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Revenue decline expected in Oklahoma

Early projections show the Oklahoma Legislature will have less money to spend on state programs in the upcoming fiscal year, prompting the state's finance secretary on Wednesday to warn agency leaders to prepare for flat or reduced budgets.

Secretary of Finance Preston Doerflinger said early estimates show the Legislature will have about $6.9 billion to appropriate for the fiscal year that begins July 1. That's about $273 million, or 3.8 percent, less than lawmakers spent on the current fiscal year.

The revenue estimates are expected to be certified on Thursday by the Oklahoma Board of Equalization and will be used by Gov. Mary Fallin to prepare her executive budget, which is often a starting point for budget negotiations with the Legislature.

"Barring a big revenue increase, it looks like the next state budget will be slightly smaller than last year or flat," Doerflinger said.

However, as a result of Tuesday's decision by the Oklahoma Supreme Court to toss out a bill to cut the state's top personal income tax rate and divert $120 million in tax collections for Capitol repairs, Fallin plans to make a motion to add about $103 million back into next year's budget. If approved by the board, that would reduce the budget hole to about $170 million, or about 2.4 percent less, than what was appropriated last year, Doerflinger said.

The board will meet again in February to make a final determination on how much will be available for the Legislature to appropriate, but Doerfliner said a major change in the revenue picture is unlikely.

Although Oklahoma's economy is continuing to improve and overall gross collections to the state treasury are up, Doerflinger said collections to the general revenue fund, the state's main operating account, are dwindling as a result of legislation over recent years to divert money directly to pay for things like transportation, education, pensions, and various tax credits and incentives.

In 2007, Doerflinger said more than 55 percent of overall revenue collections went to the general fund. This year, that figure is down to about 45 percent.

"Policymakers now control less than half the revenue collected by government because the general revenue fund is losing ground each year," he said. "Even though most of the redirected funds are going to necessary, noble purposes, the trend should still cause pause."

Rep. Tom Newell, R-Seminole, said: "We knew all along that even with a flat budget that we were going to have to make some tough decisions. Now, this just makes those decisions even tougher."

Education officials, who have been pushing for more funding as a result of increased enrollment, say public school students are likely to suffer from flat or reduced budgets.

"It's our students who will be sitting in overcrowded classrooms," Oklahoma Education Association President Linda Hampton said in a statement. "It's our students who will be retained in third grade this year if they cannot pass the reading test, who won't receive the needed remediation. It's our students who won't have access to technology and will be forced to use outdated textbooks.

"You can't expect everything and pay for nothing."

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