The Encyclopedia of Oklahoma History and Culture

BUDGET-BALANCING AMENDMENT.

Article Ten of the 1907 Oklahoma Constitution established the general rules and procedures by which the state might raise revenue through taxation and spend revenue after a budgeting and appropriation process. Sections 2, 3, and 4 allowed the legislature to tax to defray state expenses, to pay a deficiency of income over expenses, or to pay the state debt, including both principal and interest. In practical application, the legislature annually appropriated money to run the government, but taxation mechanisms did not necessarily collect enough revenue to pay for expenditures. When revenues failed to cover the appropriation, “nonpayable warrants” could be issued to “pay” for the deficit; these were limited to $400,000 per year. The state did not have to redeem these warrants for decades. In other words, “deficit spending” could and did occur, and the state debt mounted.

Many political leaders and thousands of taxpayers wanted to put the state on a cash basis, balance the budget, and pay off the debt. For three decades, however, deficit spending continued, becoming particularly dangerous during the Democratic, New Deal-era administration of Gov. Ernest W. Marland. During the Great Depression of the 1930s the state amassed a debt of nearly $40 million. Nevertheless, state government functioned under the provisions of Article Ten until 1941.

Opposition to deficit spending coalesced in the late 1930s in a movement for a balanced-budget amendment. Led by Gov. Leon Phillips and supported by prominent businessmen statewide, the movement included a generally bipartisan constituency. In fact, a balanced budget plank appeared in the state Democratic platform. The only real opposition came from school system administrators led by State Superintendent of Public Instruction A. L. Crable. In 1940 House Joint Resolution Number Ten proposed the constitutional amendment to Article Ten, Section 23. State Question 298 went to a vote of the people on March 11, 1941, receiving a two-to-one vote of approval and failing in only twelve of seventy-seven counties.

The Budget Balancing Amendment limits the state’s annual appropriations budget to the amount of anticipated revenues. The State Board of Equalization makes annual and quarterly estimates of revenues and, accordingly, adjusts the state budget and makes cuts when necessary. If revenues are more than expected, the excess is deposited in a “rainy day fund.” In theory at least, no longer would the state of Oklahoma spend more than it collected.

Dianna Everett