Options to fix Oklahoma’s budget shortfall

For Immediate Release: March 17, 2015

State officials have projected that Oklahoma is facing a $611 million budget shortfall for next year. The shortfall comes at a time when this year’s state budget is already $680 million smaller than six years ago after inflation. Years of budget cuts and flat funding have resulted in larger class sizes, uncompetitive salaries for teachers and state employees, dangerously understaffed correctional facilities, and long waiting lists for critical services.

In this context, relying on even more funding cuts to balance the budget is terrible for Oklahomans’ health, safety, and economic future. However, Oklahoma has options to prevent some or all of this damage. A new OK Policy fact sheet presents seven feasible and responsible solutions to the budget shortfall.

“These options should remind lawmakers that continuing to slash education and other core services is a choice we don’t have to make,” said Oklahoma Policy Institute Executive Director David Blatt, the author of the report.

The first option recommended by OK Policy is to cancel a scheduled income tax cut that would add $57 million to next year’s shortfall and another $147 million in 2017.

“When legislators approved this tax cut last year, they promised a trigger would keep it on hold until there’s revenue growth,” said Blatt. “Because of a badly written bill, the tax cut will kick in despite a huge shortfall, unless legislators act sensibly to stop it.”

Several other options could help with next year’s shortfall while also boosting Oklahoma’s long term budget outlook. The report recommends ending a double deduction for state income taxes, an unintentional fluke of the law that reduces revenue by an estimated $97 million. It recommends adopting combined corporate reporting, a reform that prevents corporations from shifting profits earned in Oklahoma to tax shelter states. In addition, the report calls for Oklahoma to accept federal funding to expand health coverage for low-income residents, which has been calculated to save the state about $450 million over a decade by shifting costs onto the federal government.

“The problem isn’t just about declines in the energy industry, and it’s not just this year,” said Blatt. “Year after year, Oklahoma simply isn’t bringing in enough revenue to maintain a competitive education system, strong infrastructure, and safe communities that we need to be a prosperous state. Each of these solutions could help put us on a better path for the long-term.”

The final three options in the report offer one-time solutions to help get Oklahoma through this rough patch. These include tapping a portion of the Rainy Day Fund, postponing a scheduled increase in off-the-top funding for roads, and making careful use of cash reserve and revolving funds.

You can download a copy of the fact sheet at https://okpolicy.org/wp-content/uploads/budget-gap-2015.pdf.


Gene Perry worked for OK Policy from 2011 to 2019. He is a native Oklahoman and a citizen of the Cherokee Nation. He graduated from the University of Oklahoma with a B.A. in history and an M.A. in journalism.

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