Last week, the Oklahoma Legislature passed the 2022 fiscal year budget. The total budget is $8.8 billion, an increase of 14.3% over last year’s $7.7 billion.
Oklahoma has a "balanced budget" amendment in the state constitution. The Legislature can’t spend more than revenue than it takes in, but in the past five years, the Legislature has passed historical tax increases that have resulted in an increase of over $1.1 billion in revenue.
Oklahoma is heavily dependent on sales tax revenue: 45% of tax revenue comes from sales tax, and 40% more comes from state income tax. The new budget includes $3.2 billion for common education – up more than $210 million over last year. That doesn’t include an increase of $27 million for textbook funding and school activity funds. Over the past five years, the education funding in Oklahoma has increased by $776 million. The education lobby shouldn’t complain about funding, but rest assured they will.
The budget does include a slight tax cut. Personal income tax in the Sooner state will be reduced a whopping quarter of 1% – from 5% to 4.75% – and corporate income tax will be reduced from 6% to 4%. The decrease will place Oklahoma in the top 10 for lowest corporate and personal income taxes in the country. It also includes funding for the Attorney General to represent the state in legal challenges associated with the McGirt case.
First, the Legislature doesn’t fund the budget; Oklahoma taxpayers do. In press releases by both chambers, lawmakers bragged about funding core services – and some not-so-core – with taxpayer money. Taxpayers should never lose sight of the fact government has no money to fund anything. Every dime government gets comes out of taxpayers' pockets. That simple fact is often forgotten, but it shouldn’t be.
Second, the Oklahoma government budget has grown at twice the rate of Oklahoman’s income. In five years, the state budget has grown by 23%. In 2017, the state budget was $6.78 billion. According to the U.S. Census Bureau, during the same period, Oklahomans per capita income grew 12%. It is not healthy for government to grow at twice the rate of those that fund it.
Third, Oklahoma taxpayers may be pleased with the 2022 budget. If so, that’s great, but the vast majority of citizens have little or no knowledge of how much of their money the state spends. The ’22 budget has a plenitude of funding for a plethora of programs – some worthy, some not. It’s the responsibility of the taxpayers/voter to call their respective legislators into account for how their money is being spent.
Four fundamental economic principles should guide elected officials when they consider fiscal issues: Every dime of spending must undergo a cost vs. benefits evaluation; government spending affects the growth of the private sector, so every dime spent by the government in effect competes with private sector monies; the private sector always delivers services in a more effective way than the government; and government spending should work to spur individual responsibility, not discourage it.
The late U.S. Sen. Tom Coburn said, “Republicans should simply focus on first principles and give the American people what they want: an honest party dedicated to common sense, fiscal responsibility and limited government.”
Steve Fair is chairman of the 4th District of the Oklahoma Republican Party.