Will we avoid balancing the budget with a blunt axe? (Steve Lewis Capitol Updates)

Photo by brittgow.

Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol. You can sign up on his website to receive the Capitol Updates newsletter by email.

While much of the noise surrounding the legislative session has centered on the “hoodie” bill, AP history courses, and anti-gay legislation much of the work of legislators is going on in discussions behind closed doors.  Faced with a $611 million budget gap, leaders are compiling a list of responses to put “on the table” for discussion.  Presumably these ideas will be presented to the full membership at some point for a broader discussion and some vote counting.

Among the possibilities on the list are appropriating part of the rainy day fund; un-earmarking some revenues previously set aside by the legislature for specific purposes and thus removed from the general revenue fund; again dipping into various agency revolving funds that have carryover; appropriating money from the cash flow reserve fund; and repealing some tax credits that are deemed to be no longer fully accomplishing their purpose.

What does not appear to be on the table is postponing the tax cut approved last year to go into effect in January, 2016, half way through the fiscal year.  The tax cut gives Oklahomans an average $35 tax cut while removing $50 million from the state budget next year and $157 million per year when implemented for an entire year.  Even though it has yet to go into effect, this would be considered a tax increase by some, an untenable political risk. 

I was glad to learn use of the Rainy Day Fund is being discussed.  I was on the conference committee during the oil, banking and real estate bust of the 1980’s that created the Rainy Day Fund constitutional provision, and it was intended to level the peaks and valleys in state revenue caused by what we are now experiencing, volatility in the oil and gas sector.  By using part of the money in the fund, and reserving some to see if it will be needed in the future, legislators could fill part of the $611 million budget gap.

I doubt that much will be gained in the area of permanently un-earmarking some revenues.  The revenues were earmarked in the first place because past legislatures knew the money was needed, and they also knew that there is often little political payoff for funding such things as retirement funds and college scholarships for low income students.  So, to make sure promises could be kept, they earmarked the funding. 

Another difficult issue will be repealing tax credits.  In the recent past the repealing of tax credits has been talked about in the context of lowering overall tax rates, not using the increased revenue to fill budget gaps.  It will be interesting to see how this will play out.  But the good news is that serious thought is being given to balancing the budget in a way other than using the business end of a blunt axe.  That would be a very good thing.          


Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.

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