TABOR not a fit for Oklahoma, economists say
Marie Price, The Journal Record
March 31, 2006
OKLAHOMA CITY -– Oklahoma already
has government spending-limitation provisions tailored to its needs and doesn't need
a Taxpayer Bill of Rights, a University of Central Oklahoma economist said Thursday.
Another UCO professor said he has no
problem with the philosophy of restricting
spending, but opposes the TABOR formula.
Economists Don Maxwell and Mickey
Hepner spoke at a forum held in conjunction
with UCO's annual Southwest Business
Symposium. Hepner is also director of the
UCO Policy Institute.
A TABOR proposal, similar to the original
Colorado law, is pending before the
Oklahoma Supreme Court. It would require
a vote of the people to become law.
The measure would limit growth in government
spending to the combined growth
rates of inflation and population. It uses the
Consumer Price Index to gauge inflation. A
part of any savings under the law would be
returned to taxpayers as rebates.
Colorado's spending cap was recently
suspended for the next five years to allow
the state budget to recover from the recent
recession. At the end of the five years, lawmakers
will recalculate Colorado's spending
limit. Voters also did away with the socalled
"ratchet effect," which kept spending
down to the point that Colorado's budget
could not recover, even as state revenues
started to rebound from the recent recession.
Colorado residents have not received
any rebates since 2001.
The proposed Oklahoma TABOR would
cap spending at the greater of the spending
limit for the prior year or total spending in
the previous year increased by inflation
plus population growth.
Hepner said the Oklahoma TABOR proposal
would affect only state revenues, not
local or federal dollars or fees such as
tuition.
Maxwell said it would do away with the
current balanced budget amendment and
rainy day fund, creating an emergency fund
and a budget stabilization fund. He said it
would require voter approval to raise the
spending cap, one year at a time.
Hepner said that, unlike Congress, Oklahoma
lawmakers cannot deficit spend, but
must balance the state budget.
"The balanced budget requirement
forces them to make a choice," he said.
Maxwell said this law has worked well
as a restriction, while allowing for some
growth.
He also highlighted recent measures
tightening the procedure for tapping the
rainy day fund and the existing 12-percent
limitation on spending growth in Oklahoma
law.
Oklahoma also has a constitutional provision
requiring that tax increases not
achieving a three-fourths majority in both
legislative houses be put to a vote of the
people.
Hepner and Maxwell agreed that the
CPI, which uses a particular basket of urban
consumer goods as an inflation measure, is
not a proper gauge for increases in the cost
of services government buys, such as transportation,
corrections, education and the
like.
From 1992 to 2002, Hepner said, Oklahoma
government grew faster than the
national average, ranking about the 10th or
12th fastest among the states.
Had TABOR been in effect, he said, that
growth would have ranked about 49th.
Hepner said a better gauge would be
growth in personal income.
From 1992 to 2002, he said, personal
income in Oklahoma grew about 61 percent,
with tax revenues following closely behind
at 60.75 percent.
Maxwell said 25 or 30 states have some
type of spending limit, but most are based
upon personal income.
He said there is an index known as the
implicit price-deflator for state and local
consumption and investment expenditures
that measures government costs, but it is not
state-specific.
Maxwell expressed doubt that a TABOR
law would be flexible enough to allow the
state budget to reflect a predicted spike in
the state's aging population and the
increased use of many state services, including
Medicaid, that will mean.
Maxwell also said that the Oklahoma
TABOR may not properly provide for economic
downturns. If the emergency fund
has not built up to an adequate level, he
said, that would prevent lawmakers from
addressing key needs.
He also pointed out that only 35 percent
of the budget stabilization fund could be
tapped at any one time.
Maxwell said policy-makers also need to
decide whether they think the current
spending level, which would set the initial
TABOR level, is where it should be.
Maxwell said a better approach would
be to look at needs on a program-by-program
basis, which is not generally the case
now.
Proposals like TABOR reflect a distrust
of representative democracy, he said.
"I think good governance is a bit more
complicated than putting everything to a
vote of the people," Maxwell said.
