Oklahoma state budget

Oklahoma's governor, Mary Fallin, signed the $6.8 billion FY2013 state budget into law on May 29, 2012. The budget increases state spending slightly more than 3% over the FY2012 budget, although most state agencies will receive no increase in state funding.^[1]

Oklahoma budgets on an annual cycle and the fiscal year begins on July 1.^[2]

Oklahoma has a total state debt of approximately $36,256,896,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the FY2013 state budget gap.^[3] The FY2013 state debt total is similar to the FY2012 total of $36,952,387,000.^[4]

Oklahoma's total state debt per capita is $9,562.66.^[5]

See also: The Oklahoma State Budget on State Budget Solutions

Economic Freedom

A new Fraser Institute report on economic freedom ranks Oklahoma 20th in economic Freedom. Delaware ranks 1st and New Mexico ranks 50th. The study examines the impact of economic freedom on both the level of economic activity and the growth of economic activity. According to the study, the freest economies operate with minimal government interference, relying upon personal choice and markets to answer basic economic questions. More governmental restrictions on those choices curbs economic freedom. The study looks at three major categories per state – size of government, taxes and regulations. ^[6]

Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

Figures are calculated by dividing each state’s intergovernmental revenue into its general revenue. Data is available at in U.S. Census.

Fiscal Year 2013 State Budget

On May 21, 2012, lawmakers and the governor reached a deal on the $6.8 FY2013 budget.^[7] The governor signed the budget into law on May 29, 2012.^[8] The budget can be found here.

The FY2013 state budget spends 3% more than the FY2012 state budget did.^[8]

Higher Education

Higher education funding accounts for 14.8 percent of the state's budget for FY2013, down from 18.6 percent of the budget in FY1980.^[9]

K-12 Education

Per pupil spending for K-12 education in the state decreased $706 between FY2008 and FY2013, a drop of 20.3 percent.^[10]

Rainy Day Fund

The budget provides for the state to deposit $340 million into its rainy day fund if revenue estimates on which the budget was based hold. The deposit will bring the fund's total to nearly $690 million.^[11]

Human Services

One of the increases in the budget is an additional $50 million to the Oklahoma Department of Human Services to bolster child-welfare services as a result of the settlement of a lawsuit over the care of children in its custody.^[8]

State Treasurer Ken Miller said on Nov. 3, 2011, that, despite rising state revenues, legislators face challenges in drafting the FY2013 budget. Those challenges include dealing with one-time funds used to plug holes in the FY2012 budget and the expiration of some tax credits. ^[12] Then in Dec. 2011, state Finance Director Preston Doerflinger said that lawmakers should have $6.5 billion available for the FY2013 budget.

Legislative Proposed Budget

The budget spends approximately $200 million more than legislators were told in February by budget officials that they would have available to spend as a result of federal funds and extra available cash. The budget for FY2013 is 3.2% more than the FY2012 budget of $6.6 million.^[7]

The budget keeps spending for most agencies the same as FY2012, with the exception of Human Service and education, which will see increases.^[7] Increases include:

• State Education Department: $52.4 million;
• CareerTech: $1.4 million for operations;
• Higher Education: $10 million for operations;
• Transportation Department: $99 million to repay a transfer of funds this fiscal year.^[7]

Governor's Proposed Budget

Gov. Mary Fallin explained that although the state has seen an increase in revenues, she expects that the FY2013 budget will be relatively flat budget because the state must make up for the loss of one-time funds, including those from the federal government. The budget estimate includes the loss of $36 million for FY2013 when a dozen tax credits that were suspended the past two years are expected to resume July 1 and that the state must repay $50 million a year in energy rebates that were not paid out the past two years to oil and natural gas companies to help Oklahoma get through its budget crisis. The estimates also include the loss of about $70 million in revenue when the state personal income tax's top rate drops from 5.5 to 5.25 percent, effective Jan. 1.^[13]

Gov. Fallin presented her proposed FY2013 state budget to the legislature when it began its session on Feb. 6, 2011. Gov. Fallin's proposed budget can be foud here.

