Lawmakers weighing agency needs, budget cuts, and $4.6 billion in state savings (Capitol Update)

As the 2025 legislative session approaches, the appropriations and budget subcommittees continue to hear Fiscal Year 2026 budget requests from state agencies. Most of the agencies are asking for modest budget increases.

Among the small but important agencies in the Public Safety Subcommittees, the Office of the Chief Medical Examiner is requesting $3.5 million in additional funding to restore its national accreditation. The office lost its accreditation 15 years ago when its national accrediting agency found 29 deficiencies, including poor facilities and inadequate staffing. The office has addressed those deficiencies, most recently adding additional staff using carryover funds from unfilled positions. Now that those positions are filled, they must be funded.

Another public safety agency, the District Attorney’s Council, is requesting $8.8 million for workforce recruitment and retention, as well as $5.9 million for office operation and infrastructure updates and $2 million for technology updates. Kathryn Brewer, the council’s executive director, described the shortage and turnover of assistant district attorneys as a crisis.

Craig, Mayes, and Rogers County District Attorney Matt Ballard said he has lost 22 attorneys in the past 10 years. Cleveland, Garvin, and McClain County District Attorney Greg Mashburn said the combination of pay lower than other agencies and the high workload, which prevents an appropriate work-life balance, are the biggest factors leading attorneys to leave, usually after two or three years, leaving the office with less experienced prosecutors.

This is just a fraction of the over $800 million in agency requests for additional funding for FY 2026. The agencies put their budgets together last fall, reflecting the needs of their agencies before the State Board of Equalization certified in December there would be $191 million less than the current budget year to spend for the upcoming fiscal year that starts on July 1, 2025.

It is a good thing that the agencies are continuing to present their needs to the budget subcommittees anyway, because the members and legislative leadership have some important decisions to make about how to move forward in a year when budget projections are down.

During the past seven years, Oklahoma’s economy has produced big increases in revenue. Legislators, shellshocked from prior years of budget cuts in our volatile economy, chose to create various savings accounts to guard against future downturns rather than to fully fund agency needs at the time.

While this is understandable, and wise to a point, the question is, when are we making unwise budget cuts in advance, by refusing to appropriate available funds? Is it a good thing for the Office of the Chief Medical Examiner to go unaccredited for 15 years? Or for DA offices to lose experienced prosecutors so the state can carry $4.6 billion in cash in various accounts? These are just two state agencies that have been forced to give the public less than full value because the money they need is sitting in a state savings account.

Here is where the $4.6 billion is located:

  • Constitutional Reserve Fund (Rainy Day Fund), $1,365,345,200;
  • Revenue Stabilization Fund, $663,557,325;
  • 2023 General Revenue unspent, $563,696,626;
  • 2024 General Revenue unspent, $759,392,964;
  • 2025 General Revenue unspent, $42,485,140;
  • FMAP Rate Preservation Fund (Projected Balance) $595,678,831;
  • Education Revolving Fund Cash (1017), 640,461,250;
  • Grand Total Reserves and Unspent Revenues, $4,630,617,336.

It seems the legislature could have four options:

  1. Cut budgets by the amount of the revenue deficit and leave the $4.6 billion savings intact,
  2. Spend enough of the $4.6 billion savings to create a flat FY 2026 budget and defer the agencies’ requests to a future year,
  3. Spend enough of the $4.6 billion savings to fill the budget gap and meet agency requests necessary to avoid a crisis, or
  4. Spend a prudent amount of the $4.6 billion savings to fill the budget gap and to fund agency requests found to have merit and new programs legislators see as continuing to move the state forward.

Even if the legislature appropriated as much as 20% of the $4.6 billion, it would leave more than $3.68 billion in savings to meet contingencies for the next few years.

This is the first year of a small revenue downturn, caused not by the economy but primarily by last year’s sales tax cut on groceries and funding the private school tax credits. It seems like the best option could be to cautiously continue the progress of the past several years.

ABOUT THE AUTHOR

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.