About half of state revenue is skimmed as share for general fund shrinks

Source: Tulsa World, Okla.儲存Jan. 12--OKLAHOMA CITY -- Legislators expect to have about $170 million less to appropriate in the coming session, which seems odd to some, given that tax collections have actually increased modestly over the past year.The reason for this apparent discrepancy is the increasing tendency to fund some areas of government, especially transportation, outside of the normal appropriations process. Only about half of all state tax revenue makes it to the general fund, the big stack of money divvied up by lawmakers during the legislative session.That share is steadily shrinking.Shelly Paulk, deputy budget director in the Office of Management and Enterprise Services, says the fiscal year 2013 general fund would have grown by $749.8 million had it received the same proportion of tax revenue as it did just six years earlier.Paulk said the general fund received 59 percent of all available state revenue in 2007, compared to less than 52 percent in the last budget year.Such facts are normally submerged in the cold, murky depths of 400-page budget books and last-minute appropriations bills. The reversal in general fund revenue and Republican angst over a possible income tax rate cut and a $175-million-a-year break on gross production taxes for the oil and gas industry are bringing the subject to the surface, however.OMES spokesman John Estus said the discussion is not about collecting more tax money but about maintaining flexibility and accountability for how the money now being collected is spent."It's not about the size of government," Estus said. "It's about how much say elected representatives have in how money is spent."OMES' concern is couched in terms that compare the current state trend to the federal government, which is in a budgetary stalemate in part because mandatory spending has grown to almost 70 percent of all outlays."Oklahoma has a very modest, thrifty budget," said Estus. "We have the ability to be flexible and nimble to meet the needs of the state. We're losing some of that flexiblity."Republican leadership is also frustrated because the current situation creates the impression that, contrary to current GOP economic theory, state revenue has declined in recent years despite income tax cuts.All of this creates a conundrum for leadership. They generally agree the trend is problematic but are loath to attack it too vigorously because some of their most cherished programs have benefited from it.The Oklahoma Teacher Retirement Fund gets more than $200 million a year in direct apportionments. Transportation has seen enormous funding increases in recent years through direct apportionments. The Oklahoma's Promise scholarship program is supported in this way, as are public schools."(Gov. Mary Fallin) believes that dedicated funding is appropriate in certain limited circumstances," said Fallin spokesman Alex Weintz. "For instance, the governor recently supported using dedicated funding to improve roads and bridges that were suffering from years of neglect."However, the governor also believes we have to be careful not to overuse dedicated funding. The more money we skim off the top of general revenue, the less flexibility the state has to respond to situational needs and concerns. We certainly don't want taxpayers to lose influence into how their money is used by their government."State Treasurer Ken Miller, a former House Appropriations Committee chairman, said he generally opposes direct apportionments but thinks they're necessary in some situations."I am generally against dedicating funding streams outside of the normal appropriations process," Miller said. "Legislative control over the budget process should be preserved."That being said, I support ongoing dedicated funding for two core functions of government that had been chronically underfunded -- transportation and higher education. If past budgets had been better prioritized and concentrated resources into core functions, there would have been no need to dedicate funds for (transportation迷你倉 and Oklahoma's Promise in the first place."The desire for dedicated funding streams is understandable," he said. "However, the more funds are allocated outside of the budget process, the more limited the Legislature is in its ability to examine funding performance or make year-to-year adjustments based on changing needs and priorities."According to Miller, fiscal year 2013 gross state revenue totaled $11.23 billion. About 6 percent of that was sales tax collected on behalf of local governments and remitted to them.Of the remainder, $5.6 billion went to the general fund, $622.1 million was returned to individual and corporate taxpayers in the form of refunds, and the rest was apportioned directly for specific purposes or areas of government.According to the Oklahoma Tax Commission, these apportionments ranged from $56 for the Silver Haired Legislature to $336 million for local school districts.Education, transportation and energy producers have been the biggest beneficiaries of these direct apportionments. Education gets more than $700 million a year in such allocations, mostly because of the landmark school reform law House Bill 1017 passed in 1992.But education is not the reason for the recent change in the share of money taken out of the appropriations process. Its apportionments have been relatively flat and are even expected to fall $6.7 million in the coming budget year.Apportionments to the Transportation Department's ROADS program from income tax revenue, on the other hand, have almost quintupled since 2007, to $357.1 million a year. By statute, ROADS must receive at least another $59.7 million in the next budget year, and every year, until it reaches $575 million a year.Considering the ROADS program's recent legislative history, even that figure is questionable: The cap has been raised in each of the last three legislative sessions.Paulk said because the transportation money comes out first, it not only lowers general fund revenue but reduces the amount available to the so-called 1017 funds and other apportioned entities.Transportation has also benefited from three special funds created in recent years. Those funds, which receive a share of motor vehicle taxes formerly flowing into the general fund, received $100 million in FY 2013, and by statute will receive progressively larger shares in each of the next two budget years.Apportionments to the State Transportation Fund have also increased sharply in recent years, from $99.6 million four years ago to $208.7 million this year.All told, direct transportation apportionments have increased from $430.7 million in 2011 to $611.8 million this year, according to OMES.But the sharp increase in transportation apportionments is not the reason this issue has been raised. The real target seems to be the large tax preference given to horizontal oil and gas wells.The exact cost of these preferences is difficult to pin down. OMES puts it at $229.3 million for FY 2013, but others say it is more than $300 million.The preference, which essentially lowers the gross production tax rate on horizontal wells from 7 percent to 1 percent for the first 48 months of production, was instituted in 1994, when such wells were rare and considered experimental. Now 90 percent of the wells drilled in Oklahoma are eligible for the lower rate, and the cost of the program has far exceeded expectations.Some Republican policymakers want the program modified if not eliminated, in part to help pay for another income tax cut and alleviate the perception that state revenue is declining. Miller and OMES Director Preston Doerflinger, who is also Fallin's Secretary of Finance, have both said the drilling incentive should be re-examined.Others, including House Speaker T.W. Shannon, want to make the 1 percent rate permanent and cut income taxes, too.Randy Krehbiel 918-581-8365randy.krehbiel@tulsaworld.comCopyright: ___ (c)2014 Tulsa World (Tulsa, Okla.) Visit Tulsa World (Tulsa, Okla.) at .tulsaworld.com Distributed by MCT Information Servicesself storage