Spending

The governor's proposed FY2013 budget spends nearly $6.6 billion, up $124.7 million from the $6.5 billion FY2012 budget. Most agency budgets would remain the same as the current year. Under the budget, the Department of Mental Health and Substance Abuse Services budget would increase $143 million, a 76.4 percent increase, and the Oklahoma Health Care Authority's budget would decrease by $146.7 million, almost 15 percent.^[14]

Income Tax Cuts

She proposed reducing state income tax rates, including reducing highest rate of 5.25% down to 3.5% and reducing the income tax brackets, from seven down to three. Personal income taxes bring in about one-third of the state's legislative-appropriated budget. For this fiscal year, personal income taxes are estimated to bring in $1.9 billion of the $6.4 billion budget. The governor said that she would pay for the tax reduction by eliminating tax loopholes, carve-outs and other exceptions, but did not specify which ones.^[15]

Fiscal Year 2012 State Budget

• See past state budgets

The FY2012 budget bill can be found here. The governor signed the $6.4 billion spending plan into law on May 24, 2011.^{[16] [17]} The FY2012 budget was 3.2 percent less than the $6.7 billion FY2011 budget.^[18]

As of October 2011, state revenue collections had risen for 20 months in a row, with collections for the past 12 months up almost 9 percent from the prior 12 months. State Treasurer Ken Miller said that Oklahoma regained almost 60 percent of the revenue that disappeared during the recession.^[19]

The legislature directed the Department of Central Services to assemble a list of all state-owned property and identify the "most underutilized state properties" of the state's 9,000 properties. Lawmakers have proposed selling some of the properties and use the revenue from the sales to help fund basic infrastructure needs.^[20]

To balance this fiscal year's budget, lawmakers and the governor used $357 million in special cash appropriations and $113 million in federal stimulus funds designated for the state's Medicaid program.^[13]

Personal income taxes bring in about one-third of the state's legislative-appropriated budget. In FY2012, personal income taxes are estimated to generate $1.9 billion of the $6.4 billion budget.^[21]

Legislative Proposed Budget

The legislature approved a $6.5 billion state budget^[22] when the House approved a key piece on May 13, 2011, and sent it to the Senate. The budget cuts cuts $238 million from state appropriations,^[23] trimming funding for most state agencies from between less than 1 percent to 9 percent. The FY2012 budget is 3.2 percent less than the $6.7 billion FY2011 budget.^[24]

Legislators had been approved to spend $6.3 billion based on revenue projections by the Oklahoma Tax Commission. To address a lawmakers plugged a $500 million shortfall, lawmakers turned to $120 million in cash flow reserves and also used money from a $70 million transportation bond issue, revenue from state agency revolving funds and remaining stimulus funds.^[22]

Budget Cuts^[23]

• State finance office was cut by $1.4 million
• Department of Consumer Credit will lose more than $200,000, of its $535,000 appropriation
• Oklahoma Health Care Authority was cut by $9.9 million, about 1 percent of the authority’s appropriations
• The prison system will lose $2.3 million
• Education-related funding will lose $167.4 million

Funding Increases^[23]

• The Attorney General's Office will receive an 8.3 percent increase in its appropriation
• Department of Central Services will see funding increase by 8.4 percent, or $1.3 million, due in part to moving the Oklahoma Supreme Court from the Capitol across the street to the Wiley Post Building and the replacement of a $479,000 boiler in one of the state office buildings.
• The Corporation Commission will see an additional $1.2 million because it was losing $2 million in federal funding because of its inability to enforce certain regulations and also because it needed to be compensated for an inadvertent “double cut” imposed on its budget several years ago.

