Fallin budget veto reaction

On Friday, the Oklahoma Legislature approved a budget compromise that funded essential services, cut spending in other areas, and avoided raising taxes entirely. Later the same day, Gov. Mary Fallin used her line-item veto to remove all of the bill except for funding for the three agencies that would have been funded by the cigarette tax increase that was approved during regular session and struck down by the State Supreme Court because it lacked the constitutionally required vote of the people.

Legislative leaders were puzzled by Fallin's veto.

When asked what the Oklahoma Legislature might do after Gov. Mary Fallin line-item vetoed the product of its eight-week special session, House Floor Leader Jon Echols struggled to give an answer.

"I don't think anybody really understands what the intent of this is," said Echols, R-Oklahoma City. "There's a lot of unanswered questions here."

It appears that her veto leaves the state short $110 million this year instead of $215 million, which mostly affected three agencies that have a critical health care mission. She signed enough of the bill to send some money to the Department of Mental Health and Substance Abuse Services, the Oklahoma Health Care Authority and the Department of Human Services.

Fallin said she wants to call the Legislature back into special session to address the shortfall without spending what is considered one-time funding. She didn't say, however, when that might happen.

"Bringing the Legislature back into special session at this point seems like a waste of time and taxpayer dollars," Senate President Pro Tem Mike Schulz said. "The governor's veto doesn't help Oklahoma thrive; it only serves to throw our budget further into chaos."

(This was not the first time Fallin has vetoed bills unexpectedly, seemingly on a whim.)

State Rep. Josh Cockroft says Fallin's veto broke a promise and may have broken the State Constitution:

I am not happy about the veto especially since the Governor had agreed to the plan if it passed both the House and the Senate. Her actions are a complete reversal of her promise. This is unacceptable, and she should and will be held accountable.

The Governor's decision gives no stability in a state that desperately needs it.

Questions of the constitutionality of the Governor's decision have been raised since it now leaves our budget unbalanced. These concerns must be explored. The fact of the matter is that right now, the legislature has no idea what exactly she did last night or where any funding is. She only released a statement and no documentation to show exactly what was being done. This is highly concerning for us as legislators and should be for the entire State as well.

Oklahoma's budget crisis reflects eight years of no leadership from Gov. Fallin or legislative leaders. Rather than decisively acting to audit the performance of state departments and consolidate services, rather than enduring the attacks from aggrieved interests that decisive action would have incited, Fallin and a succession of House and Senate Republican leaders kicked the can down the road. The minority of courageous fiscal conservatives in the legislature did not have the clout to push for reform, but, thanks to SQ 640 their numbers were sufficient to block the tax hike, forcing state leaders at last to reckon with the kind of waste and duplication now being exposed at the State Health Department.

Had a tax increase been enacted, it merely would have sent a higher baseline for overspending, temporarily relieving the pressure of financial constraint.

As I wrote this summer:

Oklahoma's current dilemma proves that, whether union-label Democrats or crony-capitalist Republicans run the government, public choice theory holds true: In politics, concentrated benefit trumps diffuse cost. Barring a grassroots miracle, a state's governor and legislative leaders will be those politicians most easily swayed by the special interests who come to the State Capitol bearing gifts in exchange for government-given financial advantage, be they public-employee unions looking for a raise, superintendents of tiny school districts hoping to dodge consolidation, or oil barons and wind tycoons looking for targeted tax credits. Pliable legislators get contributions for themselves and their PACs, with which they win the loyalty of their colleagues in the caucus room.

With this sort of leadership, if it can be called leadership, state spending will rise to match rising revenues, because the Ado Annies on Capitol Hill just cain't say no. Concentrated benefit trumps diffuse cost. The profligate spending only makes the cuts all the more painful when revenues fall, as they always do. Oklahoma would be in much deeper trouble were it not for the constitutionally mandated "rainy-day fund" that sequesters some of the financial windfall in good years.

Oklahoma needs a new governor and new legislative leaders willing to eliminate the revenue earmarks that keep taxpayer dollars from flowing where they're most needed, to eliminate duplication in our colleges and career technology centers, to eliminate tax credits that do nothing for economic growth, to eliminate administrative bloat and the regulations that create it. Every one of those necessary steps will threaten some group's concentrated benefit. Persisting with necessary reform in the face of the resulting resistance will require principled courage, a quality scarce amongst the crony-capitalists currently running the state or the big-government tax-hikers who want to replace them.

