May 24, 2016

Immediate Crunch Eased; Future Shortfalls Possible

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Trevor Brown/Oklahoma Watch

A number of one-time funding measures will help stave off potentially crippling cuts to K-12 education, health care and other core services as part of a budget deal announced Tuesday by Gov. Mary Fallin and legislative leaders.

But some key lawmakers said the agreement, which will need to pass the Legislature by the end of the session on Friday, only delays the need for more painful reductions and could create more financial troubles when the Legislature returns next year.

“We have not hit the bottom of this budget downturn,” said Senate Democratic Floor Leader John Sparks, D-Norman. “So instead of addressing our long-term problems, the Republicans went to Wall Street to cover our bad checks.”

The $6.8 billion spending plan for the fiscal year that begins July 1 includes a mix of spending cuts and recurring savings to close the state’s $1.3 billion budget shortfall. But it also hinges on one-time funding moves, including borrowing $200 million through road bonds and tapping $144 million from the state’s “Rainy Day Fund” to balance the budget.

The road bonds, however, won’t be used to finance new, previously unfunded transportation projects. Instead, they’ll be used to free up appropriated money to offset cuts that would have occurred elsewhere in the state’s budget.

Rep. Richard Morrissette, D-Oklahoma City, called this a “sleight of hand” that will only hurt the state in the future.

“We are using the credit card to balance our budget,” he said. “This is basically deficit spending to pay current bills.”

Some Republicans, including Senate Finance Committee Chairman Mike Mazzei, R-Tulsa, expressed similar reservations, saying one-time revenue fixes weren’t the best way to address the state’s structural budget problems.

“I unfortunately come to the conclusion that we didn’t push hard enough,” Mazzei said. “We didn’t push hard enough on tax credit issues, we didn’t push hard enough on some (spending) issues, and we kind of gave in at the end on the total amount of borrowing.”

Senate Appropriations Chairman Clark Jolley, R-Edmond, said that like many other conservative lawmakers, he was not “overly happy” with the need to borrow that much money to balance the books.

But Jolley noted that the Legislature was running out of options and time to craft the spending plan. He said many of his concerns were minimized after gaining assurances from the state’s bond advisor that the additional debt wouldn’t hurt the state’s credit rating.

“In fact he said we could do $300 million this year, $300 million next year and the Capitol bond issue,” Jolley said. “And we would still be within our safety limits.”

Jolley said he believes the Legislature has been “aggressive” in pursuing bills to eliminate or cap tax credits and raise recurring revenues.

Rep. Earl Sears, R-Bartlesville, who chairs the House Appropriations and Budget Committee, said the package of revenue-raising bills moving through the Legislature would provide continuing help for future budgets. He said he is optimistic that the state’s revenue picture will improve as the economy turns around.

“There is no question that the great state of Oklahoma has gone through the biggest economic downturn in its history,” Sears said. “But I refuse to believe that this is our worst day and that brighter days are not ahead.”

“For those who are returning, we will have additional funds to work with,” Sears said. “And we could still have a (budget) hole – we possibly could – but I don’t think it will be $1.3 billion.”

Other lawmakers, meanwhile, said the Legislature hasn’t done enough this year.

Earlier in the session, lawmakers voted down a proposal that would have yielded a projected $158 million next fiscal year and $190 million the following year by increasing the cigarette tax by $1.50 a pack.

That proposal, however, fell victim to political posturing, partisan bickering and intense special-interest lobbying.

Democrats also criticized Republican legislative leaders for failing to allow a vote on a Medicaid expansion plan, which would have opened the door to hundreds of millions of federal dollars with a 9-to-1 state match.

Sparks said he is also upset the Legislature didn’t consider a proposal to roll back the most recent cut in the top income tax rate. That would have saved the state about $150 million next year.

Sparks said he hasn’t talked with a single Democratic lawmaker who plans to vote for the budget. But since the budget just needs a simple majority to be sent to the governor, Republicans might not need Democrats’ support.

The budget bill is expected to be heard Wednesday on the Senate floor and Friday – the last day of the session – on the House floor.

If there is a holdup in either chamber, the Legislature would be forced into a special session to reconsider the budget.

That is something Morrissette said he hopes will happen.

“We can do this better,” he said. “If we have a special session, so what.”

  • Tom Smith

    Oklahoma is in a downturn alright, but it misleading to blame it all on economy. You shoot yourself in the foot with tax reductions, rebates, credits, and then blame the economy? This is a revenue problem and it was created intentionally to make agencies fail and then privatize them. That’s the agenda. Anyone who looks will see. Just keep watching through the smoke screens they create to distract you from the agenda. Key words: libertarian, ALEC, ROPE, Koch. Learn what’s going on — or you can just keep voting the same and we’ll all see just how the bottom looks and feels. Things are never so bad that they can’t get worse.

    • JustUs

      And here I thought I wasn’t thinking. Spot on Tom.