Oklahoma's revenues came in below expectations for the 10th straight month in October, but Treasurer Scott Meacham said there is hope that economic conditions in the state could soon improve.
Meacham said the state's general revenue fund collections in October were $374.4 million. That's $116.1 million, or 24 percent, below the previous year, and $83.3 million, or 18 percent, below the state's budget estimate.
But Meacham also said he was cautiously optimistic the preliminary October numbers "could show our economy has finally bottomed and we may start seeing some recovery in actual revenue collections."
"Coupled with other positive national economic indicators, I am hopeful that with today's revenue report we have seen the bottom of the recession in Oklahoma and that recovery will begin in the next few months," he said Tuesday. "One month doesn't make a bottom, but it is better than going the other way, which we had been going."
Financial officials have already ordered 5 percent cuts in budget allocations to state agencies through the June end of the fiscal year. Those cuts came after most agencies underwent a 7 percent cut in May, when the Legislature approved the budget for the 2010 fiscal year.
Gov. Brad Henry said the reductions have resulted in "a number of painful actions, from cuts to the senior nutrition program to furloughs at critical agencies such as the Department of Corrections. And unfortunately, agency heads report that more difficult reductions are on the way."
"To prevent deeper cuts and protect basic core services in education, public safety, health care and a variety of other critical areas, I believe we will have to tap the Rainy Day Fund," Henry said. "Oklahoma voters created the state savings account to protect vital services in times of economic emergency, and there is no question we are facing such an emergency."
Citing the continuing revenue shortfalls, state Rep. Mike Reynolds, R-Oklahoma City, has called on the state Board of Equalization to declare a revenue failure, while state Sen. Kenneth Corn, D-Poteau, has started circulating a petition to call the Legislature into a special session. Henry has been reluctant to call for a special meeting of lawmakers, and two-thirds of both the House and Senate would have to sign the petition to hold the special session.
The Legislature is scheduled to convene in regular session in February.
Officials have said state revenue dropped because of low oil and natural gas prices and the depressed economy. In October, the gross production tax on natural gas brought in $23.6 million, about 69 percent below the previous year and 54.5 percent below the state's estimate.
Natural gas for December delivery dropped by 20.3 cents to settle at $4.467 per 1,000 cubic feet on Tuesday on the New York Mercantile Exchange. Meacham said an increase in that price would significantly boost state coffers and joked that "we need to be praying for sleet, snow and ice in the Northeast this winter" so that more natural gas will be used.
For the third time in four months, the state had to borrow from cash reserves to balance its budget requirements. The state now has used $155.4 million in cash transfers to support state agency operations since July 1, money that must be replenished before the end of the fiscal year. Meacham said that money likely will have to come from the Rainy Day Fund, which has about $600 million.
House Speaker Chris Benge, R-Tulsa, said that determining the size of Oklahoma's revenue shortfall for the current fiscal year is complicated by the fact there is not yet a revenue estimate for fiscal year 2011. The Board of Equalization will meet next month to determine that estimate.
"We are working together in good faith to address the revenue hole as soon as possible in a fiscally prudent way," Benge said. "While there are no good options available, the current practice of transferring dollars from other funds will inevitably make for more difficult decisions in the months ahead."