Meacham grows “less pessimistic” about tax revenue picture
Published: November 23rd, 2009
From Patrick B. McGuigan
Oklahoma Treasurer Scott Meacham, anticipating a possible special session to address reduced state tax revenues and appropriation of money from the Rainy Day Fund, said the Sooner State’s financial troubles have created two basic schools of thought among state officials.
Beyond debate about whether or not to access the fund, officially designated the Constitutional Reserve, one group wants “deeper budget cuts now, including more across the board and some more targeted cuts. This way of thinking would be more aggressive on the spending side now. The other school of thought is to be more focused on targeted cuts right away, but avoiding greater across-the-board cuts.”
Generally speaking, Republicans leading the Legislature fall into the first group, while the governor and Meacham himself fall into the second category. Meacham made his comments in an interview with this reporter.
While not dismissive of concerns, the treasurer said he is not persuaded by analysts who say government revenues will remain flat for a few more years. Asked if that meant he was optimistic, Meacham replied, “I’m not sure ‘optimistic’ is the right word, but I am less pessimistic than a couple of months ago.” After 10 months of reports where he has detailed tax revenues below forecasts (and lower in real terms than a year prior), Meacham now believes “we have more bad months behind us than we have ahead of us.”
After ordering 5 percent across-the-board cuts at all state agencies this fiscal year, Meacham says it is time for legislators to use some of the rainy day fund and to make targeted cuts, so that “core things we do in government” can avoid further reductions. Meacham said those core functions include public safety, corrections, mental health, human services and veterans’ benefits.
Earlier, at a November 10 press conference, Meacham explained he was “cautiously optimistic” about the fiscal picture. He noted, “While the shortfall for the fiscal year prior to October was 26 percent below the estimate, October’s shortfall was 7.8 points lower at 18.2 percent.” Feeding the better picture, Meacham said then, is the fact that corporate income tax receipts improved, and “those tend to be the most tied to the national economy,” which began a slow recovery over the past three months.
Despite the thread of optimism in Meacham’s analysis, in October revenues came in below estimates and actual prior receipts for the tenth straight month. At his press conference, Meacham said in response to a question from this reporter, it is possible that revenues could remain low for another year or more. Indiana Gov. Mitch Daniels and others, believe revenues in most states will take years to return to 2007 and 2008 levels. In Oklahoma, analysts for both the Oklahoma Council of Public Affairs and the Oklahoma Policy Institute have predicted years of flat revenues.
For his part, Meacham pointed to differences in income streams between Midwestern states like Indiana and energy producing states like Oklahoma, saying, “Natural gas prices could lead to a rebound in the gross production taxes.” He observed, “Natgas prices have been ‘bearish’ for 10 months, and now seem to be getting better.”
In last week’s interview, Meacham, who announced this month he would not seek reelection as Treasurer, responded to questions about his experiences in public office. Meacham said he is most frustrated by “the pervasive partisanship that runs through the [state Capitol] building. There is a constant struggle for power that falls under the Republican or Democratic banner.” Meacham, a banker prior to entering government service, said, “It would be awful to try to run a bank in the conditions of partisanship that prevail in government.”
As for “most satisfying experiences” in government, Meacham said he is “amazed we work as well as we do. … I have been impressed with the dedication and commitment of many state government employees. I’ve learned that most of them are dedicated and committed people. Regardless of the area for which they are responsible, most employees are very dedicated to their job. They choose to work hard, and with great compassion, on the mission of state government.”