Mazzei Minute: 02/28/21
What would you do with an extra $1.7 Billion? Well, if you had a windfall, hopefully you would meet with a wise financial planner (Hint), but like most families hopefully you would pay off some debts, buy some priority items for the family and then make some prudent investments.
That’s what the Oklahoma Legislature and Governor Stitt get to think about this year. Although the Board of Equalization certified that Oklahoma’s spending authority for FY2022 is $9.6B, the recurring revenue base is only $7.9B. The extra $1.7B is leftover funds from FY2021 that weren’t spent because the Legislature wisely reduced spending by $420 million in the face of the COVID-19 recession.
The federal money of over $5 billion started pouring into Oklahoma through the forms of COVID-19 testing and tracing, the Payroll Protection Program, unemployment benefits, direct stimulus checks & CARES Act relief dollars. Personal income actually increased during a recession! And, tax revenues poured in much more than expected.
So, spend like drunken sailors or save it all like a stingy miser? Neither, of course. First, I hope state leaders will focus on paying off debts. For example:
Pay back the $200M borrowed for FY 2021 from the state's Rebuilding Oklahoma Access and Driver Safety fund to pay for regular operational expenses.
Pay off at least 50% of the more than $800M "borrowed" from State Pensions to pay for the latest cost of living adjustments (COLAs). Previous pension reform required COLAs to be funded directly, but the Legislature found a way around that.
Next week: The Best Investments for High Paying Jobs