Collective Bargaining Issue

On Feb. 23, 2011, the House General Government Committee, which is controlled by Republicas, approved HB 1576, which would repeal the Municipal Employees Collective Bargaining Act, which required cities with populations greater than 35,000 to collectively bargain with their workers.^[25] The new bill, which now goes before the full House, would end collective bargaining by municipal workers in the state's 13 largest cities.^[26]

Budget Cuts

Gov. Mary Fallin recommend on Feb. 3, 2011, 3% cuts in the state's next budget for priority areas and 5% for other agencies.^[27] Previously, Sen. David Myers, the new head of the Senate Appropriations Committee, told agency heads on Jan. 13, 2011, to prepare for funding cuts of up to 10 percent and directed them to produce plans on how to make the reductions.^[28]

Significant budget cuts are expected to come from education, which accounts for more than 50% of state funding.^[28] Passage of SQ 744 would require the state to raise to raise its per-pupil expenditure to the average of surrounding states, which could cost the state about $392 million in the 2012 fiscal year.^[29]

Gov. Fallin said she will not halt an automatic 0.25% reduction in the state's top income tax rate effective Jan. 1, 2012, a tax cut would reduce revenues by $120 million a year.^[28]

Budget Transparency

• See sample transparency legislation at the Sunshine Standard

Oklahoma OpenBooks is the name of the publicly available website created by the Oklahoma government. It discloses information about Oklahoma's spending and budget, and is managed by the Office of State Finance. It is one of the few state websites that passes all five criteria of the Sunshine Review's transparency checklist.

Government tools

The Oklahoma OpenBooks page provides a searchable database of state expenditures and revenues. How often the Office of State Finance updates the database varies, depending upon the type of information being updated. For example, payroll and expenditures information is updated monthly, whereas the list of vendors is updated annually.^[30]

The following table is helpful in evaluating the level of transparency provided by Oklahoma OpenBooks:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Oklahoma OpenBooks	Y	Y	Y	N	Y	Y

See also: Evaluation of Oklahoma state website

Limitations and Suggestions

The site should post line-item expenditures.

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois has created a multi-measure transparency profile for Oklahoma, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.

Accounting Principles

The Oklahoma State Auditor and Inspector audits state and local agencies in the state, publishing its audit reports online. The Oklahoma State Auditor and Inspector is a statewide elected position serving a 4-year term. The office of Examiner and Inspector and the State Auditor was consolidated in a special election on July 22, 1975. Steve Burrage was appointed to the position by Gov. Henry on July 10, 2008 after the June 16, 2008 resignation of Jeff A. McMahan under indictment for accepting improper cash and gifts from an Oklahoma businessman.^[31][32]

The Institute for Truth in Accounting (IFTA) rates Oklahoma “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Oklahoma's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[33] Oklahoma's CAFRs are annual publications of the Oklahoma Office of State Finance and prepared by the Division of Central Accounting and Reporting. The Oklahoma State Comptroller directs the daily operations of the Division of Central Accounting and Reporting. Brenda Bolander is Oklahoma's State Comptroller and Michael Clingman is Director (appointed by the Governor and approved by the Senate) of the Oklahoma Office of State Finance.^[34]

Stimulus

Oklahoma will receive approximately $321 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[36]

Oklahoma received $1.9 billion in the prior round of federal funding.^[37]

Public Employees

According to 2008 Census data, the state of Oklahoma and local governments in the state employed a total of 249,724 people.^[38] Of those employees, 198,834 were full-time employees receiving a net pay of $630,491,968 per month and 50,890 were part-time employees paid $41,674,360 per month.^[38] More than 59% of those employees, or 149,326 employees, were in education or higher education.^[38]

External links

• State Budget Solutions, Oklahoma
• Oklahoma Council of Public Affairs
• Oklahoma OpenBooks, official website
• Oklahoma Office of State Finance
• Study of State Budget Gaps
• Oklahoma Government spending
• Model transparency legislation from the American Legislative Exchange Council is available at this link.

Additional reading

• Gov. Brad Henry's State of the State Address 2009
• News On 6,"Lawmakers to Meet and Discuss State Budget Crisis," January 3, 2010

References

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