State Slashes Budgets as Oklahoma's Revenue Declines
Staff and Wire Reports
OKLAHOMA CITY -- State Treasurer Scott Meacham said officials have ordered a five percent across-the-board cut in budget allocations to state agencies this month due to a sharp decline in revenue in July.
Tuesday, Meacham released his revenue report for July, the first month of the new fiscal year.
He said collections for the month were well below the prior year and the official estimate.
Preliminary reports show collections totaled $336.7 million last month. That's $120.4 million less than last year and $74.4 million below the estimate.
State Finance Director Michael Clingman ordered a five percent reduction to each state agency's allocation in the month of August. That represents a total cut in allocations of $21.9 million for the month.
"The less than anticipated collections for the month of July have caused us to reduce
August allocations today by five percent," Clingman said. "The cuts would have been deeper,
but we were able to minimize the impact by utilizing cash reserves."
This is the seventh consecutive monthly decline. Meacham blames it on low natural gas prices. He warns that additional cuts could be on the way.
"I think that this is going to make things that were already tight, even tighter and I think agencies are going to have to start looking at their options," the state treasurer said.
Treasurer Meacham said he is meeting with Governor Henry and legislative leaders to
discuss options for the coming months.
"We have several options. These include potential use of the Rainy Day Fund, tapping
additional federal stimulus money and other responses," Meacham said.
The Rainy Day Fund currently contains $596.6 million. The state constitution allows up
to three-eighths of the fund, or $223.7 million, to be used upon a revenue shortfall declaration by the State Board of Equalization.
Governor Brad Henry released a statement about the revenue shortfall. He said although the across-the-board cuts for state agencies will be difficult, it is no reason to panic.
"The latest budget numbers are certainly disappointing but not completely surprising in light of recent revenue trends. Last month, we warned state agency directors to be prepared to make additional cuts if revenues came up short, and now that such a scenario has occurred, they will have to implement those reductions," Gov. Henry said.
The governor said legislative leaders and finance officials have already begun discussing state revenue.
"Fortunately, we anticipated that this fiscal year could be worse than the last, and as a result, we preserved the Rainy Day Fund and retained a large share of federal stimulus funds earmarked for budget stabilization," Gov. Henry said. "With discussions ongoing, it would be premature to say what course of action we will take. It is likely that revenue trends will improve in the months to come, but we may not have the luxury of waiting for that to occur if revenue conditions continue to deteriorate. One thing is certain. We will get through the latest revenue crunch, just as we have addressed similar budget challenges before."
House Speaker Chris Benge agreed the revenue shortage is not unexpected though it will be difficult. The numbers show the effects of the recession in Oklahoma.
"Unlike many other states, we have a full Rainy Day Fund, have restrained government spending while continuing support of core government services and were prudent in the spending of federal stimulus dollars for the current fiscal year. In the coming weeks there will be tough decisions to be made, and we will be working closely with Senate leaders and the governor's office to determine the best course of action so the Oklahoma people feel the effects of the declining revenues as little as possible," Benge said.