by ANGEL RIGGS World Capitol Bureau
OKLAHOMA CITY – Oklahoma’s standstill budget for the upcoming fiscal year will likely impact the state’s ability to fund services and programs, according to a study released Wednesday by the Oklahoma Policy Institute.
Most state agencies didn’t receive any increase in state funding, despite increased fuel, utility and benefits costs, nor did they receive much direction from lawmakers on how to cope with the increases, according to the study.
“When you’re dealing with rapidly increasing costs and with an accumulation of unfunded mandates, then level funding may well require cuts,” said David Blatt, the institute’s policy director and the study’s author.
The nearly $7.1 billion budget for fiscal year 2009, which begins this summer, is just $46 million more than last year, the study reported.
It’s likely that agencies will consider spending down reserves, not filling vacant positions, raising user fees or cutting programs in an effort to deal with the funding gaps, according to the study.
“You can’t maintain your effort with the same amount of funds, if you’re dealing with higher utility costs, higher transportation costs and several years worth of increased employee benefit costs that have not been funded,” Blatt said.
The study showed that agencies are grappling with employee retirement costs that have increased by $66 million in the past three years coupled with health care costs that have more than doubled since fiscal year 2003.
Additionally, the cost for goods and services purchased by governments are rising faster, at 6.2 percent, than costs for the economy as a whole, the study reported.
“Our sense is when they look at all these rising costs, they’re going to have to adopt a variety of ways to make it through the next year,” Blatt said.
“Some of their solutions may have a limited impact on the public, but others may impact services directly.”
Many school districts, for example, may not rehire first-year teachers and may cut back or eliminate student field trips because of higher fuel costs, according to the report.
Blatt said that Oklahoma has so far fared better than other states during the nation’s current economic downturn.
However, he said, if the nation heads into a prolonged economic slump, the state’s economy will be impacted.
“We have seen revenue growth come to a halt in Oklahoma,” Blatt said. “Our view is that it is more of a result of tax cuts taking effect than it is of an economic slowdown, although it’s likely there’s some aspect of both.”