April 15th, 2014
Even as most states are enjoying budget surpluses, Oklahoma now faces faltering revenue collections and large budget shortfalls, which could lead to deeper cuts at a time when state agencies are still struggling to recover from the last downturn. Our Budget Trends and Outlook summarizes key points you should know. For a PDF version of this 2-page fact sheet, including 4 graphs, click here.
State revenue collections are faltering
- Current year General Revenue (GR) collections through March are 5.2 percent below the certified estimate. If revenues do not catch up to estimates in April, across-the-board budget cuts might be enacted
- Year-to-date collections have fallen below those of two years ago and remain 7 percent below peak levels of FY 2008, without adjusting for inflation
- General Revenue collections are weakened by earlier rounds of tax cuts; the growing cost of tax breaks for energy producers and others; increasing off-the-top allocations to the ROADS Fund, and a tax system that is misaligned with the new economy
The state budget has never fully recovered from the last downturn
- The FY 2014 budget is $572 million below FY 2009, adjusted for inflation. The proposed FY 2015 budget would be $746 million below FY 2009 after inflation.
- 40 out of 73 appropriated state agencies remain 20 percent or more below FY 2009 funding levels, adjusted for inflation. This year, 39 agencies received funding cuts or flat funding
- State formula funding for public schools remains $213 million below FY 2008 levels, while enrollment has increased by 40,000 students
- The Department of Corrections is operating with 450 fewer correctional officers than in 2008, even as the inmate population continues to grow
The budget outlook for FY 2015 is very worrisome
- The Board of Equalization has certified $188 million less in available funds for FY 2015
- Governor Fallin’s budget reduced overall appropriations by $137 million (1.9 percent). It included 5 percent cuts to most agencies, including higher education and the Oklahoma Health Care Authority (Medicaid). The proposed FY 2015 budget would be $746 million below FY 2009 after inflation.
- Many agencies require substantial funding increases simply to maintain existing programs and services, including the Oklahoma Health Care Authority, Department of Mental Health and Substance Abuse Services, Department of Education, Department of Corrections, and Department of Human Services
- The state must also find ways to provide pay raises for teachers, public safety officers, and other state employees
The state faces significant longer-term fiscal challenges
- State government employs 10 percent fewer employees than four years ago and 5 percent fewer than in 2001—despite population growth, heavier caseloads, and new mandates and responsibilities.
- In the years ahead, additional funding will be needed to meet critical obligations, including implementing the child welfare reform plan, improving educational outcomes, repairing roads and bridges, protecting our water systems, and providing fair compensation to state employees.
- Over the longer-term, Oklahoma faces a structural budget deficit associated with an aging population and decaying infrastructure, along with an outdated tax system.