Okla. state leaders order 10 percent budget cuts

AP News
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Posted: Dec 16, 2009 10:41 AM

Oklahoma officials ordered budget cuts of 10 percent across state government on Tuesday, after revenue collections on a downward spiral fell short of projections for an eleventh consecutive month.

So far in the fiscal year that began July 1, revenue collections are $717 million below the prior year's level _ a drop of more than 28 percent. State Treasurer Scott Meacham said the budget decline was worse than the oil bust in the 1980s.

"This is the deepest shortfall we've experienced in state government," Meacham said. "We hoped we had begun to see the bottom of the recession in Oklahoma last month, but that does not appear to be the case."

The 10 percent reductions in monthly allocations for December, and likely January, are double the 5 percent cuts that have been in effect since the start of the fiscal year.

Already, some state agencies have furloughed employees, shuttered treatment centers, eliminated travel and offered early retirements.

"Obviously with the deeper cuts, we'll see more of those," Meacham said.

The state's budget is built on revenue projections, and November's collections trailed those estimates by at least 20 percent in every major tax category, including taxes on income, sales, motor vehicles and gross production of natural gas.

Gov. Brad Henry, in a joint statement with the Republican leaders of the House and Senate, said they plan to shield public schools from additional cuts resulting from a $41 million shortfall in a separate education revolving fund that finances a portion of the common education budget.

While public schools still must absorb the 10 percent cuts this month, Meacham said the additional 15 percent shortfall in the revolving fund will be restored under the plan reached by Henry, House Speaker Chris Benge and Senate President Pro Tempore Glenn Coffee.

"We will attempt to protect priority areas such as education by making targeted cuts to agencies, using reserve dollars in the Rainy Day Fund and stimulus accounts and exploring revenue enhancements and efficiency programs," Henry said.

While the governor said all sides agreed tax increases would not be a part of the budget discussions, Meacham said some of the ideas being considered are fee increases, more efficient tax collections and the refinancing of state-issued bonds.

Low natural gas prices and limited drilling activity continued to plague the state budget, with the gross production tax yielding $10.3 million for November, which is $53 million below last year and $14 million, or 58 percent, below the forecast.

Meacham also expressed concern over the decline in state sales tax collections, which generated $123 million for November. That was $26.5 million below the prior year and $36 million, or 23 percent, below the estimate.

Henry and legislative leaders have not decided whether to meet for a special session next month, opting to wait until they receive official state revenue estimates on Dec. 21.