Weekly Opinion/Editorial

DON’T KICK THE CAN DOWN THE ROAD!
by Steve Fair

Last fall, the national media said Oklahoma was one of the few states that had dodged the economic recession. But last week, the National Conference of State Legislatures released a report that showed the Sooner state has the largest budget shortfall of all fifty states- a whopping 18.5%. In just the first five months of this fiscal year, Oklahoma’s tax revenue is down 28.5% below last year. If the trend continues, revenue will be more than 1 billion short of projections for the 2009 fiscal year.

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Oklahoma’s 2009 state budget is 7.06 billion, which is down –6.7% from 2008. Of that total, Education gets 54%, Health and Human Services 27%, and Public Safety and Judiciary 11.3%. That leaves less than 8% of the state budget for General Government, Natural Resources and Regulatory Services. Realistically, any meaningful cuts have to come from the first three listed.
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Why is revenue down? Oklahoma state government gets revenue from seventy (70) different sources, but a substantial amount of state revenue comes from ‘gross production tax.’ The seven percent tax is accessed on oil and gas producers, but was off a whopping 84% in November alone. Every major source of state revenue was off except motor vehicle tax by double digits in November. Less money is coming in than was projected, so it’s belt-tightening time- or is it?
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Some legislators, Republicans as well as Democrats, favor taking the $600 million ‘federal stimulus’ money Oklahoma has left and cleaning out the Rainy Day fund (also $600 million) to shore up the budget. That would solve this year’s budget woes, but what if things get worse? The Spears School of Business at OSU believes economic conditions in the state will not get better in 2010 and budget woes may continue into 2011.
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In a report released November 17th in OKC, they conclude, “ While FY 2009 was challenging for state and local budgets, FY 2010 will exhibit continued deterioration of the tax base. We anticipate some tax base recovery in FY 2011, but not enough to restore tax collections to their FY 2009 levels. “ They go on to say, “No significant recovery in U.S. natural gas prices is currently projected, but much could change through this winter. End of March storage and production levels should offer more insight into the trajectory of energy prices through 2011.”
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The Spear’s report lists four major ‘risks’ to the state forecast; (1) Further deterioration of national economic conditions. (2) Suppressed oil and natural gas prices through 2010 and lack of resolution on energy policy from Obama Administration. (3) Negative multiplier effects from strained state and local budgets. (4) Restricted capital access to Oklahoma's small businesses.
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With a projection that things could get worse, cleaning out the savings account (Rainy Day fund) is not the solution. That’s irresponsible and requires no creativity. That’s just ‘kicking the can down the road.’ Tough times require tough decisions by tough leaders.

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Ronald Reagan said, “A leader, once convinced a particular course of action is the right one, must have the courage and determination to stick with it and be undaunted when the going gets tough.”

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Here are a couple of suggestions for the legislature. Since Common Education gets the lion’s share of the state budget, it’s time for them to deal with the ‘elephant in the room.’ They should present a plan to share administration and infrastructure. They should lead the charge in the consolidating of Oklahoma’s 539 school districts. Instead of just lobbying for more money, Education should lead this initiative.

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Secondly, state agencies should be required to submit next year’s budget requirements using ‘zero based’ budgeting. They should have to justify every tax dollar they receive. The legislature should check their work; verify the taxpayer’s money is being spent in an efficient and prudent way.

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Legislators should make strategic cuts that deal with waste, duplication, and unnecessary functions. Everyone knows there is waste in Oklahoma state government. Everyone knows Oklahoma should share school administration and infrastructure. Everyone knows Oklahoma has more school districts than is efficient or necessary. But every legislature has just ‘kicked the can down the road’ in the hope a future legislature will deal with it.

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“Kicking the can down the road" was a game played by children in years past. In most versions of the game, someone kicked the can and then the person who was "it" had to retrieve the can before they could chase the other players. Kicking the can as far down the road as possible gave the other players the maximum possible time to hide or scatter or whatever is required by the game. Metaphorically, "kicking the can down the road" is similar to a delaying tactic, putting it off until later, etc. Let’s hope the Republican led legislature will show some courage and not play this children’s game.