The Oklahoma Board of Equalization certified a revenue estimate for next year that is $1.3 billion less than the current one, the result of a sluggish economy and low oil and natural gas prices that have reduced tax revenue during the past year.
The board, made up of Gov. Brad Henry and other statewide elected and appointed officials, on Tuesday said lawmakers will have about $5.3 billion to spend during the fiscal year that begins July 1 _ a dramatic 20 percent drop from this year's $6.6 billion legislative spending authority.
The board also declared a revenue shortfall of more than $729 million for the current year. Henry, who will use the board's revenue figures to write his executive budget proposal, said ongoing budget cuts at state agencies will reduce the gap to about $530 million by the end of the fiscal year June 30.
State officials ordered 5 percent across-the-board state agency budget cuts in August to cope with declining revenue and later extended the cuts through 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.
"This is a very difficult challenge," Henry said. "But there is no need to panic."
He said budget cuts, constitutional Rainy Day reserve funds and federal economic stimulus money will help fill this year's budget hole and fund state agencies next year.
The Rainy Day fund contains almost $600 million, and the state has set aside another $600 million in economic stimulus money. The governor said any additional cuts should be targeted to preserve vital state services to Oklahomans.
The board will meet again after the Legislature convenes Feb. 1 to certify lawmakers' final appropriation authority. Henry said the financial forecast could improve if estimates by the Oklahoma Tax Commission on the price of oil and natural gas _ major state revenue sources _ turn out to be lower than actual prices in the coming months.
"I hope they're wrong on the conservative side," he said.
State Finance Director Mike Clingman said the commission estimated natural gas will cost $3 per 1,000 cubic feet and oil will sell for about $66 a barrel through the balance of the fiscal year. Next year, the commission's price estimate was $3.92 for gas and about $67 for oil.
Benchmark crude oil for February delivery settled at $74.40 on the New York Mercantile Exchange Tuesday. Natural gas settled at about $5.71 per 1,000 cubic feet.
Attorney General Drew Edmondson, a member of the board, said previous estimates of oil and gas prices by the commission had been overly optimistic.
"Is there a chance of being overly pessimistic this year?" Edmondson said.
"Let's hope so," Clingman responded.
The board certified a $57 million appropriation next year for the Oklahoma Higher Learning Access Program, which provides college scholarships to high school graduates who make good grades and stay out of trouble. The funds, $3 million more than the previous year, pays for scholarships for 19,600 Oklahoma college students, officials said.
Superintendent of Schools Sandy Garrett, also a board member, said the program does not face budget cuts although a teacher stipend program she administers, the National Board Certified Teachers Program, may not be able to afford $5,000 bonuses to the 296 teachers who completed the program this year because of the budget shortfall.
"It means they won't get a bonus," Garrett said. "We think that was a promise to our teachers."