THE road to That Place is paved with good intentions. In Oklahoma, the road to a fix for crumbling infrastructure is tarred with a myopic pay-as-you-go mindset. As for the state's fiscal path, it should be resurfaced with two additional layers of sound money management.
This last point is made by state Secretary of Finance Preston L. Doerflinger. He touts two policy choices that would help put the state “on a steadier fiscal path.”
The two items are a decreased reliance on one-time funds and a shift toward performance-based budgeting, “a fiscal model that allocates funds based on data-driven projections of measurable spending results.” This is a tool that businesses have used for years. For governments, says Doerflinger, “it's a great tool to get more bang for their taxpayers' buck.”
The finance secretary's comments are contained in the Oklahoma Economic Report, published monthly by the office of state Treasurer Ken Miller. Miller and Doerflinger are two of Oklahoma's smartest and most pragmatic state officials. When they speak, we should listen because they show a wise and practical concern for managing taxpayer funds.
One-time funds are generated by “nontraditional” sources such as fees and carry-over dollars. The constitutional requirement to balance the state budget can't be waived during recessions, so one-time funds were deployed to get through the last downturn. Yet it's easy for government officials to continue using such funds when conditions improve. Easy, but not wise. It's time, Doerflinger believes, to “stop leaning so heavily on that crutch.”
Over the years, in good times and bad times, tax consumers have clamored for one-time funds to boost pay or cover other expenses. The list of people seeking money from the Rainy Day Fund was quite long at one time; the clamor stopped only when lawmakers — by necessity — had to tap the fund until it was virtually depleted.
Fortunately, the fund has been replenished. Unfortunately, appropriation of one-time funds continues. Doerflinger and Gov. Mary Fallin submitted a budget for fiscal year 2014 that proposed no appropriations from one-time funds. They got part of the way there with a 50 percent reduction in such appropriations compared to fiscal 2013.
Doerflinger also got a partial victory in his quest for performance-based budgeting. Additional funding for the Department of Human Services, for example, is linked to hard data rather than promises. “All too often,” the secretary said, “state budget builders act like farmhands sloppily filling a trough when they should be more like dietitians developing the best regimen for success.”
Our view is that legislative leaders, in their resistance to bond issues for infrastructure needs, are like road workers sloppily filling potholes after buying the material by the shovelful as money comes in. Capital improvements — one-time expenses — are best funded with bond issues in the same way individuals take out a mortgage to buy a home.
This approach is clearly off the table among current lawmakers, but other pathways to fiscal soundness are still within reach. Use of Rainy Day Fund money to cover expenses related to natural disasters is apt. Using it, or other nontraditional sources, to cover pay raises is not.
Doerflinger and Miller are leaders in taking small steps on the road to smarter government. It would be a shame to pave over this progress with a return to business as usual or getting stuck in a post-recession catch-up pothole that results in repeated one-time money fixes for ongoing expenditures.