In the wake of this year’s second mid-year revenue failure, Governor Fallin and legislative leaders reached an agreement to tap the Rainy Day Fund to help public schools and the Department of Corrections make it through the year. The Legislature promptly passed SB 1572, which provided $51 million to the State Department of Education, and SB 1571, which provided $27.6 million for the Department of Corrections. With the supplemental, DOC has had its funding fully restored to its initial FY 2016 levels, while common education remains $58.2 million below its initial appropriations amount. Other state agencies are left with 7 percent cuts to their state appropriations from the General Revenue Fund; total appropriations are now $334.2 million below the initial FY 2016 budget.
These latest withdrawals leave the Rainy Day Fund with a balance of $309 million. The Fund hit a post-Great Recession peak of $580 million at the end of FY 2013. Since then, $45 million was withdrawn to help cover emergency expenses associated with the Moore tornadoes in 2013 and $150 million was appropriated in 2015 for this year’s budget.
This year’s supplementals came from the up to 3/8ths portion of the RDF that can be used for mid-year revenue failures. Up to $66 million could still be appropriated for use to offset part of this year’s shortfalls. If these funds are not used for this year’s revenue failure, they will not be available for next year’s budget. While many agencies are struggling to manage mid-year funding cuts, no other agency has formally requested a supplemental.
The remainder of the Rainy Day Fund – $242 million – could be appropriated for next year’s budget as follows:
- Up to 3/8ths, or $145 milliom, by a simple majority vote of the Legislature
- Up to 1/4, or $97 million, upon declaration of an emergency. This requires either a 2/3rd vote of both legislative chambers if the Governor declares an emergency, or a 3/4ths legislative vote without the Governor’s consent.
The available Rainy Day Funds will be an important component of any overall budget plan to address the state’s $1.3 billion shortfall. However, even using the maximum $242 million that is available provides only a partial solution to Oklahoma’s budget emergency. And lawmakers may want to refrain from spending down all of the Rainy Day Fund that they can this year, since many expect to see prolonged economic and fiscal stress for the state.