the OCPA's analysis and on misleading use of the data. When these errors are corrected, it turns out that Governor Henry's budget proposes spending increases of $462 million (7.4%)."

"While the $6.6 billion number is uncontroversial," Blatt continues, "the other two numbers used to unearth the 18.7% growth are more problematic." (Twice in his analysis Blatt refers incorrectly to 18.7%, rather than 18.4 percent, growth.)

The Alliance says OCPA was wrong to include the $117.7 million in lottery money because, even though "the presentation of the summary table in the Governor's budget document creates some confusion about the $117.7 million," this money is already included in the total proposed expenditures.

The plain and simple fact is that Governor Henry's budget shows lottery revenue as an addition to the certified revenue. It is clearly presented as a separate line item. Simple rules of financial statements require that individual revenue items above an underline (the universal signal even in basic math) be added together to show total revenue. Those are the rules.

We agree with Blatt that the governor's out-of-balance budget document "creates some confusion", after reviewing his casino and tobacco numbers, by now we're accustomed to confusion, but nonetheless the printed budget book says what it says. If the governor and the finance director (a former colleague of Blatt's on Stratton Taylor's fiscal staff) wanted to tell the world that the lottery money was in line 1, they shouldn't have created a separate line 2 for it.

The Alliance also takes issue with OCPA's inclusion of $392 million in excess general revenue funds, saying "It is far from clear that these expenditures should be counted at all as part of the annual state budget."

It's interesting to note that the Alliance's initial accusation ("inaccurate," "mistake," "error") has been downgraded to "more problematic" and "far from clear." But I don't think it's far from clear at all. The Alliance would have us believe that the starting point for measuring the governor's FY-2007 spending spree should be not the FY-2006 actual appropriated amounts, but rather some arbitrary amount decided by the Alliance. OCPA - just like the House fiscal staff, Senate fiscal staff, and Office of State Finance fiscal staff - simply used last year's actual appropriations as a starting point for this year's budget. After all, if you paid to put a new roof on your house last year, you don't include a new roof in this year's budget. And again, if one doesn't want this money to be included in the annual state budget, then one shouldn't have put it in the annual state budget.

Despite the Alliance's obfuscation, the fact remains that Gov. Henry has presented a budget that not only doesn't balance, but increases spending 18.4 percent over last year's appropriation level. OCPA would welcome the opportunity to debate this matter, with professionals - for example, members of the Governmental Accounting and Auditing committee of the Oklahoma Society of CPAs - acting as the judge and jury.

House Speaker reveals state budget blueprint

Associated Press, Edmond Sun 4/5/06
http://www.edmondsun.com/local/local_story_095003140.html

OKLAHOMA CITY (AP) - House Speaker Todd Hiett opened the debate over the state budget Tuesday by proposing more than $500 million in tax cuts and rejecting Senate plans to accelerate teacher pay raises and expand a state-funded college scholarship program.

Hiett said his tax cut plan, including eliminating the inheritance tax and an income tax cut of about 1.3 percent, is possible because of an estimated $1 billion in surplus revenue available next year due largely to economic growth. About $200 million has already been spent.

"It's obviously an extraordinary year with a lot of surplus revenue," said Hiett, R-Kellyville. "I think this is the best opportunity Oklahoma has had in many years to grow the economy."

While big on tax cuts, Hiett's budget plan includes modest spending increases including $1,200 across-the-board pay raises for teachers, a $56 million allocation that would pay for the second phase of Gov. Brad Henry's plan to bring teacher salaries to the regional average.

Hiett said he does not support a proposed $3,000 across-the-board pay raise for state teachers, part of a $339 million education bill passed by the Senate.

The speaker also expressed opposition to a Senate plan to expand the number of students who qualify for free college tuition through the Oklahoma Higher Learning Access Program.

"It would take quite a lot of convincing," said Hiett, a candidate for lieutenant governor this fall.

His budget plan includes money to pay existing OHLAP obligations.

A bill authored by Senate President Pro Tem Mike Morgan, D-Stillwater, would raise the maximum income level under which students are eligible for free college tuition from $50,000 to $75,000.

The measure, pending in a House committee, increases the cost of the program by $27.3 million when fully implemented in 2010.

Hiett said he has not discussed his budget plan with Henry or Senate leaders.

Senate Appropriations Chairman Johnny Crutch-field, D-Ardmore, said Hiett appears to be negotiating the budget with news reporters.

"At least that way we can get a glimpse of what he's for," Crutchfield said.

Crutchfield said he is disappointed Hiett has not included new money for higher education and CareerTech, "two of the biggest economic engines we have in Oklahoma."

"We have a unique opportunity this year to make significant investments that will pay dividends for the future of our state. We must, as we consider the budget, look beyond the next election and focus on the next generation," Crutchfield said.

Hiett's budget plan dedicates much of the state's surplus revenue to one-time projects, including proposed cancer and diabetes centers and a new research tower for the Oklahoma Medical Research Foundation.

It proposes annual spending increases for state drug courts, child abuse investigators at the Department of Human Services, roads and bridges and a variety of other programs.