Executive Budget Balanced with Election Year Gimmickry, Pension Funds Raided to Help Pay for Tax Cuts

Saying Governor Keating is using "election year gimmickry and creative accounting procedures" to make his budget balance, a Senate budget leader is raising concerns about some of the funding sources cited in the executive budget.

"Red flags always go up when the state chief executive makes a lot of expensive promises in a tight budget year. When the promises outweigh the money, you've got a problem. I would say the Governor's budget has a big problem, especially in the pension area," said Senator Darryl Roberts, chairman of the Senate Appropriations Subcommittee on Education.

In order to pay for a series of big ticket budget items, namely an income tax cut, Governor Keating created several new funding sources:

• $44 million from state pension funds (Exec. Budget, pgs. 54 and 101);
  
  
• $13.7 million from "purchasing reform (pg. 242);"
  
  
• $16.5 million from "improved state tax collections (pg. 53)."

The diversion of pension funds would impact all state retirement systems, including those for all state employees, judges and law enforcement. The only exception is the Oklahoma Teachers Retirement System.

"Raiding state pension funds to help pay for tax cuts is a very, very risky business. I think it will be very difficult to explain to state retirees why their hard earned money is being diverted to a tax cut program," said Senator Roberts.

The projected funds gained from improved tax collections and purchasing reform also represent potential problem areas, according to the Ardmore legislator.

"I don't know if they just pulled those numbers out of the air or if they used some kind of reputable formula to come up with their estimates. I'm also curious to find out how they're going to cause all that additional money to start rolling in," said Senator Roberts.

"We can all hope for 'improved tax collections' and 'reform savings' in a perfect world, but just wishing it to be so is not going to create any new dollars. We have to deal in hard numbers around here, but unfortunately the Governor's figures look to be a little soft."

The Senate budget leader acknowledged that the election year considerations may have influenced the executive budget, making it more of a wish list than previous years.

"I know there's always a desire to play Santa Claus in an election year, but reality dictates that not every one of the Governor's friends can get a big present. No matter how creative Governor Keating's accountants are, there just isn't enough money to enact a tax giveaway for the wealthy and keep our commitments on roads, prisons and education. The numbers just don't add up," said Senator Roberts.

"I'm sure the Governor realizes that and will be ready to begin serious budget negotiations in the months to come. I look forward to those meetings. "