In fits and starts, challenging budget is fashioned
By Patrick B. McGuigan
Last Thursday, Oklahoma Governor Brad Henry and legislative leaders announced the broad parameters of a $6.7 billion budget deal. As this week began, its implementation remained likely, but not assured.
As the governor and fellow Democrats hoped, the accord included notable “revenue enhancements.” Disappointing many Republicans, only $100 million will remain in the Constitutional Reserve (the Rainy Day Fund).
As anticipated, funding for common education presented difficult choices. Treasurer Scott Meacham confirmed education was the last matter resolved: “It was about 9:30 p.m. Wednesday night (May 19). It took a lot of our time. After all, it is over half the budget when you consider Higher Ed, Common Ed and CareerTech.” Education spending cuts were held to low single digits, while smaller agencies absorb cumulative two-year cuts greater than 15%.
Complaints arose quickly from partisan flanks of the bipartisan team — House Speaker Chris Benge and Senate President Pro Tem Glenn Coffee for the Republicans and the governor for Democrats.
Friday afternoon, House Minority Leader Danny Morgan of Prague told CapitolBeatOK his caucus would “on a case-by-case basis” support the emergency clauses needed to pass budgets. The emergency assures a law goes into effect after the chief executive’s signature. Otherwise, implementation is delayed 90 days.
By Friday night (May 21), things were jumbled. An insurance claims fee (House Bill 2437) to provide $78 million of “enhancements” needed for the deal did pass the House 60-31, but enough members of both parties withheld support for the emergency (68 yes votes were needed) to create confusion and delay.
Another challenge came Friday morning in the House. Speaker-designate Kris Steele of Shawnee, presiding during debate over S.J.R. 61, a bill designed to create an “in lieu of” levy to avoid massive tax hikes on business “intangibles,” ruled the matter germane. He was challenged by state Rep. Mike Reynolds of Oklahoma City, a Republican. Most of those who stood to second Reynolds were Democrats. Debate and discussion over that and related issues took about two hours.
Despite such jolts, the general appropriations bill cleared both chambers on Friday. Tax credit moratoria which had failed to gain “emergency” support earlier in the week also cleared both the House and Senate on Friday.
State Rep. Scott Inman of Oklahoma City, leader-designate for House Democrats, told CapitolBeatOK Friday afternoon: “We are relatively pleased with the budget, considering that the Republican leadership was willing to allow even deeper cuts of 7% to 10% more. We feel as if our efforts were important in holding budget cuts to a minimum We believe the hospital provider fee and other revenue enhancements could have gone a lot way to close more of that gap, but the Republicans were not willing to work with us on that.”
State Sen. Charlie Laster, Senate Minority leader, told Capitol reporters Thursday evening, “I have some disappointment, certainly, that a hospital provider fee is not part of the enhancements.” He later added, “I have every reason to think that proposal will be back on the table next year.” Laster also told said, “I remain concerned about the effects of the whole spending outline for this year in terms of effects on rural Oklahoma.”
Sen. Laster, pressed by reporters on why REAP (Rural Economic Action Plan), a part of the final budget deal, was so important to Democrats, said, “This might best be understood as another one of the urban vs. rural issues. An expression around the Capitol is that one man’s good project is another man’s pork barrel project. REAP is analogous to the water issues and the safety programs. We believe those help provide a better life out in the rural areas. For us, these are good programs. We know there’s a difference of opinion on that.”
Democratic solidarity strengthened Gov. Henry’s hand in late negotiations and in non-budgetary battles, including his vetoes of an “open carry”gun bill and his negative verdict on H.J.R 1054, the bill to authorize legislative leaders to pursue litigation against the controversial federal health care bill. Late Friday, the governor vetoed another pro-life measure.
Rep. Mike Reynolds called the new budget for Fiscal Year 2011 “a disaster,” but House Speaker Benge evoked Will Rogers when he quipped, “I’ve never seen any budget that Rep. Reynolds liked.”
Although Benge told fellow Republicans the budget included spending he still found objectionable, he defended the overall product, telling reporters, “We managed to get this done and leave some money in the reserve fund in a position to be deployed next year. The tax credit moratorium revenues are anticipated to be on the cash side for two years. There is a potential for further cuts in 2012. The members are certainly aware of that.”
Benge, like Coffee and Henry, defended the process that yielded a framework in time to avoid a special session. “I think the process is better,” Benge said. “We’ve worked to make it so. That’s why we require 24 hours to lay it over and monitor changes in the bills. I’m not sure we can ever have a fail-safe system.”
President Pro Tem Coffee, in his Thursday briefing, characterized the budget overall as “a mixed bag. This place is built on compromise. I do have several concerns. This is built on federal dollars and a huge amount of [federal] stimulus money. I think it’s clear the federal government is broke and we in the states cannot continue to rely or count on that money.”
He admitted disappointment at leaving only $100 million in the Rainy Day Fund, observing, “There is a likely $800 million hole for next year.”
As for the process that resulted in the budget, he defended the principal players – himself, Benge and Henry – while acknowledging disagreements. As for the legislative process, he said, “In the conference committee process we have a wide range of members. Some are old, some are new, some are in between. They each make up their own mind on how they will vote.”
Treasurer Meacham, Gov. Henry’s closest budget adviser, said the Great Recession presented unprecedented challenges to government leaders: “Never before has a governor and a Legislature faced a challenge like this.”
CapitolBeatOK asked Meacham if future budgets should consider sale of state assets like CompSource, the public-private entity that controls much of the state workers compensation insurance market, and further accelerated sales by the School Land Commission.
Meacham replied with a nuanced perspective: “Governments have to be careful about the things they do in budget situations like this, decisions that could cost them dearly down the line. The related question is should you be looking at assets and potential one-time gains in resources? Of course you should, absolutely. Government should be looking at what it really needs, what should be retained and what could be converted into an asset.”
For all the difficulties, challenges and criticisms that still remain, both participants in the process and analysts on the outside looking in begin the final week of the 2010 session believing the Legislature and the governor will finish work on deadline – by 5 p.m. on Friday, May 28. Meacham told reporters in his budget briefing: “We’ll get out of here by next Friday.”