With state revenue collections seeing their steepest plunge in a generation, Oklahoma is enduring a tough year of state budget cuts that are already having a harmful effect on families, communities and the economy. However, while the severity of this year’s cuts has been mitigated, the outlook for next year’s budget is substantially worse. In the absence of new revenue, we should expect additional budget cuts of 10 to 12 percent across the full range of state agencies beyond those cuts already enacted this year. While we know far too little about how deeper cuts will be absorbed by state agencies and school districts, we are certain that if  the budget were to be balanced exclusively by cuts, the impact will be devastating to our schools, safety net programs, infrastructure, and public safety.

In this context, there is an urgent need for a balanced approach to the state’s budget shortfall that includes identifying possible sources of additional one-time or ongoing revenue. Governor Henry, in his FY ’11 Executive Budget,  proposed over $700 million in revenue enhancing measures, along with additional cuts across all of state government, savings from efficiencies and consolidation, and the use of remaining stimulus and reserve fund balances. Not all of the Governor’s ideas are likely to gain traction, but they provide a good starting point for an urgently-needed  discussion. In this and subsequent blog posts, OK Policy will explore some of the most promising policy ideas for generating additional revenue that would go at least part of the way to closing the budget deficit.

One straightforward revenue-generating idea involves limiting the discount that the state pays retailers for collecting the state sales tax. Currently Oklahoma is among 26 states that provides vendors some form of compensation, or discount, for collecting and remitting sales tax. As the policy organization Good Jobs First has noted: 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 Monday’s State of the State address, Governor Henry laid out the broad parameters of his FY ’11 Executive budget. The Governor’s speech likened our current fiscal storm to the severe weather the state has faced recently and so often in our past.  While the Governor stated clearly that continued budget cuts are unavoidable due to the dramatic plunge in revenues that has hit the state during the current fiscal year (FY ’10) and that will continue next year, he earned loud, bipartisan applause when he declared:

We all will be asked to sacrifice. But we cannot balance the budget at the expense of the most vulnerable among us.

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This afternoon at 3:00 marked the first meeting of Governor Henry’s coordinating council to oversee the use of the federal stimulus money available to Oklahoma through ARRA. All of the members of the council were in attendance for this inaugural meeting. Susan Savage will serve as the lead contact for the council. Scott Meachem will work on all aspects of the stimulus package as they relate to the state budget and will work on a daily basis to coordinate with the legislature. Steve Burrage will be the “monitoring guru”.

Governor Henry stated that the goal of the council is to make sure Oklahoma doesn’t fall into any traps and that we get the full benefit of the stimulus funds. He stressed that, although openness and accountability is a key goal of this process, it goes beyond that. The other stated goal is to identify all opportunities where Oklahoma can benefit from the stimulus package.
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We are very pleased to learn that Governor Henry has announced the creation of a coordinating council to help oversee use of federal stimulus funds. OK Policy was out front in calling for such an entity to allow for input and transparency in the distribution of funds from the massive American Recovery and Reinvestment Act. The Governor previously designated the State Auditor to lead the effort to ensure oversight of stimulus funds and launched a state website at http://www.ok.gov/recovery/ to provide publicly-accessible information on the various funding streams contained in the stimulus package. Given the unprecedented magnitude and critical importance of the stimulus bill, the coordinating council is another important component of the effort to develop public confidence that funds are being spent efficiently and honestly.

The coordinating council is set to hold its first meeting on Friday, March 13th at 3:00 p.m. in the Governor’s large conference room at the Capitol.

UPDATE: Here’s the Governor’s Executive Order creating the Coordinating Council