With energy prices sagging, Oklahoma House Speaker Chris Benge said Monday he is studying the need for an energy stabilization fund to mitigate the financial fallout from volatile oil and natural gas prices.
The fund would capture excess revenue when prices are high and distribute it when they are low, thus providing a cushion to avoid massive budget cuts whenever prices fall, Benge said.
The state is facing a revenue shortfall of more than $729 million due to the sluggish economy and low energy prices. Officials ordered 5 percent across-the-board cuts to state agency budgets in August to cope with declining revenue and later extended the cuts through the end of the fiscal year June 30. The cuts were doubled to 10 percent for December and January as revenue continued its downward spiral.
"Oil and gas is very difficult to predict. There are so many factors that come into play," Benge, R-Tulsa, said during an interview with The Associated Press. "How do you take out some of the volatility in our energy collections?"
Similar to the state's constitutional Rainy Day reserve fund, state officials would set a benchmark for oil and gas collections that are available for appropriation and whatever is collected above that amount would be set aside in the energy stabilization fund for distribution when prices are low.
The Rainy Day fund captures up to 10 percent of general revenue funds collected in excess of the annual estimate certified by the Board of Equalization. It contains about $600 million, money that lawmakers are expected to tap later this year to help fill the state's budget hole.
At least three bills have been filed in the state Senate to increase the maximum annual contribution to the Rainy Day fund to 15 percent of the general revenue fund estimate. The legislature convenes its 2010 regular session on Feb. 1.
Benge said he is not in favor of appropriating all Rainy Day fund revenue to prop up the current budgets.
"It's good to have a healthy reserve fund," the House speaker said. "I think we would be very smart and very prudent if we left some for the next Legislature."
The state Board of Equalization, made up of Gov. Brad Henry and other statewide elected and appointed officials, has estimated lawmakers will have about $5.3 billion to spend during the fiscal year that begins July 1 _ a 20 percent drop from this year's $6.6 billion.
Benge said declining revenue will force lawmakers to prioritize spending in four key areas _ education, public safety, transportation and health care.
"You have to have a good public education system. You have to have a good system of roads. And you have to be able to keep the streets safe," he said.
Spending may be sharply curtained in other _ as yet not determined _ areas that lawmakers believe are not core government functions, Benge said.
"I think some restructuring is going to be in order, because we just have to," he said.