State Budgets Cut 5 Percent After Revenue Declines
By Dave Jordan, NEWS 9
OKLAHOMA CITY -- State officials were forced to implement a five percent across-the-board cut in budget allocations after revenue declined in August, State Treasurer Scott Meacham announced Tuesday.
Although Oklahoma's economy has been considered one of the strongest in the country, the recession has hurt budgets in most states, and Oklahoma is no exception.
"We will once again this month institute a five percent cut in allocations to state agencies," said State Treasurer Scott Meacham.
State revenue collections for August were about $335 dollars down by $155 million or 32 percent. That loss along with a sluggish national economy and lower than expected tax collection rates has forced the state to slash its budget for the second time this fiscal year.
"I think agencies would be wise to prepare for at least that level of cuts," Meacham said.
The Office of Juvenile Affairs has already prepared for a smaller budget. Last week, the division put the final touches on contingency plans including furloughs and buyouts. Tuesday, that plan went into went into full effect.
"Our problem is because the cuts are coming on a monthly basis, it's difficult for us to plan. Many of the agencies are taking cuts for the entire year and we may be in a position to have to do that," said Gene Christian, executive director for the Office of Juvenile Affairs.
The state has already taken about $130 million out of its cash reserves, and as of now, the state has no plans to use rainy day funds or stimulus money to balance the budget. Meacham said he is holding out hope that the budget turns around in the next few months.
If that happens, Meacham said there will be no need for a special session to discuss budget issues.
Meacham also said if the state hadn't used the cash reserves, state agencies could have faced budget cuts of at least 25 percent. However, in addition to balancing the budgets the state now has to contend with the cash reserves it used to offset the budget cuts. That money has to be paid back by the end of the fiscal year, which ends in June.
Gov. Brad Henry released the following statement regarding the state's revenue shortfall:
"We had hoped to see improvement in August revenue collections, but unfortunately, the totals were similar to those posted in July. As a result, we will have to implement another 5 percent cut in the monthly allocation to state agencies.
"For the past several months, we have warned state agency directors to prepare for the possibility of continued reductions depending on monthly revenue performance. Still, we know these cuts will not be easy to implement, particularly after the budget reductions we authorized in the last legislative session.
"We are continuing our discussions with legislative leaders and reviewing all options available to address the possibility of a protracted decline in future revenue collections. Because those talks are ongoing and we are still digesting the latest revenue numbers, it would be premature to say what ultimate course of action we will choose."
More on News9.com: Oklahoma's Tax Revenue Plunges as Recession Hits State