Mary Fallin's non-leadership is what happens when voters choose image over substance. Her unwillingness to lead has been evident throughout her term and even before her first election to the governor's office:

• April 3, 2013: Mary Fallin: What's holding her back from bold leadership?
• July 6, 2010: Fallin plans lobbyist meet, skips grassroots event and forums
• July 20, 2010: Mary Fallin disparages following the Constitution as "the easy way out!"
• July 24, 2010: "Fallin-esque" vs. Brogdon's specific plan

Oklahoma Council of Public Affairs president Jonathan Small praised the Legislature for reaching a budget compromise that balanced the budget without raising taxes:

The Legislature did the right thing by utilizing surplus funds and other available resources rather than raising taxes on working Oklahoma families and small businesses. After the loss of $215 million in expected cigarette tax money, policymakers only needed to address revenue failures for three core agencies during this special session.

This special session was a reminder that, even with total state spending at an all-time high, government will always ask for more money. Leading up to and during the special session, well-paid state government agency heads resorted to threatening many of Oklahoma's most vulnerable citizens.

Meanwhile, subsidies remained in place for out-of-state wind companies, Hollywood filmmakers, and other non-essential programs. There's also plenty of misguided, non-critical spending in agencies like TSET. And, given the recent troubles surrounding one of Oklahoma's largest and most powerful regulatory agencies, it is incumbent upon lawmakers to pump the brakes on any more tax increases until performance audits and true reforms can be completed.

Oklahoma families have to live within their means and make tough choices, as do state policymakers. Using so-called one-time funds in state government is not ideal, but it's better than raising taxes on working Oklahomans.

Americans for Prosperity-Oklahoma reacted to the veto:

Oklahoma City, OK - Americans for Prosperity-Oklahoma (AFP-OK) is disappointed in the surprise vetoes issued by Governor Mary Fallin on Friday. Her vetoes will bring the legislature back in to what has already been a costly special session. AFP-OK is a strong advocate of good stewardship of taxpayer dollars and hopes lawmakers push to resolve the threat of a continued budget crisis quickly and without raising taxes on hard working Oklahoma families and businesses.

Over the past several months, a steadfast group of legislators have repeatedly rejected the Governor's desire to raise taxes on lower and middle-class families and AFP-OK continues to applaud that effort.

AFP-OK state director, John Tidwell released the following statement:

"I think Will Rogers was right when he said, 'when you find yourself in a hole - quit digging.' This largest tax increase in state history only digs that hole deeper. Governor Fallin's decision to veto large parts of a balanced budget deal and intention to drag out a special session is a raw deal for taxpayers. The governor should have signed the budget deal and accepted the tough budget cuts which would have balanced the budget."

"Her insistence on raising taxes on Oklahoma families is just wrong," Tidwell continued. "What's worse, the Governor seems totally obstinate to truly cutting wasteful spending or reforms of any kind. Oklahomans should support those lawmakers who worked in a bi-partisan way to balance the budget and ask them to continue to stand strong against costly tax increases that will hurt families and small businesses."

MORE: Earlier this month, State Rep. Jason Murphey of Guthrie explained why you should never believe that state government needs more of your money:

Those in the arena of public policy are constantly subjected to the unending refrain of, "Give us more money or all types of armageddon-type scenarios will inevitably occur."

Too often, the weak-minded policy maker acquiesces and accepts the overstated demands at face value.

Worse, many times he doesn't just acquiesce, but actually becomes a co-opted agent for the very bureaucracy to which he was commissioned by the people of Oklahoma to be the check and balance.

Those policy makers who take their responsibility seriously and don't accept the claims of the bureaucrats at face value know that many millions of dollars are wasted by government every year.

It seems that significant waste is found almost every time a truly independent authority investigates the actual spending practices of these agencies.

Over the years, I have seen report after report and audit after audit expose this waste and point to potential spendings.

Unfortunately, state government is so large and spending is so great that legislative purview (already quite minimalistic) has only reached a small subset of overall spend.

Even with those reports and audits pointing to the waste, modernization efforts frequently run up against the political power of bureaucrats who have worked the system to the point that they can use taxpayer dollars to finance an army of lobbyists who are extremely effective at protecting those bureaucracies from reforms.

STILL MORE: The failure of the tax hike seems to be giving new impetus to efforts to address waste:

Following revelations of apparent financial mismanagement at the Oklahoma Department of Health, House of Representatives Speaker Charles McCall today said he is empaneling a House Special Investigation Committee to begin conducting an investigation into the agency's use of taxpayer dollars.

The committee will focus its investigation into the finances, state appropriations and other financial resources of the Department of Health and how they were managed. The scope of the committee's investigation could expand to other agencies.

"The allegations at the Department of Health are very concerning, and I share the public's frustration with the mismanagement of at least $30 million in taxpayer funds," said Speaker McCall, R-Atoka. "The Legislature has the authority to conduct an investigation, and our members want that to begin as soon as possible. This is a very serious matter, and I would encourage those associated with these allegations to cooperate fully with our investigation."