Skip to main content

Budgeting During the Wuhan Virus Apparently Means Not Having to Make Tough Decisions


At the time of this writing, Governor Stitt remains in a budgetary impasse with the legislature over completing the current fiscal year, which ends in June. By the time this is posted, in all likelihood, he’ll have signed the spending bills that access the rainy day fund and which make no spending cuts for the rest of this fiscal year, despite current revenue issues and the fact that many agencies are closed. 

One of those bills Governor didn’t immediately sign also cut funding to the Digital Transformation Revolving Fund. This Fund appears to be very important to Governor Stitt as part of his efforts to make Oklahoma’s government top-10 in performance among the states. What’s strange is this is just about the only thing that saw a cut – something that likely involves contracts, and the sort of thing that does usually get defunded in the middle of a fiscal year.

A Tulsa World editorial has dismissed the disagreement with “The pandemic crisis isn’t a good time for a state budget fight” as if “pandemic” is all you have to say, and that makes the conclusion self-evident. And apparently, legislative leadership’s thinking is the same, along with a veto-proof majority of legislative members.

But is anybody – the legislature, the governor, or the press – in the right? Arguably, none are. Frankly, Governor Stitt is probably the closest to taking a principled stand. He has at least acknowledged that there is a rocky road ahead and now isn’t the best time to hide one’s head in the sand. The suggestion that budget cuts might be in order after a couple of years of pretty free spending and in the face of an economy devastated by a pandemic panic, accompanied by an oil price collapse, is actually a good idea. The error is in failing to prioritize. Some spending is less necessary than other spending. Across-the-board equal-percentage cuts is a result of laziness or an unwillingness to separate wheat from chaff.

The legislature and its press allies have nothing to stand on. The legislature’s first reaction seems to be that they really didn’t want to be at the capitol doing business in the first place. The pandemic therefore offers the perfect excuse to not do what they didn’t want to do anyway. Budget decisions made well before anybody had an inkling of what the overreaction to the Wuhan virus would do to the economy and before we realized just how badly oil prices would drop, are to stand (except a program important to the governor’s office, and apparently cut due to some sort of childish vendetta). Any and all of the gap between budgeted spending and revenue will be made up with rainy day funds. Yahoo! Let’s go home.

But when times are bad and rainy day funds get used, it’s generally prudent to review spending and prioritize, fall back to absolutely necessary spending, and cut any fat. It’s not a perfect analogy, but if a family’s chief breadwinner loses a job, that family might have substantial savings, but they don’t spend down the savings while continuing to live as if the job is still bringing in income – at least not if they’re prudent. They cut back expenses and use the savings to provide for necessities. That’s because they don’t know when or by how much the income will come back.

We don’t know when Russia and Saudi Arabia will cut back on their oil production or when they do, how much they’ll continue to produce. So we have no idea how much or when oil prices will recover. We have no idea what the economy will do once the powers that be decide we can go about our daily business again. We have no idea if the Wuhan virus or some variant might rear its ugly head again at some point in the fall. For that matter, these are uncertainties every time a budget is written, regardless of current circumstances, good or bad. But, we do know, right now, with absolute certainty, that revenues this year will fall short, and next year’s revenues are not likely to do well, either. Now is the time to be saving.

So legislature, why not acknowledge that Governor Stitt has a point? If you’re scared of the virus, maybe if the governor’s digital transformation efforts were fully funded, you could make new rules and meet virtually. Besides, it’s your job to make tough decisions. If that’s not what you stood for election to do, or if you seriously thought you wouldn’t have to, you really should leave the legislature and let somebody else take office who is willing to make some tough decisions. But if you stick around, this hyperlink gives some pointers for how you ought to make some of your budget decisions.

Byron Schlomach is 1889 Institute Director and can be contacted at bschlomach@1889institute.org.

The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.

Popular posts from this blog

Friday Special: The Left’s New Fear of Speech

As we said there in rejecting Virginia's claim that the only way it could enable its citizens to find their self-interest was to deny them information that is neither false nor misleading: "There is… an alternative to this highly paternalistic approach. That alternative is to assume that this information is not in itself harmful, that people will perceive their own best interests if only they are well enough informed, and that the best means to that end is to open the channels of communication rather than to close them. - Thurgood Marshall, Linmark Associates, Inc. v. Township Of Willingboro , 431 U.S. 85 (1977) With 2020 being such a caustic year, many novel innovations will be forgotten. Does anyone remember that the global shutdown was supposed to last three weeks to “flatten the curve?” The phrase probably rings a bell now that you hear it, but I bet you haven’t thought of it lately. We took for granted that something had to be done. We blithely accepted that lockdowns wer
Read more

OG&E and the Corporation Commission Aren’t Doing Their Jobs

At the time of this writing, it’s been a full week since there was power at my home. I live within OG&E’s electrical grid, so when it comes to being without power this past week, I’m nothing special. Many of OG&E’s customers had no power for days, and some will have no power for well over a week. By the time power is restored to everyone in their service area, OG&E’s own estimate is that it will have taken ten full days to repair all the damage from Oklahoma’s latest ice storm. Ice storms are bears, no doubt about it. They are very hard on trees, and if the roads ice over, they are very hard on cars. But roads, for the most part, were not an issue during Oklahoma’s “Icemageddon” of 2020. The problem was the extra weight of the ice on trees, wires and poles. And what we discovered was that Oklahoma’s electric power grid, once again, was not up to the challenge. Fact is, Oklahoma’s power grid isn’t up to much of Oklahoma’s weather. Every time the electricity goes out, which
Read more

Official Statement of 1889 Institute: Open Oklahoma’s Schools

Byron Schlomach, director of the 1889 Institute, issued the following statement today regarding the ongoing school closures throughout Oklahoma as a result of the Oklahoma State Board of Education’s response to the COVID-19 virus: Way back in March, the 1889 Institute first protested school closings based on then-existing evidence that school-age children are not prone to the disease, evidence confirmed in intervening months. This evidence, combined with the failure of school districts to provide a rigorous online education and the hardship on two-earner families created by distance learning, makes it clear that closing the schools has, indeed, been a policy error of epic proportions. To that end, 1889 Institute is calling on the Board of Education to rescind its current guidance that recommends such closures and reopen traditional brick and mortar schools immediately following the upcoming Christmas break. Not doing so is a disservice to both students and parents and will have a last
Read more

Think Carefully before Voting on SQ 802

So we vote next week on whether or not to expand Medicaid according to Obamacare’s provisions. A vote “Yes” on State Question 802 would expand Medicaid to able-bodied adults above the poverty line. A vote “No” would keep the status quo, with taxpayers buying health care under Medicaid mainly for poor children and pregnant mothers. But as with just about anything proposed by initiative, State Question 802 is not really that simple. For one thing, it forever entrenches a federal program, which can be changed by Congress at any time, in our state’s constitution, which is not so easily amended. Obviously, the proponents of SQ 802 want to set the terms of the Medicaid expansion permanently, sidestepping our constitutionally instituted legislature, which is supposed to react and adjust to existing circumstances. SQ 802 would take that flexibility away. A consequence of that reduced flexibility will likely be sacrifices in other state-financed programs such as public education, both in the n
Read more