The second session of the 54th Oklahoma State Legislature will convene on Monday, February 3rd. Overall, we have nearly 4,300 bills to consider. I’m authoring 24 measures and will be co-authoring other bills with my House colleagues.
Each session our most important duty is to pass an efficient budget to meet our state’s needs based on projected revenue.
I was pleased to recently learn of Oklahoma’s strong financial rating according to a study conducted by the Mercatus Center at George Mason University. They found that Oklahoma has the 12th most fiscally-sound state government in the U.S. based on our state’s ability to meet long- and short-term obligations.
The report noted that the top states are able to match revenues and expenses to achieve balanced budgets. They also have enough liquid assets to pay their short-term bills on time as well as strategies to manage long-term liabilities.
States were ranked in four sub categories. Oklahoma ranked eighth in “long-run solvency,” which is the ability to cover all costs with incoming revenue, including long-term obligations such as guaranteed pension benefits and replacing infrastructure. We ranked ninth in “budget solvency,” which shows a state’s ability to create enough revenue to cover expenditures over a fiscal year. We were the 15th best state in providing our citizens with a sufficient amount of services. Finally, our state ranked 16th best in “cash solvency,” which has to do with whether a state has easy access to enough cash to pay bills in the near future.
Our unfunded public pension liabilities were a part of the above mentioned ranking and that’s important to note. In 2011, Oklahoma’s unfunded liability was $16 billion. In my first year in office, we approved House Bill 2132 requiring that the legislature fund all cost of living adjustments (COLA’s) instead of leaving them to be absorbed by the pension system (which had been one of the substantial reasons adding to pension insolvency). That change alone reduced the total future unfunded liability of the state’s pension plans to $11 billion as of this year. We are now on track to ensure our states pension system is sound in the years to come for current state employees.
Anecdotally, it was just six years ago that a close family member of mine retired after 30 years in education and simultaneously pulled their funds completely out of the Teacher Retirement System. Their decision to do so was based upon the large amount of unfunded liability at that time. After speaking with pension experts, this person felt it was the best decision even though they lost 25 percent of the retirement value due to pulling it out early. Had the pension system been in the shape it is today, I believe this family member would have been given different advice due to the legislative changes mentioned above designed to protect the system.
The report notes that our high ranking is due in part to “living within our means” and prudent budgeting. Unlike some other states, Oklahoma’s constitution requires that the legislature pass an annual balanced budget meaning we can only spend as much revenue as we have each fiscal year. This is why the State Equalization Board provides the Governor and the legislature with an estimate of the revenues that’ll be available during the next fiscal year. The Governor uses that estimate to create her proposed budget, which she presents to the legislature on the first day of session. At the end of February based on tax revenues, the Equalization Board will then give the actual amount the legislature has to appropriate and that’ll be used to craft the budget. The study pointed out that liberal states ranked low for the most part because they weren’t this efficient or frugal in their spending.
Every taxpayer should be proud of our state leaders, agency heads and local administrators for their efforts in making our tax dollars stretch farther in Oklahoma. These rankings highlight the positive outcome that can occur when everyone takes waste and program duplication seriously. The legislature has been working hard in recent years to make state government run more efficiently and it’s paying off. However, there’s still more to be done within a $7 billion budget. We still have areas where we could be more efficient, which is why constituent feedback is vital. I take such information seriously, even down to the price of the smallest items. Please continue to share specific areas where you believe taxpayer dollars are being unwisely spent. Every dollar saved is another dollar that can be put to highway improvements, public safety and education.
To contact me at the Capitol, please write to Senator Josh Brecheen, State Capitol, 2300 N. Lincoln Blvd. Room 413, Oklahoma City, OK, 73105, email me at firstname.lastname@example.org, or call (405) 521-5586.