Oklahoma Treasurer Scott Meacham said Monday that even with budget cuts that have already been made, state government will face a $530 million shortfall this year.
And things don't look much better for the next fiscal year, which starts in July. Meacham said lawmakers will have about 20 percent less in funding than they budgeted for the current fiscal year due to the sagging economy and low energy prices.
Lawmakers already have made some cuts, reducing state agency budgets by about $279 million so far for the fiscal year that ends June 30. The projected $530 million hole includes an $80 million shortfall in a special fund for public schools.
Lawmakers can order more cuts and use money from the constitutional Rainy Day reserve fund, federal economic stimulus funds or other sources to balance the budget, Meacham said. The Rainy Day fund contains almost $600 million, and the state has set aside another $600 million in economic stimulus money.
Gov. Brad Henry said the revenue projections are disappointing and pose "some very difficult challenges" for state officials, who are required to balance the state budget.
"As we work to address this historic shortfall and balance the budget, Oklahomans who rely on state programs and services will feel the pinch as additional cuts are imposed to reflect the latest revenue estimates," Henry said.
While gross production taxes on oil are expected to increase by $71 million in the fiscal year that begins July 1, revenue from income taxes, sales taxes and the gross production tax on natural gas are all forecast to decline, leaving lawmakers with about $5.3 billion to spend, a drop of $1.3 billion from the current fiscal year.
Henry said the reserve funds will be key to the state's effort to protect core services to Oklahomans.
"We are already working with legislative leaders on a budget framework that will include the use of reserve funds, targeted cuts, efficiency programs and revenue enhancements," the governor said.
State officials ordered 5 percent across-the-board budget cuts to state agency budgets in August to cope with declining revenue and later extended the cuts to June, the end of the fiscal year. Last week, the cuts were doubled to 10 percent for December and January as revenue continued its downward spiral.
The revenue figures released by Meacham are preliminary and must still be approved by the Board of Equalization, which will determine how much revenue lawmakers will be authorized to appropriate during the 2011 fiscal year. The board is scheduled to meet Tuesday.
Meacham said the Legislature's total spending authority for 2011 is forecast at about $5.3 billion, which would make next year's state budget the lowest in at least five years. Total general fund revenue is estimated at $4.4 billion, a decline of almost $967 million, or 17.6 percent, from the current fiscal year.
Legislative leaders said sacrifices will have to be made as lawmakers work on the budget. The Legislature will convene its 2010 regular session on Feb. 1.
"Our state has made it through economic hardships before, and I am confident we will again as we work in a bipartisan way to make sound fiscal decisions for the people of Oklahoma," said House Speaker Chris Benge, R-Tulsa.
"It will be our task to make the necessary reductions in a fair and equitable manner," said Senate President Pro Tem Glenn Coffee, R-Oklahoma City. "This is an opportunity to restructure government into a more efficient and effective system of providing for the public."