Budget & Tax

With Budget Crunch Upon Us, It's Time to Right-Size Government

February 1, 2016

Jonathan Small

In 2016, it’s time for policymakers to get serious about “right-sizing” government.

When it comes to government spending in Oklahoma, the 800-pound gorilla in the room that many people ignore is this simple question: Should government grow faster than the private sector’s ability to pay?

To answer that question, I recently teamed up with OCPA economists Scott Moody and Wendy Warcholik to explore the two major components of government spending in Oklahoma— state and local government worker compensation and personal current transfer receipts. Chart 1 illustrates the growth differentials between Oklahoma’s state and local government worker compensation and private-sector income.

The data are no more encouraging than what we saw in Figure 2 on page 10—a consistent upward trend in the real resources the state of Oklahoma is commanding over time, even after population growth is considered.

Oklahoma policymakers still spend millions of dollars on targeted earmarks (such as rodeos, golf courses, aquariums, and other non-essentials), hundreds of millions on inefficient health care programs (even though bipartisan solutions abound), and hundreds of millions on non-instructional K-12 activities in public schools.

Across Oklahoma, families—many of whom are experiencing their own “revenue failure” due to private-sector job losses—are faced with rising health insurance deductibles and out-of-control medical costs, rising food prices, out-of-control higher education costs, and numerous other financial pressures. This year there will be Oklahomans who are forced into debt to pay medical bills or cover other necessities. Government shouldn’t take from these more than what is absolutely necessary to perform core functions.

On the facing page are OCPA’s top 10 budget recommendations. The list is by no means exhaustive. What former Indiana governor (and current Purdue University president) Mitch Daniels observed about the fat in higher education is true of state government generally: “Just like a cow,” he says, “it’s marbled through the whole enterprise.”

Jonathan Small, C.P.A., serves as OCPA’s president. Previously, he served as a budget analyst for the Oklahoma Office of State Finance, as a fiscal policy analyst and research analyst for the Oklahoma House of Representatives, and as director of government affairs for the Oklahoma Insurance Department. He holds a B.A. in Accounting from the University of Central Oklahoma and is a Certified Public Accountant.