On Tuesday, Governor Fallin and the Republican leadership of the House and Senate announced an agreement on the FY ’12 budget. Total state appropriations for next year will be $6.511 billion, which is $254 million, or 3.8 percent less than this year’s final budget.

To make the budget balance and limit the magnitude of cuts, the agreement includes some $370 million more revenue than what was certified as available for appropriation by the Board of Equalization in February. Although full details have not been spelled out, the main revenue enhancements appear to be: $120 million in cash balances that have accumulated this year; some $100 million from the final round of federal stimulus money approved by Congress last summer; and a $100 million transfer from the State Transportation Fund that will be partly made up for by a $70 million bond issue for the Department of Transportation. Additional revenues include transfers from the Unclaimed Property Fund and agency reserve funds, increased tax compliance efforts, and diversion of tax revenues slated for the ROADS program to the General Revenue fund. Read the rest of this entry »

As the dust settles on the 2010 legislative session that adjourned on May 28th, we’ve now released a detailed summary of the major highlights of the state budget for the upcoming year.  Our fact sheet includes a set of seven tables and charts, including this one, which compares total state appropriations over the past twelve years:

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Legislative leaders and the Governor yesterday announced their agreement on the FY ’11 budget. We’ve posted the press release here and the document that was provided comparing appropriations for each agency for this budget year and next, and listing the additional revenues that were agreed on in addition to the $5.4 billion in state revenues certified by the Board of Equalization in February. The Oklahoman’s Paul Monies has created a nifty visual breakdown of where the money is going  using a program called Many Eyes. Read the rest of this entry »

For the second time in less than a month, the Governor and legislative leaders have announced an agreement on how to address the huge shortfalls in this year’s budget caused by declining revenue collections. This second agreement is not much different than the initial January agreement: monthly across-the-board cuts of ten percent of allocations from the General Revenue Fund will continue for the rest of the year, with the extent of cuts to some agencies mitigated by additional funds. This “addendum” to the January deal involves two main components: Read the rest of this entry »

Just before the start of the Legislative session, Governor Henry announced that he had reached an agreement with Speaker Benge and President Pro Tem Coffee on the FY ’10 budget.  Faced with projected mid-year revenue shortfalls of slightly more than $800 million, the leaders agreed that agency appropriations from the General Revenue Fund would continue to be cut by 10 percent for the remaining months of the year, with supplemental funding made available to certain agencies (Common Ed, Higher Ed, Health Care Authority, Corrections and Rehab Services) to mitigate the extent of cuts.

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In a press release Tuesday afternoon, Governor Brad Henry, Speaker Chris Benge and Senate Pro-Tem Glenn Coffee announced agreement on how to address the shortfalls in the FY ’10 budget that have resulted from this year’s revenues coming in sharply below the certified estimate.

Based on the revised estimates for FY ’10 certified by the Board of Equalization in December, the state is looking at a total mid-year shortfall of $809 million in FY ’10, made up of  $729 million in the General Revenue Fund and $80 million in the HB 1017 Education Reform Fund. The leadership agreement involves the following main features for bringing the FY ’10 budget into balance: Read the rest of this entry »

Just a day after Governor Brad Henry signed the state budget for FY ’10, Oklahoma Policy Institute released its annual budget review. And the new fiscal year, which starts July 1, promises to be an interesting one:

all agencies face a tight and difficult year ahead as they wrestle with increases in mandatory operating expenses and, for some, rising caseloads in a downturn, with flat or reduced funding.

This year, the adoption of the budget is just the start of a process that will unfold over the next 13 months. Agencies must allocate appropriated  and other funds to their programs, figure out how they’ll cover all these built-in cost increases, adjust service levels and, in all probability, adjust again later in the year. We won’t know until next June or later how it all worked out.

But it does start at the beginning, and that’s where our budget review helps. It is the first comprehensive look at the budget process and the outcomes it led to. Here’s what you’ll find inside:

1. Analysis of the speedy drop in available state revenue.
2. Details of how federal stimulus money and state revenue changes allowed the overall budget to grow slightly.
3. A rundown of how individual agencies fared and what that says about state priorities.
4. Further analysis of problems to watch for as the year unfolds.
5. A look ahead to the FY ’11 budget and beyond.
6. Recommendations to improve budgeting processes and to increase funding of state services in the economic recovery.

Once you’ve read the budget brief, you’ll be caught up with us and ready to see the rest of the budget picture develop.

When legislative leaders and the Governor announced the FY ’10 budget deal last Friday, they stated that the agreement “protects the four core functions of government, including education, health care, corrections and transportation.” It may not be that simple. The Department of Human Services, the agency that operates programs primarily serving vulnerable children, families, seniors, and persons with disabilities, was dealt a cut of $9.4 million for FY ’10 compared to FY ’09. Even though this cut equals only 1.68 percent of agency appropriations, it is becoming apparent that DHS could be hard-pressed to continue operating existing programs. For this agency, and likely several others, we may not know what is protected, and how, for months after the Legislature heads home tomorrow.

