OPEA

With only two months of revenue reported for FY 2010, state leaders are anticipating the September revenue report to be released, Tuesday, October 13 to give a clearer picture of what is happening with the state budget.

“July and August revenues were 18 and 28 percent below the estimate on which the state budget was based,” said OPEA Policy and Research Director Trish Frazier.  “However, state leaders have implemented five percent across the board cuts and borrowed funds from various state accounts to help fill the gap.

“The revenue report for September, due Tuesday, October 13, will tell if agencies will be forced to take deeper cuts,” continued Frazier. “Hopefully, revenue will not continue to fall and the recovery has started.”

According to information provided by the Oklahoma Policy Institute, the most likely scenario will be an annualized shortfall of 18.5 percent or $623 million.  If the legislature uses 3/8’s of the Rainy Day Fund that can be allocated in a budget shortfall and another quarter, which can be appropriated in an emergency, the cuts should be held to five percent.

“The governor and the legislature must use approximately one half of the Rainy Day Fund in order for the cuts to be limited to five percent,” said Frazier.  “The state can continue to borrow from funds to help cash flow and limp through to legislative session.”

“The most serious issue about the budget situation is that there seems to be no plan,” concluded Frazier.  “Everyone is trying to guess the strategy being employed by state leaders, if there is one.  The House and Senate should be holding interim budget hearings to determine the shortfall’s effect on critical services.”

“The legislature is holding interim studies on every issue you can imagine, except the state budget,” said Frazier.  “Instead of studies on the privatization of CompSource or child welfare, each appropriations subcommittee should be asking the hard questions of state agencies…Have they cut out-of-state travel and conferences?  Have the cuts been to both contracted and state operated functions of the agency?”

“Most of the agencies are concentrating on state operated functions, by not filling positions using furloughs,” said Frazier.  “Contractors say they are partners with the state.  They can partner in the pain also.”