Aug
31
The domino theory of SQ 744
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Supporters of State Question 744 like to tout the fact that the measure does not raise taxes or mandate that other agencies get their budgets cut. And they are right. In fact, there are no provisions at all in SQ 744 about how to pay for the billion dollar price tag.
That makes SQ 744 the first in a line of dominoes that will result in budget problems for lawmakers and, eventually, taxpayers. You can’t argue that since you only knocked over the first domino, you’re not responsible for the others falling as well. There are consequences to SQ 744 that supporters are trying to pretend don’t exist.
The FY 2012 budget has a billion-dollar hole in it, caused by lawmakers using one-time federal stimulus and Rainy Day funds. That means in order to have just a stand-still budget for FY 2012, the state will have to have revenues exceed estimates by a billion dollars. The first month of the current budget did exceed estimates by 12% or $40-million. But the state would need to see an increase of about 20% in order to have the surplus to cover the FY 2012 hole. Again, that’s simply to have a stand-still budget that doesn’t provide for increases in health insurance and other costs.
Now add to the mix the roughly $375-million cost of the first year phase-in of SQ 744. Supporters of SQ 744 say growth revenue will provide enough money to meet the mandate on education spending plus leave more for other agencies. I haven’t seen any economist predicting that Oklahoma will be bringing in an extra $1.3-billion this year.
The only way for lawmakers to increase education spending in FY 2012 is to take in more money through higher taxes or reduce spending elsewhere in the budget. Those are the dominoes that SQ 744 supporters don’t want you to see. But there is no doubt they are there and the only way to keep them standing is to defeat SQ 744.
Aug
30
Policy and a Pint
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State Question 744 will be the topic of a discussion tonight at Picasso’s in Oklahoma City’s Paseo District. Representatives from both sides of the issue will be on hand at the “Policy and a Pint” event which is put on by KOSU Public Radio. The format isn’t really a debate, just a way for the public to find out from each side why they believe the way they do.
KOSU did a story this morning on SQ 744 that included OFRG Executive Director Brian Downs. Yesterday’s episode of Oklahoma Forum on OETA was also on the topic of SQ 744. OFRG Communications Director Peter J. Rudy represented the STOP744 side.
We’re glad to see more and more people becoming educated on SQ 744. There are ways to improve Oklahoma’s education system that do not include decimating other state agencies or raising taxes. We believe that when people learn of the true cost with SQ 744, the more votes we have to defeat it in November.
Aug
25
Taxpayers flexed their muscles yesterday in Guthrie, Norman and Enid where bonds or fee increases on the ballot were shot down by voters.
In Guthrie, the school district was asking for nearly 90-million in bonds for improvements like a new high school, sports fields and gymnasium. It would have raised property taxes by 24% and nearly four out of five voters said “No.”
Norman is the only city in Oklahoma which has to ask citizens to approve rate increases. Two measures were on the ballot, one dealing with trash rates and the other water rates. In each case, the question was actually multiple increases - trash rates would have increased three times in two years and water rates twice. Both failed by an 18-point margin or more.
Enid voters narrowly defeated a $20-million bond proposal for a new events center and other improvements.
Guthrie had the highest turnout of the three races at 38% followed by Enid at 34% and Norman at less than 28%. We’ve railed in the past about low voter turnout deciding important bond measures. While these votes may not have been as low as some of the towns that voted earlier in the year, we’d still like to see more people take an active role in government.
Aug
24
There’s a hole in the budget now
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Following today’s State Supreme Court decision overturning the health insurance claims tax as unconstitutional (read our blog from yesterday here and our comment on the ruling here), we got a comment from Wayne Rohde about the impact on the state’s budget:
Now that this fee has been ruled unconstitutional, it was a center piece along with the proposed $50 million revenue from the camera system.
Now, what happens next. The state constitution requires a balanced budget. With these two items thrown out, does a special session need to be called to balance the budget?
We don’t think a special session is required. Here’s why:
The health insurance claims tax was supposed to raise $78-million which would have been used to get matching federal dollars for Medicaid. The State Treasurer and State Finance Director have a couple options to replace that money. First, they could take money from cash reserves, much like they did to offset higher mid-year cuts last year, to use as the state match. This money has to be replaced before the end of the fiscal year in June. They could assume that revenues will exceed expectations for the year and count on that money being there to pay back those cash reserves.
Similarly, they could reduce monthly allocations to agencies (two-percent across-the-board should be more than enough) to free up funds for the match. This money could then be given back to agencies through special appropriations passed by the next legislature provided the state continues to see revenues exceed estimates.