The FY ’10 budget agreement allocates $549.7 million for FY ’10, of which $71.4 million is federal stimulus money associated with enhanced federal matching rates on the agency’s Medicaid-eligible expenditures. At its April Commission meeting, Director Howard Hendrick presented the emerging FY ’10 budget picture for the agency. He asserted that DHS required $665.8 million in state funds for FY ’10, which amounts to an increase of $106.6 million compared to FY ’09 appropriations. Based on the figures presented to the Commission, the $9.4 million funding cut means DHS could be facing a shortfall of up to $115 million in FY ’10.

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The initial reports on the agreement for the Fy ’10 budget reached on Friday between legislative leaders and the Governor were positive - due to the availability of over $600 million in federal stimulus dollars, key education, health care, and public safety agencies received flat funding or increases to cover mandatory costs without recourse to the Rainy Day Fund or tax increases. While most agencies were hit with budget cuts of 7 percent, news articles and editorials expressed confidence that agencies would be able to absorb these funding reductions without having to implement layoffs or furloughs.

Quickly enough, the picture has begun to darken. Today brings the first reports of agencies considering furloughs, with the Department of Public Safety, which is facing a budget cut of $6.3 million, announcing it is looking at imposing a six day furlough for its staff of 800 state troopers in an effort to save $1.8 million. The Department would also eliminate its annual trooper academy and leave vacancies unfilled.
According to DPS Commissioner Kevin Ward:

“Our concern is with the smaller academy this year not filling all the slots that are going to come open through attrition and no academy next year, we’re kind of getting into a decline in personnel out there,” he said.

“As people quit, like driver’s license examiners, we’re not going to be able to replace them and so some of our areas in which lines are long now, they could get longer.”

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On Friday afternoon, legislative leaders and the Governor announced the outline of a long-awaited budget agreement. This step is necessary to start the flood of bills to fund state agencies, allocate some of the federal stimulus money, and decide what to do with various tax cut proposals that are still floating around the Capitol. The expectation is that all budget bills will get passed in time to adjourn by this Friday.

In the announcement of the agreement, House Speaker Chris Benge (R-Tulsa) acknowledged the difficulty involved in crafting a budget during a recession:

In a down financial year, the budgeting process is always difficult as we take close stock in exactly how we are spending taxpayer dollars. This year was especially complicated by the federal stimulus money Oklahoma received and our dedication to making sure those one-time dollars were used as prudently as possible. This budget is a reflection of the surgical cuts we promised the people of Oklahoma early in session. The easy route would have been to cut every agency by the same amount and go home…This effort will maintain many of the core services upon which Oklahomans depend each and every day while ensuring our government is as efficient as possible.

A spreadsheet distributed on Friday compares proposed FY ’10 funding with actual FY ’09 funding for each agency. To fund the proposed $7.200 billion FY ’10 budget, the agreement uses some $640 million in stimulus dollars, plus over $100 million in additional state funds beyond the revenues certified as available in February. “Surgical cuts” turns out to mean seven percent reductions for most agencies, smaller reductions for others, and essentially flat funding or small increases to cover increases in mandatory costs for several key agencies, including common ed, higher ed, Medicaid, and Corrections. Some key law enforcement and judicial agencies, including the Department of Public Safety, the District Courts, District Attorneys and the Indigent Defense System, face cuts of 6 to 7 percent, as do most regulatory agencies, such as the departments of  Labor and Consumer Credit; administrative agencies, such as the Tax Commission and State Auditor’s Office, and economic development agencies, such as the Department of Tourism. The Rural Economic Action Program, which supports rural water projects, had its $15.5 million budget eliminated entirely.

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As we reach one week until the scheduled adjournment of the Oklahoma Legislature on May 22nd, we can only share the advice offered by Bette Davis in All About Eve: “Fasten your seat belts. It’s going to be a bumpy ride.”

The Legislature is constitutionally required to adjourn at 5:00 pm on the last Friday in May. But earlier this session, both chambers passed a resolution to move that date up one week. At this late stage in the process, a huge amount of important work remains on the Legislature’s plate. Most obviously, an agreement on the FY ’10 budget has yet to be reached between the Legislature and Governor, with the most recent indications being that the two sides remain a good distance apart. There may still be enough time remaining to pass the budget; however, with each passing day, the chances that there will be time for legislators, the media, advocates, and the public to become informed about the myriad decisions and details contained in the budget bills grow slimmer. Once an agreement is reached, bills containing appropriation language, budget limits, FTE authorizations, and other legal matters must be written, signed out of conference committee, and granted final passage in both chambers for each of the state’s 80-plus appropriated agency. For many agencies, the bills that go whizzing through the process will reflect budget cuts and include the use of federal stimulus dollars.  With such a tight schedule, it is likely to be well past the end of session before anyone other than the few key legislators and staff involved in the actual budget negotiations know what has been decided.

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