You may have seen recent news reports detailing how Britain’s national debt now equals 90% of its entire economy. The Daily Mail published a graph showing the acceleration of the UK’s debt since 1992. I noted that although on a larger scale, the UK debt accelerated at a significantly slower rate than Oklahoma’s state debt during this same time period. For you see, in Oklahoma, long-term state obligations now exceed TWO BILLION dollars!
Twenty years ago, total long-term state obligations were a tenth of this amount. I have published on my website at hd31.org/435 the graph showing the acceleration of Oklahoma’s debt since 1992. This massive difference between 1992 and 2012 becomes extremely apparent when we look at the bar chart showing the increase.
The viewer will note the 2012 debt towering over the 1992 debt much like the new Devon skyscraper dominates the Oklahoma City skyline.
The amount is so substantial that it would take each and every Oklahoman paying approximately $600 to pay it off. A family of four would have to come up with $2400 just to pay their “share.”
To put it into a little different perspective, the state debt equals approximately ninety years of expenditure from either the Deer Creek School District general fund budget or the City of Guthrie city budget. This amount would pay for nearly 200 years of Logan County’s operating budget.
Those who continue advocating for debt increases seem to think that Oklahoma should jump off the fiscal cliff because, compared to the federal government and many other states, we are in a much better financial position. Of course, most who take a second to think through this dangerously flawed logic will quickly recall the important adage, “If all of your friends jumped off a cliff, would you do the same?”
A day of financial reckoning is rapidly approaching for our nation, and the debt-encumbered national, state and local governments are sure to face dire consequences when that occurs.
Perhaps even scarier is the fact that these numbers only represent the state’s tax-backed long-term obligations.
The amount actually owed by the state is really much, much more. The state owes NINE BILLION dollars in revenue-backed debt. Revenue-backed debt is issued by state government entities such as the Oklahoma Turnpike Authority, higher education entities, the state’s workers’ compensation insurance provider or the state-owned electric utility providers, OMPA and GRDA.
Advocates of new debt sometimes claim that revenue-backed debt isn’t problematic since it will be paid off by fees for service. But every time Oklahomans pay an unnecessary toll on a turnpike or are forced by bad higher education policy to live in a higher education financed dormitory, they are paying the penalty for this debt. Like the tax-backed debt, issuance of revenue-based debt has also dramatically spiraled out of control over the past 20 years.
None of this speaks to the additional ELEVEN BILLION dollars of unfunded pension system liability owed by the state, or the 750 MILLION dollars owed by the state’s business-type activities funds.
Fortunately, there is a light at the end of this very dark tunnel. A few weeks ago, in one of the most important votes of this legislative session, the state House of Representatives voted to pass House Speaker TW Shannon’s proposal to cap the level of state debt at current levels. This would substantially slow the practice by which the Legislature has incurred so much future indebtedness that will be placed on the backs of our children and grandchildren.
Not content to just say “No” to fiscal irresponsibility, Shannon also proposed and secured House passage of legislation that would allow the state to meets its legitimate capital infrastructure needs through a common sense pay-as-you-go approach that does not require debt issuance.
Shannon has proven that he is one of those rare elected officials who can oppose bad policy while creating positive solutions to real needs. Final passage of these two bills is a vital goal of reform-minded legislators during the remainder of this year’s session.
With the passage of these bills, Oklahoma can start to turn the tide and show that it is possible to roll back the fiscal insanity that has gripped our nation the past few years. Now, perhaps policy makers in other states won’t have to give in to the peer pressure to jump off the fiscal cliff as they look to the new Oklahoma example.
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.