Legislative Staff Release

Published: 18-Feb-2010

Governor Brad Henry, House Speaker Chris Benge and Senate President Pro Tempore Glenn Coffee announced an agreement today on the distribution of funds to fill the state’s budget hole for fiscal year 2010.

The agreement would spend three-eighths of the Rainy Day fund, or $223.5 million, for the budget shortfall in fiscal year 2010. The remainder of the FY10 shortfall will be filled with other state funds, federal stimulus dollars and revenue generated from previously announced targeted budget cuts to agencies.

The deal would also move a second three-eighths of the Rainy Day fund, or another $223.5 million, into the state’s Special Cash account.

If needed, the funds would be available for appropriation in the fiscal year 2011 to offset the shortfall certified by the Board of Equalization this week. 

The agreement will leave one-fourth of the current Rainy Day Fund proceeds in the reserve account. A portion of those dollars could also be accessed if state leaders deemed it necessary later in session.

The agreement also directs additional state funds to education, health care and other areas and preserves a larger share of stimulus dollars for use later in the session.

“By preserving stimulus dollars for the coming fiscal year, we keep Oklahoma in compliance with the federal stimulus agreement. We also made a significant commitment on the use of Rainy Day dollars, earmarking a large share of the reserve account for pressing budget needs while leaving a cushion of funds that could be accessed later this session if necessary,” said Gov. Henry.

“This is an important step forward and I applaud legislative leaders of both parties for their hard work, but it’s important to note we still face many challenges ahead. Many tough decisions will have to be made as we attempt to craft a balanced budget that protects core state services in the next fiscal year.”  

“This compromise helps spread out our reserves to create as much of a soft landing for state agencies as possible. Economic projections indicate our state will recover slowly from this downturn. I hope the estimates are wrong, but we cannot appropriate state dollars on the hope of revenues recovering in the near-term,” said Benge, a Tulsa Republican. “This agreement ensures our state will have reserves to use for the current fiscal year, while saving some for FY11 and beyond.

“With this agreement in place, we can now turn our attention to crafting a budget for FY11. There is still much work ahead of us, but we stand ready to make the touch decisions that will be required to align our state expenditures with our projected revenues,” Benge concluded.

“This agreement takes a conservative budgeting approach and limits the Rainy Day fund spending, which also preserves the Rainy Day fund for future legislative budgets,” said Coffee, an Oklahoma City Republican. “It is important to make sure we continue to budget in a fiscally conservative manner in tough times.”

The deal also reiterates targeted agency cuts announced last month, which will continue 10 percent monthly allocation cuts, equating to an overall 7.5 percent annualized cut for most agencies. There are several agencies that will receive supplemental appropriations to reduce the impact of those cuts, including Corrections, Public Safety, Education, and the Health Care Authority.

The supplementals will include:

Corrections    $7.2 million

Public Safety    $3 million

K-12 Education $54.4 million

Higher Education $25.6 million

Health Care Authority  $33 million

1017 Education Fund $50 million

Rehabilitative Services  $1.2 million

Central Services $700,000

These supplementals work to reduce the core agency cuts to minimize the impact on vital government services. Under the plan, Corrections will see a 5.3 percent total cut for FY10; Public Safety a 4.3 percent cut; Common Education a 3 percent cut; Higher Education will receive a 3.1 percent cut; and the Health Care Authority will not see a cut at all from FY 09 levels.

The emergency funding will also help head off planned trooper furloughs at DPS and reverse the recently-announced Medicaid provider rate cuts of 3.5 percent.
 
Legislation implementing this agreement is currently being drafted and should be considered on the House and Senate floor next week.