Many Oklahoma lawmakers say they’re fiscally responsible with our tax dollars, yet they don’t follow some best practices of financial planning that can help ensure this.
Let’s say you were considering making a major expenditure – buying a car or a house – that would have financial impact for years. You wouldn’t make that decision without considering your current income, your future prospects, and how that payment aligned with all your other household expenditures moving forward.
Yet, some Oklahoma lawmakers are comfortable making major financial decisions without the same type of fiscal planning you use in your own household.
Oklahoma’s budget planners publish only one-year revenue projections. This leaves state leaders with a narrow view of the state’s financial outlook. Most large businesses operate with three- to five-year revenue projections. It gives them a broader perspective of what could be ahead and helps them plan for uncertainty.
Multi-year projections are like a road map to the future, ensuring state agencies can keep providing important services without running into financial problems. It’s a way of being smart with taxpayer dollars, making sure there’s enough for what’s needed.
Beyond revenue projections, officials also should incorporate planning models that account for inflation and population growth. Known as current services baseline budgeting, this type of fiscal planning helps determine how much it would cost to deliver the current level of service as prices rise and populations change.
A good current services budget model provides lawmakers with information they can use to identify and evaluate the costs of proposed policy changes. In recent years, state leaders have asked agencies to request flat budgets, which effectively ensures the agencies’ buying power decreases each year.
To make the best decisions, lawmakers need more robust financial planning information. The creation of the Legislative Office of Fiscal Transparency in 2019 was a step in the right direction, but more can be done.
For example, long-range tools could help lawmakers see that state revenue has been artificially high recently, primarily due to federal pandemic relief. It also might show that the state and nation could be facing significant economic hardships in the next few years.
With better fiscal planning tools, our elected officials and policymakers could make better informed decisions about our state’s limited financial resources. This would help ensure they were fiscally responsible as they use our tax dollars to help our people and our communities succeed.
Shiloh Kantz is executive director of the Oklahoma Policy Institute.