Murphey: How to review state finances

Murphey: How to review state finances

Every so often, I field this question from those who are interested in state government: “How can I see the state finances?”

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It’s a query I really appreciate. Simply by asking the question, the person sends the message that he does not intend to judge the state budget issue according to media sound bites or political press releases. He is willing to take the time to figure it out for himself.

Here is a fact realized by only a few: most state spending never goes through the Legislature’s appropriation process. In reality, the Legislature appropriates just forty percent of the $17.5 billion of state spend.

With that in mind, I refer the questioner to the follow resource: Oklahoma Comprehensive Annual Financial Reports, or CAFRs. They provide the most comprehensive resource for understanding all state spending (revenue and debt), because they include the many billions of “non appropriated” state government spend.

This emphasizes the importance of looking at all state spending instead of just the appropriated money.

Most folks mistakenly refer to the appropriated money as the “state budget”, but that is not the case.

When the media and politicians talk about a budget shortfall, they are referring to the amount of money appropriated by the Legislature. They are not talking about overall state spending.
Even in years when Legislature has less money to appropriate, the size of state government spending may continue to grow.

CAFRs provide the means for pushing past the sound bites and understanding actual spend.

It is important to note that CAFRs provide much more than just spend analysis. After reading through these documents, the reader will quickly realize the state’s enormous dependence upon funds from the federal government. It is easy to see how the actions of state officials are contributing to the federal deficits and the growing federal debt – a debt which will have great consequence in future years.

The statements also include a breakdown by category of the amounts generated from each form of state taxation. Each category of taxation contains a decade in review. The reader can use this tool to analyze the ebb and flow of tax revenues over the last ten years.

The discerning reader will determine that state tax collections do not necessarily rise when the Legislature increases a tax. In at least one category, it appears that collections actually fell after one of the increases, even though the Legislature had designed their “budget” based on a projected increase in collections.

History has a way of repeating itself and this should serve as a clear warning to those state officials who are considering tax increases in this next budget year. History shows that tax increases do not guarantee new revenue.

You will find a listing of all recent CAFRs by visting hd31.org/791.

Thank you for reading this article. Your interest and input are much appreciated. Please do not hesitate to email Jason.Murphey@hd31.org with your thoughts and suggestions.

Sincerely,

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