Budget & Tax
Curtis Shelton | September 27, 2021
Don’t fall into the federal money pit
The American Rescue Plan Act of 2021 will send $3.5 billion to the state of Oklahoma. Counties and municipalities get a share of $1.3 billion. The use of funds is restricted to responses to the Covid-19 pandemic, whether directly health-related or in response to negative economic impacts.
This funding comes on top of the $1.5 billion in CARES Act funding the state received amid the pandemic. Moreover, Oklahoma collected $1.3 billion more in revenue in fiscal year 2021 compared to 2020.
This much stimulus at a time when the state doesn’t really need it creates problems for the state and local officials who must decide how to spend it. To avoid creating unsustainable recurring spending, these officials should prioritize one-time funding projects.
This may be easier said than done, but some low-hanging fruit is already out there. State lawmakers have already earmarked $42 million for rural broadband expansion that would qualify under the federal guidelines.
An interim study on criminal conviction expungement reform led by state Rep. Nicole Miller, R-Edmond, could also provide an opportunity to use these funds to build out an automated system to help process expungement petitions, giving more employment opportunities to formerly incarcerated individuals.
A few other possibilities include replenishing the state’s Unemployment Compensation Trust Fund. Oklahoma’s fund is currently 29 percent funded, according to the Tax Foundation.
Officials in charge of these spending decisions have an enormous responsibility. Tax reform in Oklahoma should be a top priority for state officials. To stop the flow of Oklahoma residents to states like Texas and Florida, eliminating the state income tax is a must.
Programs created through these funds that increase the size and cost of state and local government indefinitely would undermine the ability of the state to pursue growth-minded reforms such as income-tax elimination. That sort of government expansion should therefore be avoided.
Curtis Shelton currently serves as a policy research fellow for OCPA with a focus on fiscal policy. Curtis graduated Oklahoma State University in 2016 with a Bachelors of Arts in Finance. Previously, he served as a summer intern at OCPA and spent time as a staff accountant for Sutherland Global Services.