Less government headed this way

For my phone pal who calls the office voice mail every Sunday to preach his less-government-is-great sermon, your prayers have been answered. "Less" looms and the results will be painful for those who can afford it the least.

Less government won't come in the form of decreased regulations or intrusion. That would be welcome. It will present itself through reduced services and hardship. Thanks primarily to tax cuts, mushrooming operating expenses for state agencies and declining revenues, the state budget for the fiscal year beginning July 1 is all but flat. To claw itself up to even that level, lawmakers and the governor relied on $180 million in one-time-only and carryover funding sources. Come next year, there will be one huge gaping hole to fill.

So, what is likely to happen is that agencies, unable to keep up with rising costs and mandatory employee benefit increases, will be forced to decrease public programs and services. Who will feel the impact most acutely will be those without health insurance and Oklahoma's large population living below the poverty line. For them, reduced services amounts to quick and prolonged pain. And, compounding the problem is that when the economy really gets bad those in need will reach for a safety net that they will find in tatters.

Unlike other states struggling with flat or reduced budgets, Oklahoma's money woes cannot be blamed on a stumbling economy. Flat revenue collections - leading to the standstill budget - were triggered by the phased-in implementation of steep cuts in the state's personal income tax enacted in recent years - a cumulative loss of $600 million.

Those who promoted the tax cuts may be able to capitalize on them at the ballot box for awhile. But someday Oklahomans will realize what's happened. By then, the tax-cutters may already be term-limited and someone else will have to pick up the pieces.

Recently, David Blatt, director of policy at the Oklahoma Policy Institute, a new, nonpartisan think tank, looked at the main features of the fiscal '09 budget. While the Legislature managed to scrape together enough money to fund some key obligations, numerous needs and priorities were, by necessity, omitted. With the existing revenue picture, the Legislature could not:

Grant a teacher salary boost of $1,200 annually to get teacher pay towards the regional average.

Address critical staffing shortages in the child welfare system. A plan to add 200 new workers got left on the table.

Provide a small pay raise to state employees who've only had two modest raises in eight years.

Fund the growth in the state's inmate population. The Department of Corrections will receive $3.6 million less in fiscal '09 than its current year budget. DOC projects a $17 million shortfall without even considering projected growth of 1,000 more inmates in the coming fiscal year.

Those are just the highlighted omissions, says Blatt, who details the total scenario at www.tulsaworld.com/okpolicy.

"The state's best guide for the future," Blatt said, "may be the past. The state's last budget downturn...led to a cumulative economic shortfall of $1.2 billion. Adjusting for budget growth and policy changes, a budget downturn comparable in magnitude to the last one would create a shortfall of judge under $2 billion in the years ahead."

Another part of the story is that while overall appropriation levels rose in recent years, the Legislature failed to properly fund agencies to cover mandated benefit contributions and increases in operating costs. Employee health insurance has more than doubled since 2003. Meanwhile fuel, utilities, postage, contract labor and building maintenance all have skyrocketed. At the Department of Education, alone, school operations rose $87 million in three years.

What this all means, says Blatt, is that agencies already were in a situation where funding levels fell short of ongoing expenditures. Inflationary pressures ensure that this situation will worsen. The question that must be answered is which agencies will be able to cover rising costs with temporary belt-tightening measures and which will be forced to cut back core public services and programs.

We're about to get a lesson in less.

Julie DelCour, 581-8379
julie.delcour@tulsaworld.com

Read the full story on the Tulsa World website