Drafting a budget during uncertain times (Capitol Update)

Given the substantial information gap under which legislators were operating, they did a good job of writing and passing the state budget last week. The budget reflects tremendous work by the appropriations committee members — especially the respective chairmen, Sen. Roger Thompson and Rep. Kevin Wallace and their subcommittee chairmen — during the period legislators were marking time at home waiting for the session to resume.

Without a reliable certification of funds available by the Oklahoma Board of Equalization, the leaders opted to use the $1.7 billion shortfall estimate provided by the Tax Commission through the governor despite no explanation of how it was calculated. They apparently decided they had no time or meaningful way to calculate their own estimate or to force the information from the executive branch absent the governor’s willingness to cooperate.

To balance the budget, legislators cut education about 2.5 percent and the remainder of state agencies an average of 4 percent. To avoid deeper cuts, they took money from the Rainy Day Fund and several other funds as well as sweeping certain revolving funds. They also redirected income, sales, and use tax revenue earmarked for retirement funds to the Education Reform Revolving Fund while moving $180 million in earmarked transportation funding to the general budget. To make up for the lost transportation funding, they passed a bill allowing the Oklahoma Department of Transportation to borrow $200 million through bonding. 

Legislators bypassed an opportunity to challenge the Governor’s authority to unilaterally spend the federal COVID-19 money. Instead, they plan to send to his desk a bill requiring the executive branch to post daily reports of how the money is spent on the state’s “checkbook” website. During the great recession that began in 2008, the federal stimulus package amounted to more than $1.5 billion to Oklahoma. Under Governors Henry and Fallin, the legislature appropriated that money. I don’t know if the difference now is in how the federal legislation was written or in Gov. Stitt’s claiming the prerogative to allocate the funds.

Another unknown with which legislators are dealing this year is Medicaid expansion. It seems certain that there will be Medicaid expansion, but the timing and the form it will take are uncertain. To meet the 10 percent state share of expanded coverage, legislators raised the SHOPP (Supplemental Hospital Offset Payment Program) fee that hospitals pay from 2.3 percent to 4 percent for the purpose of leveraging Medicaid dollars. The additional 1.7 percent will be used for the new expanded coverage. In addition, they directed the Office of Management and Enterprise Services to take any additional funding as needed from the Revenue Stabilization Fund for the Medicaid match. These are stop gap measures, and leaders acknowledge they will have to pass new legislation next year when the picture on Medicaid expansion is clearer. 

Oklahoma and America face a very uncertain health and economic future in the near term. As Sen. Thompson said on the Senate floor, this situation (the $1.7 billion shortfall) was dropped on them on April 20. All things considered, they worked hard, stayed focused, and kept the ship of state afloat for now. You don’t have to agree with everything they did to acknowledge that’s quite a feat. 


Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.

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