It’s that second option that should be used. We argued back when the budget agreement was reached that it relied far too heavily on new revenue and not nearly enough on budget cuts. Had the 3.4% average cut been increased to 5% it would have saved $96-million and there would have been no need for lawmakers to pass this unconstitutional bill.
Aug
23
Oral arguments were heard today at the State Supreme Court over the new law which imposes a fee on health insurance claims in order to raise around $78-million for Oklahoma’s Medicaid system. State Insurance Commissioner Kim Holland is challenging the constitutionality of the law.
Her argument is similar to the one we had back when the law was passed and sent to the Governor: as a revenue-increasing measure, the bill needed to pass with a super majority in each house or else a vote of the people. She also says the bill violates the rule prohibiting revenue increasing bills from passing in the last five days of the legislative session.
This will be a crucial decision by the Supreme Court that will have repercussions far beyond this specific bill. If it’s allowed to go through, then State Question 640 passed by the people in 1992 would lose much of its power. Lawmakers could simply invent new taxes and call them fees in order to get around the will of the people.
The constitutional language of SQ 640 seems to be very clear:
Article V, Section 33
A. All bills for raising revenue shall originate in the House of Representatives. The Senate may propose amendments to revenue bills.
B. No revenue bill shall be passed during the last five days of the session.
C. Any revenue bill originating in the House of Representatives shall not become effective until it has been referred to the people of the state at the next general election held throughout the state and shall become effective and be in force when it has been approved by a majority of the votes cast on the measure at such an election and not otherwise, except as otherwise provided in subsection D of this section.
D. Any revenue bill originating in the House of Representatives may become law without being submitted to a vote of the people of the state if such bill receives the approval of three-fourths of the membership of the House of Representatives and three-fourths of the membership of the Senate and is submitted to the Governor for appropriate action. Any such revenue bill shall not be subject to the emergency measure provision authorized in Section 58 of this Article and shall not become effective and in force until ninety days after it has been approved by the Legislature, and acted upon by the Governor.
We hope that the justices find the law to be as clear on this issue as we do. While it would create a temporary problem for the current state budget, the problem would be much worse for Oklahoma’s taxpayers if the healthcare tax is allowed to go forward.
*Note: On Tuesday, August 24, the State Supreme Court overturned the health insurance claims tax as unconstitutional. To read OFRG’s comment on the ruling, click here.
Aug
17
Obama administration favors release of teacher performance data
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The Los Angeles Times published an analysis of teacher effectiveness earlier this week, using test score data that the paper says shows which teachers are more likely to get students to improve. According to the paper,
Contrary to popular belief, the best teachers were not concentrated in schools in the most affluent neighborhoods, nor were the weakest instructors bunched in poor areas. Rather, these teachers were scattered throughout the district. The quality of instruction typically varied far more within a school than between schools.
Although many parents fixate on picking the right school for their child, it matters far more which teacher the child gets. Teachers had three times as much influence on students’ academic development as the school they attend. Yet parents have no access to objective information about individual instructors, and they often have little say in which teacher their child gets.
Many of the factors commonly assumed to be important to teachers’ effectiveness were not. Although teachers are paid more for experience, education and training, none of this had much bearing on whether they improved their students’ performance.
Other studies of the district have found that students’ race, wealth, English proficiency or previous achievement level played little role in whether their teacher was effective.
Not everyone is happy with the report, but U.S. Secretary of Education Arne Duncan (pictured below with President Obama) had encouraging words to say. He thinks parents have a right to know if their children’s teachers are effective.
Aug
16
UCO economics professor Mickey Hepner writes on his blog that one way to increase per-pupil spending in Oklahoma is to develop a voucher system that “outsources” education to private schools. The idea being that as long as the voucher amount was less than the average spent per pupil, there would be more money available for the students that remained in public schools.
This is a conversation worth having when it comes to educating our children. It’s something that can and should be debated in legislative hearings and perhaps even be a part of the discussion during the upcoming statewide elections.
But it doesn’t change the fact that State Question 744 will devastate Oklahoma’s budget. Even using Professor Hepner’s example of a $3,000 voucher and 10% of students using it, it falls short of covering even the first year’s phase-in of SQ 744 which, under the most recent data, would require an extra $578 per student. Years two and three of the phase-in would still require over a billion dollars which could not be made up with vouchers. It would have to be either budget cuts or tax hikes.
Oklahoma can’t afford State Question 744 with or without vouchers. So before the voucher debate comes to the Legislature, State Question 744 has to be defeated in November.
