Oklahoma government spending continues to climb

March 22, 2011

Contrary to what you may hear from our friends on the left, government spending in Oklahoma continues to rise, and it continues to outpace personal income growth in the state.

Every year the Oklahoma Office of State Finance, where I previously served as a budget analyst, prepares the Comprehensive Annual Financial Report (CAFR) for the state. The CAFR reports total revenues, expenses, and other financial data.

Taxpayers might be interested to learn that, despite two recessionary periods, total state expenditures increased every year from FY-2001 to FY-2010 (the latest year data are available). Yes, despite the recession, the state set a record for expenditures in FY-2010.

In FY-2001, total state expenditures were $9.6 billion. By FY-2010 state expenditures had grown to $16.6 billion.

It is important to use total state expenditures as a yardstick, because looking only at appropriations fails to consider the money that the state extracts from taxpayers that never enters the appropriations process.

For example, the Oklahoma Teachers Retirement System (OTRS) receives five percent of all sales, use, individual income, and corporate income tax revenues before those tax dollars can be appropriated. That’s $669 million in the last three years alone—none of it appropriated. And the OTRS is but one example. Legislators are fond of using these “dedicated, directed” funding sources to channel millions of dollars to their favorite government programs.

Clearly then, “appropriations” is not the most useful measure of government growth. Indeed, appropriated funds account for less than 40 percent of total state expenditures. That’s right: of the $16.6 billion in state expenditures in FY-2010, only $6.4 billion of it was appropriated. Oklahoma’s state government receives (and spends) revenue from a variety of sources, including licenses, fees, permits, fines, forfeits, income from property, and grants from the federal government (which, contrary to popular belief, is not “free money.” Oklahomans pay federal taxes, and our grandchildren will be stuck paying the Chinese for this debt).

Some have argued that state appropriations are decreasing as a share of personal income. But again, appropriations are not a comprehensive measure. As the nearby charts show, federal data tell us that government growth is outpacing personal income growth, and is far outpacing the more reasonable benchmark of population plus inflation.

A recent SoonerPoll showed that Oklahomans overwhelmingly prefer a smaller government with fewer services. Unfortunately, we’re still waiting.