The state Board of Equalization met Monday to fill a massive hole in this year’s budget caused by COVID-19, and to look at projections for coming years. There was a lot of information, and none of it good.
The board certified a revenue failure. That happens when revenues fall below projections. Because of COVID-19 and the unemployment and decrease in oil revenue it’s caused, the state is short $416.9 million this fiscal year which ends June 30, and $1.3 billion short next year.
“We have the largest savings account in state history with a billion dollars right now and we’re going to use that over the next two years or over the next three years to protect core services,” Governor Kevin Stitt said.
The impact on jobs is projected to be staggering.
“This initial peak employment loss for the state is 188,000 jobs in the second quarter of 2020 and we won’t return to the peak level of pre COVID employment until the fourth quarter of 2022,” Said Jay Doyle, director of the Oklahoma Tax Commission.
According to the projections, we are likely to see a peak unemployment rate of 12 to 14%. That’s compared to a rate of 3.1% last month.
Demand for oil is expected to remain low.
“With low prices, excess supply and low demand drilling activity is not expected to resume in a meaningful way until late 2021 or early 2022,” said Doyle.
The governor said he plans to release details of reopening the economy in the coming days.
“We have had a nice trend down in hospitalizations and deaths. So, we feel like we’re in a good position. We’re hitting all the gates that the federal government set out for us to safely reopen and we will do this in phases,” said Stitt.
The governor is urging the state legislature to look at cuts and cost reductions rather than spend all of the state’s savings to fill budget holes.