Aug
11
Recovery will have to be much stronger to help state budget
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Yesterday, State Treasurer Scott Meacham released state revenue figures for July with the announcement that “the recovery of Oklahoma’s economy is obviously underway.” And it’s true that the first month of the fiscal year started out with collections up 12% over the estimate for July. While we applaud the news, it’s important to point out that the state continues to face two huge budget problems for FY 2012.
As we’ve pointed out before, there is a hole in the current budget being filled by federal stimulus dollars and Rainy Day Funds that total about a billion dollars in one-time money not available for FY 2012. The revenue estimates for this year are just about $5-billion, so a 12% increase over the entire year would bring in roughly $600-million. That still leaves a $400-million hole. To put that into perspective, this year’s budget only cut $256-million from the previous year, so cuts for FY 2012 would be even larger.
In order to fill the hole for FY 2012, state revenues would have to be about 20% higher than predicted for the rest of the year. And even then, it only guarantees a stand-still budget. There would be no room for supplemental appropriations this year or increases next year to help agencies dealing with budget cuts.
Now consider the other looming budget problem: State Question 744. Not to sound like a broken record, but SQ 744 would require at least $375-million in new spending for K-12 education in FY 2012 alone. In order to cover the $1-billion budget hole AND pay for the first year of SQ 744 without making any cuts to other parts of the budget, state revenues would have to increase by 27.5% for the entire year or more than double the increase for July.
We can’t do anything to change the hole in the budget. It’s already done and the next Governor and Legislature will have to deal with it. But it’s not too late to do something about SQ 744. We can defeat it at the polls in November and make the FY 2012 budget challenge a bit easier.
Aug
10
The Oklahoma Transportation Commission today will vote on a new long-term construction plan that outlines what roads and bridges will be built over the next eight years. But even before it starts, the plan is in jeopardy, thanks to State Question 744.
If voters approve SQ 744 in November, the state will be spending an extra $1.7-billion on education over the next three years. And as we’ve pointed out repeatedly, the state budget is already operating with a $1-billion shortfall for 2012 that needs to be made up. That’s nearly $3-billion in funds that have to be found somewhere. No one is predicting that kind of economic recovery for Oklahoma, so the only alternatives are a tax increase (which would require a super-majority in the legislature or a vote of the people) or cuts in all other state agencies, including ODOT.
At an interim study last year on SQ 744, Transportation Secretary Gary Ridley testified that a 20% cut to his agency would mean a loss of $400-million because federal matching funds would also be lost. That’s 10% of the funding for the Eight Year Plan or the equivalent of 197 structurally deficient bridges not getting repaired or replaced.
What if ODOT was proposing that Oklahoma’s road spending per mile - which ranks 43rd in the nation - be brought up to the regional average? Based on 2008 figures, that would mean an extra $1,483 per road mile or over $167-million.
Maybe the Department of Corrections can get in on this as well. After all, Oklahoma ranks 45th in the nation in spending per inmate at $16,202. Let’s raise that to the regional average of $24,400 at a cost of about $191-million.
Do you think the Oklahoma Education Association would be willing to cut funding to schools so that transportation and prisons could be brought up to the regional average? We don’t think so.
And that’s why SQ 744 is such a bad idea. Education is a top priority in the state, but it’s not the ONLY priority. The governor and lawmakers try to balance all the priorities in order to make the budget work every year. SQ 744 eliminates that and has lawmakers in the surrounding states determine how much Oklahoma spends on education and how much is left for prisons, roads, health care, troubled children, colleges, career tech and all other functions of government.
Let’s defeat SQ 744 and then work on ways to improve education in Oklahoma through innovation and ideas in the legislative process.
Aug
3
At least the waste is visible
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U.S. Senators Tom Coburn and John McCain today released a report outlining 100 more stimulus projects that fail to deliver on the promises made to the American people about why the $862-billion spending scheme was needed. Included in the list is a sidewalk in Boynton, OK, which was the subject of this report from the Oklahoma Impact Team.
We have pointed out many times that the so-called stimulus package failed to stimulate the economy at all, especially since only 44% of the stimulus funds have actually been spent 18-months following its passage. It’s troubling to see how much of even that amount has been wasted. If there’s any good side to this, it’s that at least we can see the waste.
Having transparency in government spending makes it easier to track and assess how the funds are spent. But the process doesn’t stop there. Taxpayers need to take this information and act on it, demanding accountability from elected officials to make sure something like this doesn’t happen again.
As the Senators put it in the report:
“We owe it to every American to rebuild our economy without doing additional harm and in a manner that expands opportunities for future generations of Americans. There is no question job creation should be a national priority, but torrential, misdirected government spending is not the way to do it. Generating record-breaking national debt is not an investment in our children’s and grandchildren’s future and will not lead to any long-term recovery.”
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