Oklahoma Policy Institute state fiscal study projects ‘bleak extended period’ (Tulsa World)

Original at http://www.tulsaworld.com/news/article.aspx?subjectid=16&articleid=20101207_16_A12_OKLAHO370531&archive=yes

By BARBARA HOBEROCK World Capitol Bureau 

OKLAHOMA CITY – Oklahoma lawmakers will have $400 million less to spend in the coming fiscal year than they did in the current fiscal year, the director of the Oklahoma Policy Institute said.

David Blatt said the state wouldn’t likely return to the pre-downturn levels of 2008 and 2009 until 2014 under current policies.

“We are definitely saying it is an extended bleak period where it will take several years for revenues to return back to pre-downturn levels, and that is the result of the severity of the drop in revenues we suffered the last couple of years but also some of the policy decisions made in prior years,” Blatt said.

State Treasurer Scott Meacham said Blatt’s $400 million figure was a little high.

“He is a little overly pessimistic in his forecast for the future,” Meacham said.

The institute’s new report, “A New Fiscal Reality for Oklahoma: The State Budget Outlook, 2011-2014,” says that after the last revenue downturn ended in 2003, taxes were cut and programs were added. The report is to be released Tuesday. The Tulsa World obtained an advance copy.

The report recommends actions such as deferring or repealing additional income tax cuts, which likely will not garner support in the Republican-controlled Legislature.

“The cut in the top income tax rate from 5.5 percent to 5.25 percent is likely to be triggered in 2012 even though revenue collections and budgets remain substantially below pre-downturn levels,” the report says. “This tax cut will cost $120 million per year when fully phased in, representing more than a two percent cut in the General Revenue Fund at a time when even five percent revenue growth may be optimistic.”

The report recommends reducing tax exemptions, credits and rebates. Lawmakers have studied those ideas.

It also suggests increasing taxes on risky behaviors such as alcohol consumption and tobacco use to cover the cost of treatment and prevention programs.

The report suggests consolidating agencies and programs and streamlining services where savings can be expected.

In regard to crime, the state should emphasize prevention, diversion, and surveillance over detention, the report says.

“Oklahoma cannot afford to lead the nation in incarceration any longer,” the report says. “We should cap and then reduce spending on corrections and shift funding to mental health and substance abuse treatment, and programs that help prisoners re-enter society when their sentences are complete.”

State Treasurer-elect Ken Miller said he agreed with some of the suggestions but disagrees with others.

“I totally disagree that we need to look at mechanisms to raise revenue,” he said. “We have enough revenue. We just have to learn to live within our means.”

Meacham and Miller said the state has handled the economic downturn better than other states have.


Oklahoma Policy Insititute (OK Policy) advances equitable and fiscally responsible policies that expand opportunity for all Oklahomans through non-partisan research, analysis, and advocacy.

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