OKPOLICY.ORG
As you’ve no doubt already heard, the worst fears about state revenue collections in the beginning of the new fiscal year were confirmed yesterday with the release of July General Revenue (GR) collections. The Treasurer’s office announced that July revenues were down 26.3 percent compared to a year ago and came in 18.1 percent below the certified estimate upon which current year appropriations were based. This year’s July GR collections were not only $120 million below last year’s; they were the lowest since FY ’03, at the depth of the previous recession, without adjusting for inflation or the growth in the overall state budget in the intervening years. The sole glimmer of good news in yesterday’s announcement: July’s 26.3 percent decline in revenue collections compared to the same month in the prior year was actually slightly less than the year-to-year declines suffered in June (- 30.1 percent) and May (-27.7 percent). This suggests that the state budget may have already hit rock bottom. However, the climb back up will likely be long and will definitely be hard.
July’s revenue shortfall led Treasurer Scott Meacham to implement an immediate 5 percent across-the-board cut to agency appropriations for the month of August. The Treasurer said that he will be meeting with Governor Henry and legislative leaders to discuss how to handle the budget crisis, stating:
“We have several options. These include potential use of the Rainy Day Fund, tapping additional federal stimulus money and other responses,” Meacham said. “However, I would warn state agencies that additional cuts may very well be coming.”
For now, implementing cuts to all agencies in equal proportion to their share of appropriations from the GR fund is the only course that is constitutionally available. This approach, however, is unable to take into consideration the differing capacity that agencies have to absorb budget reductions and the differing impact of potential cuts on services that are essential to the health, well-being, and security of Oklahoma families and communities. In a blog post last month, OK Policy suggested an approach for dealing with shortfalls, including being ready to call the Legislature back into Special Session in the fall and tapping the Rainy Day Fund to minimize the extent and severity of cuts. We will continue to monitor the budget situation closely, and in collaboration with policymakers and partners in the community, be working to develop recommendations and strategies for how to proceed.
David,
You are exactly right about the ability of various agencies to respond to the budget cut. If I remember correctly, DHS only has enough carryover to last about 5 days at the most. Considering how the unemployment figures for OK keep climbing, DHS will more than likely have to cut back on SoonerCare and food stamps.
Darrell
On the education side of the coin it would be more productive if the state would increase the maximum amount of carry over they are allowed to maintain. We understand short falls and are capable of making sound decisions, including saving for cases such as this.