It is said the definition of insanity is doing the same thing over and over again and expecting different results. In the context of the state budgeting process, it could be said the definition of insanity is continuing to plug budget holes with hundreds of millions of dollars in non-recurring revenues while at the same time working to eliminate the recurring ones.
The dash for cash typically occurs twice during the legislative session.
It happens at the start of session to fund supplementals for agencies that didn’t receive sufficient funding for a full year. The Department of Corrections is a perennial recipient. And it happens again at the end of session when budget writers scramble to pull together enough resources to fund the General Appropriations bill.
Such suboptimal resource planning is understandable during times of extreme fiscal distress. Most would not fault the use of reserve funds or creative finance during the three budget cycles that spanned the Great Recession.
But such tactics should be rare, not business as usual.
State government funding in Oklahoma has become dependent on the use of one-time funds in both good times and bad. Revenue growth in the Sooner State was strong last year, yet legislators spent almost $400 million in non-recurring funds to increase the budget bill by 5 percent above the prior year.
Nearly $298 million in one-time money was employed in the FY’13 budget from such sources as the insurance premium assistance fund, various revolving funds and the unclaimed property fund, which has become such a favorite grab bag that budget writers often forget to seek the statutorily required authorization.
Last session, about $93 million originally destined for the Rainy Day Fund was intercepted by legislators to fund supplementals for education and public safety. In the previous session, $21.4 million was diverted in the same manner.
Even though the money was earmarked for legitimate needs, the ends did not justify the means.
In both diversions, simple changes to codified tax law allowed the Legislature to reapportion current year collections after the Equalization Board approved the final estimate. The action effectually allowed the Legislature to spend more money than authorized.
Such action violates at least the spirit of the constitutional balanced budget provision and establishes a dangerous precedent that allows the Legislature to circumvent Rainy Day Fund laws at will.
Now that state revenues have returned to pre-recession levels, it is time to inject common sense into our revenue structure.
Only when one-time revenues are reserved for one-time expenditures can eliminating recurring revenue sources be responsibly accomplished.
To get better budgeting results, policymakers must continually learn from past mistakes.
Oklahoma certainly would benefit from comprehensive tax reform that lowers rates by broadening the base and better prioritizing the spend. But until the annual mad dash for cash comes to an end, the quest for fiscal sanity will remain elusive.
KEN MILLER, an Edmond resident, is Oklahoma state treasurer. He may be contacted via his website at http://www.ok.gov/treasurer/.