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Counterpoint: Reactive response


Kurt Hochenauer December 10th, 2009

Beginning in 1929, the Great Depression defined Oklahoma as Okies escaped westward in massive numbers and the state's population dwindled. The exodus didn't stabilize until nearly the '50s.   In t...

Beginning in 1929, the Great Depression defined Oklahoma as Okies escaped westward in massive numbers and the state's population dwindled. The exodus didn't stabilize until nearly the '50s.  

In the '80s, the collapse of Penn Square Bank and the oil bust caused high unemployment rates, memorialized in local T-shirts emblazoned with this question: "Will the last person to leave Oklahoma please turn off the lights?"

The recession that began after the Sept. 11, 2001, terrorist attacks, although short-lived, forced teacher layoffs and chased away college graduates who looked for work elsewhere.

This history should not be lost now on Oklahoma political, corporate and educational leaders as the state faces a budget crisis that may take years from which to recover. As Paul Shinn, a consultant for the Oklahoma Policy Institute, argues in an insightful study brief, "it may be several years before we return to pre-recession revenue levels."

According to Shinn, "Oklahoma's current revenue shortfall and service squeeze is harsh and will continue for several more years. State services will continue to deteriorate, causing harm to families and restraining economic growth in Oklahoma. It will be years before services are restored and even longer before we can invest in the public structures that will support greater prosperity." 

State leaders need to consider the long-term economic and human damage the crisis can create in a state with systemic problems, which include underfunded education systems, poor medical outcomes, hunger and an aging physical infrastructure needing repair and replacement.

The numbers tell a sad story: General state revenues in October came in 18.2 percent under budget estimates and 23.7 percent below last year's collection, according to State Treasurer Scott Meacham. Overall, revenues have declined 28.1 percent below last year for the first four months of this fiscal year. That's nearly a 30 percent decline. Although Meacham noted in a press release the 18.2 percent estimate decline in October was less than the first quarter estimate decline, the numbers remain sobering.

Unemployment stood at approximately 6.7 percent in November, the highest rate since 1988, according to Shinn. Oklahomans are receiving food assistance from the Oklahoma Department of Human Services at record levels. State agencies have furloughed employees and some are not filling positions. State Schools Superintendent Sandy Garrett has urged school districts to try to protect teachers, but that may be impossible.

State agencies are cutting their budgets by at least 5 percent each month, but if the steep declines continue, they will need to cut more. Federal stimulus funds have kept the state away from disaster, but if revenues continue to decline at current levels, it could lead to widespread layoffs and furloughs. Right now, the state is borrowing money from cash funds to keep cuts at approximately 5 percent, but this money will have to be repaid, most likely from the state's Rainy Day Fund, which has approximately $600 million.

Tax hikes on the state's wealthiest citizens would solve the problem, but that's not going to happen in a Republican-dominated Legislature that includes many conservative Democrats.

"The state's response to shortfalls so far can best be characterized as reactive and uneven," according to Shinn.

Hochenauer is an English professor at the University of Central Oklahoma and the author of the Okie Funk blog.

 
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