Saving the Rainy Day Fund won't work

Our friends over at Oklahomans for Responsible Government have a blog post up on the FY ’10 budget agreement expressing dismay over the use of (an unspecified amount of) Rainy Day Funds to help cover this year’s revenue shortfall. They say:

OFRG argues that the Rainy Day Fund needs to be as full as possible for FY 2012 because stimulus funds will no longer be available, leaving a $600-million dollar hole in the budget, about the same amount as the Rainy Day Fund has.

The problem of the FY ’12 budget hole after stimulus funding runs out is a real one, but OFRG is off base in suggesting that the Rainy Day Fund can be put aside and used later. A quick refresher on the rules governing use of the RDF from our online budget guide:

  • Up to three-eighths of the amount in the Fund may be used to make up for a shortfall in the current year’s collections.
  • Up to three-eighths of the amount in the Fund may be used in the budget for the next year if General Revenue collections are forecast to be less than the current year’s collections.
  • Up to one-fourth of the amount in the Fund may be spent through the appropriations process for an emergency.

The full amount of the RDF can be used in FY ’10, and the three-eighths that is available for declining revenue will remain available in FY ’11. However, if, as is widely expected, the economy recovers and revenues begin to rebound, then only the one-quarter of the RDF that is subject to an emergency declaration would potentially be available in FY ’12. (The chart below shows OK Policy’s projections for revenue collections over the next several years).

OK Policy has in fact argued repeatedly that the rules governing use of the RDF, which are currently biased towards spending at the onset of a downturn, should be revised. We’ve proposed that a portion of the RDF remain available so long as revenues are projected to remain below pre-downturn levels.  We hope Oklahomans for Responsible Government will join us in promoting such a change. However, under the rules in effect now, not spending most of the Rainy Day Fund this year and next will lead to even greater cuts to public services without helping us out of the hole in FY ’12.



Former Executive Director David Blatt joined OK Policy in 2008 and served as its Executive Director from 2010 to 2019. He previously served as Director of Public Policy for Community Action Project of Tulsa County and as a budget analyst for the Oklahoma State Senate. He has a Ph.D. in political science from Cornell University and a B.A. from the University of Alberta. David has been selected as Political Scientist of the Year by the Oklahoma Political Science Association, Local Social Justice Champion by the Dan Allen Center for Social Justice, and Public Citizen of the Year by the National Association of Social Workers.

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