OKPOLICY.ORG
This morning, the State Board of Equalization will meet to certify the revised FY ’11 revenue estimates (we’ve posted the certification packet to our website). The February certification is binding on the Legislature as it develops the FY ’11 budget – the Legislature can appropriate above the February certified estimate only based upon changes in law approved during the current session, not changes in economic conditions.
As expected, the revised certification is more optimistic than December’s initial certification – but only slightly. The Legislature will have $120.4 million more to appropriate in FY ’11 than under the initial estimate. In addition, the shortfall in current year revenue collections is now projected to be some $53 million less than in December. The improvement is due almost entirely to expectations of significantly higher natural gas and oil revenues over the next 17 months. General Revenue collections from natural gas and oil are now expected to total $822 million over FY ’10 and FY ’11, compared to just $577 million when the initial forecasts were made. But, there appears to be no expectation that stronger energy prices will boost the overall state economy. In fact, in line with last month’s disappointing revenue collections, projections for revenues from the sales tax, corporate income tax, and individual income tax are all slightly lower over the remainder of FY ’10 and FY ’11 than when the initial estimates were delivered eight weeks ago.
Notwithstanding the additional $173 million in available revenues for FY ’10 and FY ’11, the Legislature is still staring at gaping budget holes. Even with budget cuts equal to 10 percent for the remainder of this fiscal year, there is a shortfall of $515 million in the FY ’10 budget that must be filled. The Governor and legislative leaders continue to disagree over how much of that amount should be taken from the Rainy Day Fund rather than other sources.
Then there is a gap of over $1.5 billion between the agreed-to FY ’10 budget ($6.967 billion) and the amount of certified revenue available for appropriation in FY ’11 ($5.415 billion) . The Governor proposed bridging that gap by adding 0.5 to 3 percent to this year’s budget cuts, using most of the remaining Rainy Day Fund balances and stimulus funds, and adopting an assortment of revenue-enhancing measures and cost-savings totaling some $780 million that may or may not materialize. Even if the width of the gap has been shortened, finding a way across the budget chasm without perishing remains a staggering challenge.
