The Edmond Sun

Opinion

February 4, 2013

BY THE NUMBERS: Expect state tax collections to suffer

In the coming days the State Board of Equalization will certify the official state revenue estimates — the estimates that will guide the Legislature in crafting the fiscal year 2014 state budget. If the early indications hold though, I think their forecasts will be much too optimistic.

In December the State Equalization Board certified the initial state revenue estimates for the next fiscal year, which forecast a 4.8 percent increase in state General Revenue Fund collections to $5.9 billion this next year. Generally, a 4.8 percent increase in collections is consistent with normal economic growth — a decent, but not great year. However, there is mounting evidence that next year might not qualify as even a “decent” year for revenue growth. Therefore, I’m a little less optimistic.

There are two main reasons for my being less optimistic. First, recent state economic data indicate that the state economy, if not contracting, is at least slowing. For example, seasonally adjusted state sales tax collections — arguably the best indicator of current economic activity — have steadily declined since last summer. While the decline has not been dramatic (a drop of about 2.7 percent) the last time this metric decreased for this length of time, the economy was still in the depths of the Great Recession.

To listen to many state officials though, the state economy continues to hum along. They point to our low unemployment rate is proof that the state economy remains strong. Of course, our unemployment rate remains among the nation’s lowest and we are not shedding jobs as we were in 2009. But this is only evidence that our economy was strong … not that it remains so. A steady decline in consumer spending in the state is an indicator of, at best, a stagnant economy, and at worst, a contracting one.

Furthermore, the state economy is facing external threats too. The desire of congressional leaders to significantly reduce federal government spending — some of which flows directly into the state economy — could have a significant negative impact on the state economy. After all, if the federal government significantly cuts defense spending then thousands of Tinker AFB employees, and the businesses that depend upon them, would face significant economic harm. Then there is always the risk that an economic crisis in Europe could trigger another financial crisis in the U.S. In 2008 a financial crisis nearly drove us into another depression.

Combined, these factors have me concerned that fiscal year 2014 will be a year of below-average economic growth and below-average revenue growth for state coffers. Unfortunately, state revenue has not yet fully recovered from the impact of the Great Recession. As a result, funding for education, health care, roads and prisons have suffered. A further decline in state revenue would mean even fewer investments in our future thus further dampening our state’s future growth prospects.

It is possible that the slowing of the state economy these past six months was just a temporary correction. After all, the state economy grew at near the fastest pace in the nation in 2011 and early 2012. Given the overall weakness in the state’s energy industry, such meteoric growth was simply not sustainable. Sadly, there are few indicators that the state economy has begun to expand rapidly once more. Until that happens, we can expect state tax collections to suffer.

MICKEY HEPNER is the dean of the College of Business Administration at the University of Central Oklahoma. Hepner serves on the Executive Committee of the Board of Directors for The Oklahoma Academy.

 

1
Text Only
Opinion
  • Instead of mothballing Navy ships, give them to our allies

    A bitter debate has raged in the Pentagon for several months about the wisdom of taking the nuclear aircraft carrier George Washington out of service to save money. The Washington, at 24 years old a relatively young vessel, is due for a costly refit, a routine procedure that all of the 11 large carriers in service undergo regularly.

    April 18, 2014

  • The pessimist’s guide to grizzly bears and Earth Day

    This coming Friday, to “celebrate Earth Day,” the Walt Disney Co. will release one of those cutesy, fun-for-all-ages, nature documentaries. “Bears” is about grizzly bears.
    The trailer says, “From DisneyNature comes a story that all parents share. About the love, the joy, the struggle and the strength it takes to raise a family.”
    Talk about your misguided “Hollywood values.” I previously have acknowledged a morbid, unreasonable fear of grizzly bears, stemming from a youth misspent reading grisly grizzly-attack articles in Readers Digest. This fear is only morbid and unreasonable because I live about 1,500 miles from the nearest wild grizzly bear. Still. ...

    April 16, 2014

  • Digging out of the CIA-Senate quagmire

    Last week, the Senate Intelligence Committee, led by Sen. Dianne Feinstein, D-Calif., voted to declassify parts of its report on the CIA’s rendition, detention and interrogation program. The White House, the CIA and the Senate still have to negotiate which portions of the report will be redacted before it is made public. But this is an important step in resolving the ugly dispute that has erupted between the intelligence committee and the intelligence agency.
    The dispute presents two very serious questions. Was the program consistent with American values and did it produce valuable intelligence? And is effective congressional oversight of secret activities possible in our democracy?

    April 15, 2014

  • Los Angeles Times: Congress extend jobless benefits again

    How’s this for irony: Having allowed federal unemployment benefits to run out in December, some lawmakers are balking at a bill to renew them retroactively because it might be hard to figure out who should receive them. Congress made this task far harder than it should have been, but the technical challenges aren’t insurmountable. Lawmakers should restore the benefits now and leave them in place until the unemployment rate reaches a more reasonable level.

    April 14, 2014

  • Many nations invested in Israel

    Former Israeli Ambassador to the United States Yoram Ettinger recently spoke to a gathering at the Chabad Center for Jewish Life and Learning in Oklahoma City. The event began with a presentation by Rabbi Ovadia Goldman, who told the attendee that the  upcoming Jewish holiday of Passover was an occasion for them to embrace the children of God, which is all of humanity.

    April 14, 2014

  • Coming soon: More ways to get to know your doctor

    Last week, the federal government released a massive database capable of providing patients with much more information about their doctors.
    The Centers for Medicare and Medicaid Services, the government agency that runs Medicare, is posting on its website detailed information about how many visits and procedures individual health professionals billed the program for in 2012, and how much they were paid.
    This new trove of data, which covers 880,000 health professionals, adds to a growing body of information available to patients who don’t want to leave choosing a doctor to chance. But to put that information to good use, consumers need to be aware of what is available, what’s missing and how to interpret it.

    April 14, 2014

  • HEY HINK: Hateful bullies attempt to muffle free speech

    Hopefully we agree it should be a fundamental right to voice criticism of any religion you wish. And you should have the right to sing the praises of any religion you choose. If criticism of religion is unjust, feel free to make your best argument to prove it. If criticism is just, don’t be afraid to acknowledge and embrace it. If songs of praise are merited, feel free to join in. If not, feel free to ignore them. But no American should participate in curbing free speech just because expression of religious views makes someone uncomfortable.

    April 11, 2014

  • Putting Oklahoma parents in charge

    Oklahoma’s public schools serve many children very well. Still, for various reasons, some students’ needs are better met in private schools, in virtual schools or elsewhere. That is why two state lawmakers have introduced legislation to give parents debit cards, literally, to shop for the educational services that work best for their children.

    April 11, 2014

  • Israelis, Palestinians are losing their chance

    Developments in the Middle East suggest that prospects of success for the Israeli-Palestinian talks, to which Secretary of State John Kerry has devoted countless hours and trips, are weakening.

    April 11, 2014

  • Teens might trade naked selfies for mugshots

    Will teenagers ever learn? You think yours will. Maybe so. But it's likely that was also the hope of the parents of children who were so shamed by nude photos of themselves that went south - how else can they go - that they killed themselves.

    April 11, 2014

Poll

Do you agree with a state budget proposal that takes some funds away from road and bridge projects to ramp up education funding by $29.85 million per year until schools are receiving $600 million more a year than they are now? In years in which 1 percent revenue growth does not occur in the general fund, the transfer would not take place.

Agree
Disagree
Undecided
     View Results