Economy

Rising costs and flat funding could result in cuts for state programs and services, according to the Oklahoma Policy Institute.

David Blatt, director of the institute, issued a release this week about the organization’s new report, “Falling Flat: Will Standstill Funding Force Cuts in Services.” Here is a copy of the report.

“Legislative leaders have billed this as a ‘maintenance-of-effort’ budget,” Blatt said.
“However, state agencies are facing steep rates of inflation for basic operations, such as utilities, transportation and equipment, as well as unfunded increases for employee health care and retirement costs. While most agencies will do whatever they can to avoid cutting services to the public, in some cases cuts are inevitable.”

The legislature recently approved the “standstill” or “maintenance-of-effort” budget, which is just $46 million more over last year. The budget is $7.1 billion. Recent tax cuts and declining revenues are responsible for the stagnant budget.

As Okie Funk noted earlier: “What is most distressing is the use of the word ‘standstill’ to describe this budget. It seems disingenuous. When you basically have the same amount of money you had last year to buy products that are rising astronomically in price, then you, in fact, face a budget shortfall.”

The budget also broke a promise to teachers they would receive new raises. Other state employees need a much deserved raise as well. Meanwhile, college tuition will most certainly rise on every state campus because of the budget.

The state continues to confuse its priorities. It hands out tax cuts to the state’s richest citizens as it pays its teachers some of the lowest salaries in the country. It may be great Oklahoma City has a NBA team, but teachers will continue to flee the state for better pay and benefits.

Forbes Magazine might have labeled Oklahoma’s largest city as “recession proof,” but a growing number of state families face financial hardship as food and energy prices rise and wages remain stagnant.

A newly formed, nonprofit organization, the Oklahoma Policy Institute, warned about these vulnerable families in an issue brief released Tuesday.

OK Policy, an offshoot of the Community Action Project of Tulsa, was formed to “provide objective, non-partisan, analysis” of state policy issues. The institute, according to statement, will be concerned with “alleviating poverty, expanding economic opportunity and promoting fiscal responsibility.”

According to the issue brief, written by the organization’s policy director, David Blatt, the Oklahoma economy is doing better that some state economies in distressed areas of the country, but it is unlikely the state can escape residual problems from the national economic downturn. The brief is titled "On The Brink: Oklahoma Families Are Already Facing Tough Times."

Blatt writes, “What makes the prospect of an impending downturn especially worrisome is that even in these generally prosperous times for the state, many Oklahoma families are already feeling financially pinched. Despite low jobless rates and rising statewide incomes, a great number of households are barely scraping by or not making it at all as they struggle to balance their household budgets and cover their essential needs.”

Blatt points out the Oklahoma’s median income, when adjusted for inflation, declined 4.1 percent from 2001 to 2005 while the top one percent of households grew by 11 percent. In addition, the 2005 median average hourly wage of $12.26 was actually 0.7 lower than in 2001.

Blatt’s research reflects the growing disparity in this country between the richest families and everyone else.

“According to a recent study, on average,” Blatt writes, “incomes have declined on aver age by 2.5 percent among the bottom fifth of families since the late 1990s, while increasing by 9.1 percent among the top fifth.”

Meanwhile, Blatt points out, the price of food, gasoline, utilities, health care and education (tuition, fees, child care) continue to rise in Oklahoma. Middle-class families are feeling the pinch. The state also has the sixth largest rate of people (650,000) without health insurance in the country and high rates of hunger. Many Oklahomans continue to have poor access to health care. State poverty rates continue to rise. State tax revenues are declining.

Is the state on the verge of a major economic slowdown or even a crisis for middle-class and lower-income families as the state’s richest people continue to enjoy increasing income levels? Forbes Magazine recently declared Oklahoma City as the most recession-proof city in America, but does it take into account families trying to make it during a time of rising prices and stagnant salaries?

State leaders should carefully consider Blatt’s research for a full and realistic view of Oklahoma’s economic situation.