In my last post I took Joel Griffith with the American Legislative Exchange Council (ALEC) to task because I convinced myself he was doctoring his “research” by including spending with federal funds to show how Oklahoma “taxpayers” would have saved billions if only TABOR had been in place. His totals were like Oklahoma government expenditures, including federal funds, that I’m used to seeing (which I showed using a table from the Comprehensive Annual Financial Report for 2017) for recent years, about $16 billion, with the two largest parts being state tax revenue and federal transfers/grants to Oklahoma. I am so used to the fellows at the OCPA doing sloppy work that I just stopped there thinking I got them again and didn’t even look at his source to double check my conclusion. Confidently I included Mr. Griffith’s email address on my distribution list and suggested he make a correction to his article.
As he pointed out in his reply, which was respectful of his elder (haven’t verified that but very safe assumption) his numbers did NOT include spending with federal dollars. I was wrong. He uses data from the National Association of State Budget Officers (NASBO) which is reasonable to do. Comparisons among states, like comparisons among school districts I’ve submitted data for, can never really be apples to apples but using a consistent methodology over time is about as good as you can do—though you should try to get the right numbers. Here’s what one of the pages he used looks like:
Oklahoma is down toward the bottom in the Southwest, just above Texas. The most recent report does not have actual data for 2017, only “estimated”. So when he whined about the growth in state expenditures from $11.5 billion in 2011 to $16.5 billion in 2017 he was comparing actual to estimated, presumably. Of course I have now checked his source and transcribed the data from all the NASBO reports going back to 2000. I put the estimated numbers for 2017 and 2011 in italics so there are two entries for 2011, actual and estimated. Here’s my table:
The first five data columns mirror the NASBO reports; the last two are my calculations, first removing the federal amount from the total and then also removing bond amounts. Notice that the $16.1 billion for 2017 (estimated) shows up as $16,134 million. That’s the number he used. But notice that nowhere for either 2011 actual or 2011 estimated does $11.5 billion show up, the closest being $11,596 million by also subtracting the bond amount, but that wouldn’t be apples to apples. So on this alone I think Mr. Griffith owes a correction.
What else, besides just using the wrong amount, about his numbers fits with my experience reviewing the work by Stink Tanks like OCPA and ALEC is how they are oh so clever in selecting a base year from which to describe a change. He says “total state funds expenditures are expected to smash records in fiscal year (FY) 2018 for the seventh consecutive year, after rising from $11.5 billion in FY 2011 to $16.1 billion in FY 2017.” Not only, as I’ve shown, is the $11.5 billion $600 million less than the number from the NASBO data and we don’t know if the $16.1 billion estimated actually happened, but you could also describe the data this way:
Total state funds expenditures, after taking five years to catch back up to the 2007 pre-recession total of $13.6 billion, was at $15.1 billion for 2016, being a paltry 10.5% increase over that decade and well below the combined increases in population and inflation.
His other big revelation from his look at the data was telling us that total state funds expenditures, since 2000, blew right through the cap of 56% (42% inflation plus 14% population growth) that having TABOR in place would have imposed. He could have saved us over $3 billion. But look at the data table. Here are the percentage increases from 2000 to 2017 (estimated) for three columns: “less fed” (which is total state spending) is 107.6% which clearly does blow the top off the 56% TABOR cap (his calculation, not mine); “general” is 35.7% which is way less than his cap; and “other” is 213.1%. Even a limited thinker can see that his heartburn can’t be for our general fund state spending, but rather should be focused on our “other state funds”. Figuring out what those are led me to Oklahoma’s deep state.
Here’s the NASBO definitions and a great national chart:
Remember I got off on the wrong track because I was used to data sets where federal funding was close to half of our state spending. But now I’m seeing a data set where the total is much larger, $23.3 billion for 2017 estimated, and has this “other state funds” category being a big hunk as well. So what is it?
Read the definitions above. Right off the bat, if I’m concerned about taxes, it seems I should be more focused on the “general fund” totals that are paid for mostly with taxes—and TABOR wouldn’t have limited Oklahoma’s growth (except it can ratchet you down in a pretty stupid way) as Griffith calculates it, because 36% is well under 56%. On the other hand, “other state funds” include tuition, fees, donations, assessments, provider taxes, etc.–provider taxes appear to be a way states can game the Medicaid system to have the federal government and patients pay some of the state’s match and Oklahoma plays in that game so they are not what most think of as taxes. I’m very skeptical that Colorado’s TABOR includes most of these revenue streams.
Still I went looking for Oklahoma’s “other state funds” and here’s what I think is the best representation from Page 48 (cafr16 p48) of the 2016 (so can be compared to the most recent actual NASBO data) Oklahoma Comprehensive Annual Financial Report:
I think it’s obvious that the general fund and federal funds shown in the NASBO data are within the $17 billion for “Primary Government” above, though removing the $900 million for higher education makes sense because it is used to cover the $867 million Higher Ed deficiency below and we shouldn’t double count (though stink tanks like to). So that brings us to $16 billion or so with, see at the bottom, $8 billion from taxes and, second and third columns at the top, the rest from charges ($1.7 billion) and grants, $7.8 billion, virtually all federal I bet.
What I conclude from this exercise is our “other state funds” (Oklahoma’s Deep State) will be found almost entirely in the “Component Units” described in the middle of the Table, of which Higher Education is the largest, but notice it (tuition and fees) and the others are very dependent, not on tax revenues, but on user charges. Perhaps some also comes from the list of “Business Type Activities”. The largest of these is the state’s health insurance program for state and education workers. And that’s another story—one that also doesn’t involve taxes unless you want to double count.
For my money, and thinking, if we want to use the broad NASBO data and if we’re interested in arbitrarily constraining state spending to keep taxes low, which is Mr. Griffith’s mission, then I don’t think you use “other state funds” in your argument. But if you don’t, then your argument goes away for Oklahoma and you don’t get to publish your drivel on the OCPA’s site. However at least you wouldn’t be adding to everyone’s confusion about how state services are financed and what they cost. Still I enjoyed learning more about our state’s deep state.
As always lunch is on me for the first to ID the location of this photo (selected in recognition of the recent passing of a true American hero and statesman).