July 1st marks the start of the new state fiscal year in most of the country – but as glad as state Governors, fiscal directors and legislators will be to see the end of the annus horribilis of 2010,  don’t expect to hear the sound of Champagne bottles being uncorked or bands striking up “Happy Days Are Here Again” to usher in the new year.

As noted in a new report from the Center on Budget and Policy Priorities:

Dismal state revenue collections caused by the severe recession are setting the stage for a new round of state budget cuts as fiscal year 2011 begins in most states on July 1. The states’ cumulative budget shortfalls will likely reach $140 billion in the coming year, the largest shortfall yet in a string of huge annual gaps that date back to the beginning of the recession. Read the rest of this entry »

For many state agencies, the first rounds of budget cuts over the past two years could be managed without greatly affecting key programs and services for the public. But as funding cuts go deeper and last longer, often a tipping point is reached where agencies are no longer able to simply tighten their belts but must abandon core aspects of their mission.

The state’s public television network, OETA, which plays a distinct role in covering public affairs and chronicling the lives of Oklahoma communities, has apparently reached such a tipping point. According to a recent article in the Journal Record (subscription only), the network will not be renewing the contracts of the studio staff of the Oklahoma News Report – anchors Gerry Bonds and George Tomek and meteorologist Ross Dixon -  for the upcoming year. All three were contract employees paid for by donations to the OETA Foundation. While the nightly news broadcast will continue to air, staffing reductions, increased workloads, and funding cuts will mean the end of new episodes of several locally-produced programs – Tulsa Times, Oklahoma City Metro and State of Creativity – that shed a spotlight on notable Oklahomans and current affairs. In addition, the agency has enacted a strict hiring freeze and will no longer offer weather broadcasts.

Over the past two years, state appropriations for OETA have been cut by 19.1 percent, from $5.2 million in FY ‘09 (excluding one-time capital funding) to $4.2 million for next year. As we showed in our FY ‘11 Budget Highlights, half of all appropriated agencies have seen state funding cut by 15 percent or more during this period. With one-fifth of this year’s budget being funded with non-recurring revenues, the chances for any quick or substantial improvement in the budget outlook for OETA or most any other agency are slim.

Despite the cuts, OETA will continue to operate, but with fewer staff shouldering greater workloads and responsibilities, and with fewer programs that are able to tell of the lives and deeds of the ordinary and extraordinary Oklahomans who make up the fabric of this state. Their loss of funding is our loss as well.

The state’s deep and prolonged budget crisis has taken a serious toll on public services in Oklahoma.  We have seen rate cuts to providers of community-based health services, elimination of violence prevention programs for at-risk youth, closures of facilities for persons with mental health and addiction problems, and layoffs of hundreds of teachers and public employees, to cite just a few examples (see our updated compilation of state and local cuts). Overall, as we laid out in our FY ‘11 Budget Highlights fact sheet, state appropriations have been cut by almost $400 million, or 7.2 percent, compared to FY ‘09, and more than half of all appropriated state agencies must absorb state funding cuts of at least 15 percent.

Yet the impact of the downturn would have been genuinely catastrophic had Congress not provided substantial fiscal relief to the states as part of last year’s stimulus bill.  Formally known as the American Recovery and Reinvestment Act,  the stimulus bill provided states money in two basic forms – a State Fiscal Stabilization Fund, intended primarily for common and post-secondary education, and enhanced federal matching funds for Medicaid. Over the past two years, the Legislature approved the use of $1.375 billion in stimulus funds, allocated as follows:

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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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Once bitten, twice shy. Or is it twice bitten, thrice shy?  Oklahoma’s budgeting laws try to protect against mid-year budget shortfalls by allowing the Legislature to appropriate only 95 percent of the certified estimate of General Revenue (GR) fund collections for the upcoming year. However, in each of the past two years, revenue collections have failed to reach the amounts appropriated by the Legislature. In FY’09, things started off well, but then revenues plunged  to such an extent that the final monthly GR allocation to each agency was cut by 5 percent (those cuts were later restored) . This fiscal year, which began last July 1, revenues immediately came in far below appropriated levels. Budgets were cut 5 percent a month beginning in August and then 10 percent each month since November; only large-scale borrowing, followed by an agreement to supplement collections with hundreds of millions from the Rainy Day Fund, additional stimulus dollars, and some available cash prevented mid-year budget cuts being even more drastic.

It is not surprising, then, that the funding levels announced in the FY ‘11 budget agreement have been greeted with a certain amount of skepticism by some state agencies and school districts. A Tulsa World article on funding for common education, for example, included these reactions from Tulsa-area Superintendents:

“It will be good news if, when you get the details, if it is that type of cut,” Broken Arrow Superintendent Gary Gerber said, referring to the 2.9 percent budget cut. “But we have to take it with a grain of salt because we had a budget agreement last year and they proceeded to cut us every month of the entire school year…”

Union Superintendent Cathy Burden said that while she was pleased the district now has a number to work with, their budget will require careful scrutinizing before any major decision on staffing or plans for next year can be made.

Burden said her “cautiousness is based on the history of what happened this year” of promised 3 percent cuts almost doubling by year’s end.

Yet if this skepticism – which seems to be broadly shared, based on  conversations I’ve had in recent days  – is understandable,  it is also likely unwarranted. At least a decade of history suggests that the state’s forecasters tend to underestimate both how bad things will be in bad times and how good they’ll be in good times. Specifically, the revenue projections on which annual appropriations are based tend to consistently underestimate how much revenues will fall when the economy turns bad, but also underestimate how quickly and strongly revenues will recover once the economy improves. Read the rest of this entry »

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 »

We are at a truly critical time for Oklahoma. The state faces its most severe budget crisis of the past quarter century, perhaps the most severe in its history. As revenues have fallen, successive rounds of budget cuts have created hardships for those whose health, security and livelihood depend on state-funded services. However, as bad as things have already gotten, we are only now approaching the eye of the full budget storm. In the absence of additional revenues, the state’s budget shortfall for the upcoming year is equivalent to cuts of an additional 11 to 12 percent across every agency of state government beyond what has already been cut this year.

In recent blog posts, we have laid out the potential toll that cuts of this magnitude could have on Oklahoma families, businesses and communities. The Oklahoma Health Care Authority is considering the elimination of prescription drug coverage, diabetes supplies and kidney dialysis treatment for adult Medicaid recipients. The State Health Department warns of an inability to respond in timely fashion to man-made disease occurrences and natural disasters. The Department of Human Services confronts rate reductions that could push private sector providers of services to Oklahomans with developmental disabilities out of business. Similar stories are being told across the spectrum of state government of cuts that would undo progress made in recent years and set our state back years, if not decades. Read the rest of this entry »

While discussing the state of public health in Oklahoma with a House health appropriations subcommittee, Health Commissioner Terry Cline warned that “Oklahoma is about to become the public health joke of the country.” With Oklahoma standing at 49th in overall health outcomes, ranking above only Mississippi, additional cuts to the Oklahoma  State Department of Health (OSDH) could drop the state’s public health ranking to the very bottom.

The committee has asked all agencies to report how they would be affected by additional cuts of 10, 15 or 20 percent in FY ‘11. For OSDH, a 10 percent cut would equate to a $6.8 million funding drop. Read the rest of this entry »