The (Goodyear) Wheels on the Bus

So it has come to this: Oklahoma is so desperate for money that it might authorize the sale of advertising on school buses to help soften the blow of deep cuts in the state education budget.

What's next? Biology I, sponsored by Chesapeake Energy? English Literature, underwritten by your friends at Barnes & Noble? Physical Education, brought to you by Burger King, home of the Whopper?

I know what you're thinking: What's the big deal? Sports facilities at public (and private) schools already are adorned with sponsor signs, from soft drinks to banks to car dealers. Fast food favorites already can be found in some school cafeterias.

It's dismaying for at least three reasons:

First, American children already are bombarded by Madison Avenue's must-have messages -- from iPods and iPhones to Uggs and North Face. There are very few commercial-free zones left in America. School -- for the most part -- is one of them.

In a perfect world, school bus exteriors would proudly bear the names of the districts and towns they represent -- not serve as over-sized, rolling billboards that reflect ever-creeping commercialism.

Second, the proposal underscores the fact the Oklahoma Legislature isn't willing to make the tough choices. Yes, the global recession is a big reason for sagging state revenues -- but the primary culprit is tax policy, at least $5.6 billion lost to 450-plus tax breaks, many of dubious value.

Lawmakers won't even consider touching many of the corporate tax incentives -- especially in an election year -- for fearing of alienating their biggest campaign donors.

Third, it's a disheartening, but unmistakable sign that the state's worst budget days might still be ahead, despite March's stronger-than-expected revenues.

It's bad enough that there's an estimated $500 million to $850 million hole in the 2010-11 budget that takes effect July 1, even after hundreds of millions of dollars in state Rainy Day and federal stimulus funds and 7.5 percent across-the-board agency cuts are factored in.

Imagine what could happen in FY 2011-12 if the Rainy Day fund is depleted and no more federal stimulus money is forthcoming? And what will more than two years of budget cuts have wrought? Nothin' from nothin' leaves nothin'?

March's revenues provided a smidgen of relief for state officials who are hoping it signals the beginning of the end of Oklahoma's long stay in what state Treasurer Scott Meacham referred to as "the poorhouse."

It was the first time since December 2008 that general revenue collections outpaced the same month the previous year. Even better: March's in-flow was more than triple what state fiscal experts had projected -- a sign, Meacham said, "that the Oklahoma economy is finally on the mend."

There is, however, a ticking time bomb hiding in the rosy figures: Corporate income tax collections last month were 57 percent below anticipated levels.

The state Board of Equalization has certified $5.4 billion for lawmakers to spend for the 2010-11 fiscal year -- $1.5 billion less than this year's final budget, after cuts. Even if you include $200 million or so in remaining federal stimulus money, about $225 million in state Rainy Day funds and the current level of across-the-board agency cuts, the budget hole for next year is estimated between $500 million and $850 million.

That means fewer teachers -- some estimates put job cuts at about 5,000 statewide -- and much larger classes in the state's public schools. That means the Department of Human services will furlough its employees the state maximum 18 days and serve 105,000 fewer residents. That means the Department of Corrections, already operating at less than 75 percent of its necessary staffing levels, could be stretched to the breaking point, risking safety and security for inmates and workers.

Almost from the moment the economy tanked in 2008, public policy wonks, economists and elected officials have warned that high -- and prolonged -- unemployment could stall or delay a recovery. So far, Oklahoma's jobless rate has been lower than the national average. But when the full extent of state spending cuts is realized, thousands of state workers and teachers could be jobless, further crippling state revenues -- a vicious cycle indeed.

How bad could it be? An anticipated $244 million cut in state education spending is equivalent to putting one-tenth of the state's teachers -- about 5,000, earning the state average $43,800 -- out of work. As painful and inconvenient as resulting school closures would be for communities, it may be nothing compared to the shock to state and local economies and businesses.

As the Legislature enters its final month, legislative leaders and Gov. Brad Henry won't spend much time debating further cuts: most of the state budget is committed to core services, such as education, that state officials say they want to protect. There aren't enough savings to be had from the deepest imaginable cuts in other state services to significantly cushion the $500 million to $850 million hole.

That means the real haggling will be over so-called "revenue enhancements," a fancy way of saying they're scrambling for politically palatable ways to generate more money.

Will lawmakers increase fees? Will they take steps to roll back corporate welfare -- including seven distinct drilling incentives for oil and gas producers? Will they find ways to collect sales taxes lost to Internet sales?

Ironically, as lawmakers eye new or enhanced revenue streams, they continue to make matters worse. How? Two of the fastest growing segments of Oklahoma's population are seniors and veterans. Each year, state lawmakers enact new tax deductions and financial incentives that reward seniors and veterans but cut state revenues.

Oklahoma is 50th in overall tax burden, but Republican legislative leaders long ago concluded it is better politics to mislead citizens into believing we're overtaxed than to rally them in support of social compact that attempts to create a rising tide for all, not just the privileged few.

Unwilling -- especially in an election year -- to seriously tackle the state's incoherent, corrupt tax policy, lawmakers instead turn to gimmicks designed to fool constituents into believing they're doing all they can to help lift Oklahoma out of the economic morass.

State Rep. Seneca Scott, D-Tulsa, the House author of legislation that would permit advertising on school bus exteriors, is right about one thing: "This gives school districts a chance to generate some extra money that will help offset cuts caused by the budget downturn this year. If a few advertisements can save a teacher's job, I am all for it."

It's hard to imagine, though, it will make a significant difference for most Oklahoma schools, especially those in rural areas where potential advertisers are limited. In fact, I'd be willing to bet it works best in upscale suburbs like Jenks, Broken Arrow and Edmond that already have significant financial advantages over inner city and rural schools. Could it simply end up widening the gap between rich and poor districts?

Rather than nibbling around the edges of the state's fiscal problems, it's time for state lawmakers and other government leaders to seriously address the long-term structural problems in the state's budget.

Oklahoma's chances for a brighter, more prosperous future hang in the balance.

-- Arnold Hamilton is editor of The Oklahoma Observer; www.okobserver.net