OKPOLICY.ORG
Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol.
I have a feeling there may be another shoe to drop when it comes to the state’s finances. Last week it came to light that the Office of Management and Enterprise Services (OMES) has been borrowing money from the Rainy Day Fund to pay the state’s monthly obligations. And they have done so to the point that the Rainy Day Fund is totally depleted. OMES is the finance office for state government through which the money flows, and it is under the direct control of the governor.
Those in charge at OMES say they had the authority to do this, and it’s all okay so long as the money gets put back by the end of the fiscal year. That’s because the money is supposed to be available to appropriate. 3/8ths of the money is should be available for appropriation in next year’s budget because next year’s certification of funds is less than this year’s. Another 3/8ths should be available for immediate appropriation if there is a revenue failure, not to exceed the amount of the revenue failure. And finally, the last 1/4th of the fund should be available if the governor and Legislature by 2/3rds vote to declare an emergency.
There may be authority in statute for OMES to move money in and out of the Rainy Day Fund, but I’ve never heard of it happening before. It’s true that money comes into the state coffers unevenly, sometimes causing cash flow problems. In the past, there was a Cash Flow Reserve Fund, made of surplus funds, to get through the lean months, but that has been used up by the Legislature in various budget manipulations. There have just been too many years in a row of not enough revenue. If you look at the constitutional budget-balancing scheme, when there was not enough money to pay the bills OMES should have recommended declaring a revenue failure in the amount needed. That would trigger either automatic spending reductions or freeing up part of the Rainy Day Fund for appropriation to fill the gap.
I’m not sure how much has been borrowed from the Rainy Day Fund, but it’s apparently a minimum of $240 million. This may all work out if enough money comes in between now and July to pay the Rainy Day money back and pay current obligations. But if that does not happen, it could cause some serious agency and school cuts between now and July. Last year OMES cut too much during a revenue failure. This year they may have tried too hard to spare the pain. State government has seen hard times in the past, but if things don’t go just right, this year could be a calamity.
