Billions of dollars in Oklahoma state funds are reserved for education, revolving funds and other costs. Called "apportionments," these allotments are beyond the reach of legislators and can't be changed.
As the Journal Record's Catherine Sweeney reports, State Representative Scott Fetgatter has requested an interim study on apportionments to assess how they help or hurt the state in a time of severe budget cuts.
In his proposal, he wrote that the study would look at what percentage of the state’s revenue is automatically earmarked, whether any of the statutory requirements are unconstitutional, how earmarked agencies would be affected if the requisite allotments were lowered and whether the apportionments are affecting the state’s credit rating.
Some lawmakers think apportionments help fund important budget items like education.
State Rep. Earl Sears, R-Bartlesville, spent years as the House of Representatives’ top budget official and now serves as the chairman of its appropriations and budget finance subcommittee. He said the practice began a few years before his tenure, when officials wanted to protect education spending and created the 1017 Fund.
He said that the mechanism is similar to automatically deducting important bills from a paycheck.
“There’s no question, it’s a good idea,” he said. “You know it’s there. You know it’s paid. You don’t have to worry about it.”
Others, according to Journal Record editor Ted Streuli, think apportionments are unnecessary limits on legislators' ability to govern. "Some would argue that apportionment really handcuffs legislators and take away way too much of their discretionary power to spend the money where they think it's the most needed," Streuli said.
Ujiyediin: Let's talk about Catherine Sweeney's story about state budget apportionments. First of all, what is an apportionment?
Streuli: That's money that must be spent a certain way. So it's what a lot of people might think of as an earmark or dedicated funds. And so it's money that comes right off the top.
Ujiyediin: What do apportionments fund in Oklahoma?
Streuli: That money is statutorily earmarked for specific programs, so it goes to things like education or to counties for infrastructure assistance, that kind of thing.
Nomin: And how do apportionments affect the overall budget?
Streuli: Well, there are pros and cons in that argument. Some would argue that apportionment really handcuffs legislators and take away way too much of their discretionary power to spend the money where they think it's the most needed. But the other side of that coin, and the reason behind the whole apportionment system in the first place, is that it ensures that high-priority programs, such as education, get their money first, and their budgets aren't put at risk if the legislature gets carried away spending in other areas.
Ujiyediin: Catherine’s story talks about how some lawmakers are trying to change apportionment spending. Why would they be trying to do this?
Streuli: Well, both sides agree that it's time to re-evaluate apportionments. One representative, Scott Fetgatter, requested an interim study that would look at what percentage of the state's revenue is automatically earmarked—it's really high—and whether any of those earmarks might be unconstitutional, or how agencies could be affected if the allotments were lowered, and whether the state's credit rating might be affected by the current system. So, Governor Fallin, in her State of the State address, also proposed changing how much of the money would be locked in. So right now, lawmakers really only control about 44 cents out of every dollar when they're writing the budget. And the rest of it is apportioned. Under Governor Fallin's plan, the portion they're able to control would increase up to 62 cents out of every dollar over the next few years. And they'd have it in place by 2020.
Ujiyediin: In real estate news, a Tulsa-based company set a state record by paying more than $64,000 per unit for an apartment complex in Oklahoma City. The Journal Record’s Molly Fleming wrote a story about the sale this week. Let's talk about how real estate prices have trended in the last few years.
Streuli: Multi-family housing has certainly been enjoying an upswing in prices. Just a few months ago, there was a record-breaking apartment sale in Tulsa. But this deal we're talking about this week came along right behind it, with an even higher price per unit. So that's not indicative of the housing market as a whole, as rents and home sales have been fairly steady. But it does point to a lot of interest in multi-family from investors, and those comps will probably continue to push prices higher for apartment complexes. But that's a common pattern over the years, so we don't expect any big spikes. And typically, you see a deal like that, that sets a new record, come along maybe once every year or two. So having two of those deals in the first half of this year, one in Tulsa and one in Oklahoma City, is a little bit unusual. But, you know, it's not like it's never happened before. Generally, for the economy, it's a good sign because it says investors are active, they're willing to pay more for properties, and that's a good thing overall for the market.
Ujiyediin: Thanks for being with us today, Ted.
Streuli: My pleasure, Nomin.
The Business Intelligence Report is a collaborative news project between KGOU and The Journal Record.
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