Budget Considerations in the 2011 Legislature and Oklahoma Scenic Rivers Administration

Since 2002, the Oklahoma Scenic Rivers Commission has consistently been one of the first agencies to undergo a budget cut, and often tops the list of agencies forced to absorb the largest cuts.1 For fiscal year 2011, the commission received $279,239 in state appropriations, which doesn't begin to pay for the services more than 500,000 visitors demand each year. Operations are funded primarily by $130,000 in fees paid annually by the commercial flotation device operations, service contracts with the Oklahoma Department of Environmental Quality and the U.S. Army Corps of Engineers, and, ironically, a $1.1 million grant from the poultry companies paid to the agency in four installments from 2005 to 2009.2

Oklahoma Governor Mary Fallin’s proposed Fiscal Year 2012 Executive Budget, prepared by her staff and Office of State Finance, includes 51.9% reduction (from Fiscal Year 2011 amount of $279,239.00 down to $134,391.00) in appropriated state funds to the Oklahoma Scenic Rivers Commission.3

Averaged, the Illinois River experience carries an actual cost of about $1.20 per user. This $1.20 is used for litter abatement, safety, aesthetics, protecting the water quality to make it suitable for recreation, and other ‘public goods’ that must be provided as a shared, overall governmental function.4

Of course, the user fees apply to just a few of many types of uses. Thus, a grade school student who is writing a paper about the Illinois River doesn’t pay anything for downloading information from the website. And individuals calling to ask about the river level don’t dial a toll number that charges them for the information.

Scenic Rivers Commission Administrator Ed Fite said about a third of the commission's $700,000 budget comes from state funds. The state allocation this year is $279,000, and the fiscal year 2012 allocation drops to $134,391.5

Statewide, Oklahoma’s population consists of 3,751,351 people.6 If State of Oklahoma made up for the $70,000 EPA grant expiring this year and reinstated the $279,239 at the current funding level, per capita cost for the OSRC would be less than 11 cents per person. In Oklahoma the median household income for the most recent year available, 2009, was $41,664, or per capita $17,646.00.7 Per capita, that 11 cents a person represents only .000062% of the per capita family budget. The individual savings to every Oklahoman would be inconsequential. It would be tenuous to express the proposed actions as a taxpayer relief measure, since it amounts to something in the vague neighborhood of forty cents of a family’s annual tax bill. Or, to look at it from the perspective of what the budget bill does, the tax savings would, on average, be less than twenty cents per family.

Two motivations for the proposed consolidation and budget cut were given: The commission would become a division of the state Conservation Commission as a way to save money and capture more federal matching dollars, according to the proposal. Alex Weintz said eliminating employees would be involved.8

In preparing this analysis within a short time, it was not possible to run a planning modeler such as MPLAN, for the purpose of comparing the cost of jobs lost to the benefit of saving $134,391.00.9 However, we can draw from other states’ experiences with the same question recently. A recent Arizona economic impact study has addressed whether a sales tax or whether job cuts gave the better macroeconomic result for the state.10 Arizona found that job losses attributable to reducing government services have a greater cumulative adverse statewide economic effect, sometimes due to losing leveraged matching funds in addition to the more commonly cited reasons for not powering down a swift economy. In this instance, don’t confuse the data. Below we address matching fund leveraging as being dedicated for the purpose of riparian conservation programs from USDA that can’t be used for law enforcement and public safety or litter abatement and other tourism management functions. In Oklahoma, we can’t just Ex-out the law enforcement functions because that would have big negative economic implications as tourists stopped coming to an unsafe river. The point of the Arizona study is that a tax increase actually has less adverse consequences to the state’s economy than does shaving jobs. It offsets the employment gains which are one of the stated goals of the Oklahoma Governor’s platform. Moreover, the cumulative impact on the state’s economy from joblessness is greater than the cumulative impact of either tax mitigation or debt reduction.

We do not have current 2011 numbers, but Oklahoma governments (combined state, municipal and quasi-governmental entities such as utility districts) spent a total of $6,691 per person in 2006, well below the national average of $8,381, in services and public goods to the people of the state. In 2005, the state of Oklahoma ranked last among the states in combined state and local spending per person.11 It might be worthwhile to apply the budget premise (lower taxes) in an IMPLAN model to explore whether tax reduction strategies ‘waste’ synergistic opportunities and starve Oklahoma of its economic fuel that otherwise would be spent again and again if the focus were on ‘rapid recharge’ of revenues. If that premise were indeed supported by the forecasting model, the bonus would be offering good service to state residents, while yet satisfying the main objective of adequately funding our affirmative goals within the Oklahoma economy as a whole.