After two straight years of cuts, the state’s budget situation remains dire. Despite the economic recovery and improving revenue collections, the state faces a huge shortfall for next year. The substantial non-recurring revenues that were used to balance the budget over the past two years, including federal stimulus dollars, state reserve funds, and assorted one-time revenue enhancements, have mostly dried up. The Board of Equalization has certified some $500 million less in available revenue for FY ’12 than what was appropriated for the current year budget. As we stated in our recent issue brief on protecting core services:
The impact (of budget cuts) is being felt by Oklahoma families, businesses and communities in far-ranging ways… Deeper cuts will further impinge the ability of state agencies to fulfill their core missions and may seriously affect the well-being of schoolchildren, seniors, persons with disabilities, correctional and public safety officers, and other members of our communities.
In this context, the Governor and legislative leaders are actively considering additional ongoing or one-time revenue sources that could avert truly catastrophic cuts to core services. One option being discussed is appropriating this year’s “5 percent money” for next year’s budget. This post explains the “5 percent option” and suggests why, on balance, we think a portion of this money should be used, along with other revenue solutions.
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