Yes you can do pretty much anything you need to do in OpenOffice but if you spend a significant amount of time using them then the little bits of polish in MS Office really add up and for a tool you use a lot that's a big deal.
And that goes directly to the budget reasons you mention. As a developer I wanted the best tools for the job, I didn't want the cheapest tool, I wanted the ones that allowed me to be most productive because that saved money. I don't see any reason why my standard as a tax payer should be different - I want people working on my behalf to have the best tools for the job, so they can do the best job for me.
I'd love it if Open Office was as good as MS Office but it isn't and until that changes, it's a bit more complex than you're making out.