(Oklahoma City, June 3, 2009): The use of federal stimulus managed to cushion the impact of declining state revenue collections and help minimize or avert funding cuts to most large state agencies, but funding gaps and hard choices will remain during the coming budget year, according to a new brief on the FY ’10 budget released by Oklahoma Policy Institute.
The brief summarizes the main features of the FY ’10 budget agreement, examining the major choices regarding revenues and expenditures that led to the final decisions on the budget. It also provides a series of charts and tables identifying where revenues came from and where funds were appropriated.
A projected $612 million drop in state revenues was offset by $641 million in federal dollars from this year’s stimulus bill. Stimulus funds helped minimize or avert funding cuts to most large state agencies, while many smaller agencies had their funding cut by up to 7 percent. Overall funding for FY ’10 increased by 1.5 percent compared to FY ’09; just looking at state dollars, FY ’10 appropriations were 7.1 percent less than in FY ’09.
“Even with stimulus funds, this is going to be a tight and difficult budget year ahead,” said David Blatt, OK Policy’s Director of Policy. “All agencies are grappling with rising costs and some are facing increased demands for services and growing caseloads as a result of the economic downturn and other factors. We expect that the ability of most state agencies to fulfill their core missions, whether ensuring public safety, administering justice, protecting consumers, providing arts and recreational opportunities, offering care to the needy, or educating students, will be constrained by budget cuts and funding gaps.”
The brief also looks at the budget outlook beyond next year, projecting that the budget outlook for FY ’11 may be similar to this year’s but could worsen in FY ’12 once stimulus dollars are no longer available. In addition, the brief offers a series of policy recommendations intended to help the state navigate the stormy fiscal waters that can be expected in the years ahead. The recommendations include:
- Change the Rainy Day Fund’s rules to allow for appropriations further into a downturn;
- Defer additional tax cuts at least until funding levels have been restored to pre-downturn levels;
- Consider new funding streams for Medicaid; and
- Require meaningful multi-year budget forecasting
Click here to read the full text of the fact sheet.