State expecting another, smaller budget shortfall
Oklahoma’s next budget shortfall will be the smallest in years, according to an estimate released Tuesday.
Lawmakers writing the fiscal year 2019 budget will only have to account for $167.8 million in spending cuts, one-time funding or new revenue, according to the Office of Management and Enterprise Services. That amount is considerably less than recent years when shortfall estimates ticked toward, and eventually past, $1 billion.
The amount of revenue available to lawmakers actually rose, enough that the budget year will start with $104 million more than the current year. However, there are new obligations that push things into the familiar realm of another shortfall. Most of those are things the Legislature decided to put on hold during the special session, including payments to cover hospital residency programs affected by a federal policy change and more than $92 million to repay local school
districts when property owners in the districts claim a tax exemption.
In all, lawmakers will have $5.88 billion to spend for the budget
year starting July 1.
Gov. Mary Fallin said Tuesday that without legislative agreement to secure new revenue, state agencies could endure a 2.5 percent budget cut to accommodate the shortfall.
“At this point in time, it doesn’t look hopeful,” Fallin said after a meeting of the Board of Equalization, which meets in February each year to certify appropriation levels.
The governor said she plans to sign legislation that would close out the fiscal year 2018 budget by implementing a $44 million cut across most state agencies. That bill passed the House on Monday and could be heard in the Oklahoma Senate as early as Wednesday before likely heading to her desk.
Fallin said House Speaker Charles McCall expressed hope that the Legislature could again try to pass a teacher pay raise during the regular legislative session that began this month and adjourns in May. If that happens, however, the amount might not be as much as the $5,000 salary hike proposed in the failed Step Up Oklahoma plan.
“We’re going to have to look to some alternative methods that probably would not require 76 votes,” said Fallin. “And I don’t know if that can be determined or not. But there’s still a desire to do that.”
Without needing a three-fourths majority, the House and Senate could advance bills that would eliminate or reduce tax exemptions and other incentives, and Fallin said another option could be to raise the cash with fees. The governor has already shown support for collecting taxes on services but her suggestions died in the political process.
Oklahoma’s revenue growth can be linked to the state’s economy, which has been described as moderate and steady, supported by a strong national economy.
“According to economists, currently Oklahoma’s rebounding energy sector has leveled off somewhat but remains steady with moderate price projections going forward,” said Shelly Paulk, deputy budget director of revenue for the Office of Management and Enterprise Services.
In a news release, the Oklahoma Oil and Gas Association warned lawmakers to keep the energy industry’s tax environment stable.
“If state officials continue to make wise choices which do not drive investment to other states, Oklahoma will soon be able to provide more funding for crucial state services, including education and teacher pay,” said association President Chad Warmington.