Meacham says 2010 Oklahoma budget challenges ‘unmatched’ in modern history
By Patrick B. McGuigan
Oklahoma state Treasurer Scott Meacham said he believes the Oklahoma economy will grow modestly in the fiscal year that began July 1, resulting in an improved state government revenue picture for his successor and others who will fret over Fiscal Year 2011 and later state budgets.
Meacham did not seek reelection and will leave office next January. In a press conference today (Tuesday, July 13) at the state Capitol, Meacham answered questions about his analysis of the just-concluded fiscal year 2010, which he said was not only difficult, but also “unmatched by any year in modern Oklahoma history.”
He added, however, that although Oklahoma had a tough year economically, with resulting tight revenues for state government, he considered Oklahoma’s situation “not good, but not as bad as some other states.” He stressed repeatedly that budget cuts developed over the past two year will pay dividends for policymakers as government revenue rebounds in an improving economy.
Looking to the coming year, Meacham noted the new fiscal year begins with $167.7 million in hand after agency allocations were made for July. In all, $120 million will go into a special cash fund, with $47.7 million held in a cash flow reserve fund. Improved tax collections in gross production, sales and motor vehicles contributed to Meacham’s optimism.
In response to a question from CapitolBeatOK, Meacham said the cut in common education funding for the year just passed was 2.9 percent. State Department of Education officials have asserted the cut was closer to 8 percent after all factors are incorporated.
Meacham said, “of course,” his hopefulness was muted by the possibility of a “double dip” national recession, but “we don’t expect that.” Bottom line, he contended, “The picture is not as bleak as I was last year at a this time.” He also said increases to the annual deposit into the Constitutional Reserve (popularly known as the Rainy Day Fund) add to his belief the state can weather bad years.
The Great Recession has been called by Alan Greenspan, “a once in a lifetime event.” Meacham said that’s “sort of like a 100-year flood, but it may seem like it’s been happening every week” in recent times.
Meacham reported that state government agencies are “learning to live” with spending reductions made over the past two years, but without federal stimulus money a large rainy day fund, “may have to deal with further cuts to incorporate actual revenue.”
Several reporters asked Meacham about the potential for a revenue dip if state income tax revenue increases enough to “trigger” additional tax cuts. He did not predict that, but said from a policy viewpoint, future legislators and the state’s next governor might want to consider “a different formula” before additional cuts in state income tax rates take effect.
As in prior encounters with state Capitol reporters, Meacham said state revenues will for the foreseeable future remain closely tied to the vitality of the natural gas market and gross production taxes. He cautioned the present picture is influenced by improved oil prices, but that fundamentally, “Oklahoma is a natural gas producing state.”
In the only explicitly political note during his press conference, in response to a question, Meacham, a Democrat, reiterated his support for state Rep. Ken Miller, a Republican who is seeking to become the next state Treasurer. “Ken understands the job, and is the best postured to handle it,” Meacham said.
David Blatt of the Oklahoma Policy Institute attended the briefing and answered questions from reporters after Meacham concluded. Blatt predicted it will be “two or three years before state government revenue is fully recovered to previous levels.”
Blatt said there seems to be recognition in the current campaign season “that the state faces serious budget issues, and knowledge that this is, overall, a long-term problem.” Blatt said the state faces a challenge to align projected revenue with spending obligations.
CapitolBeatOK asked Blatt about the role of State Question 744, a proposed revenue shift backed by the Oklahoma Education Association that would significantly increase spending on public education. Blatt said, “I need a short raincheck on that,” saying his group’s analysis of the challenges that would flow from popular approval of the ballot measure will be released next week. He said, “we have real concerns about passage of that.”
S.Q. 744 had drawn critical comments from Janet Barresi, the leading Republican contender for superintendent of public instruction, and a carefully neutral response from state Sen. Susan Paddack, the top candidate in the Democratic primary.
Blatt also said he was less optimistic than Meacham about the medium-term revenue picture for state government. While agreeing the Fiscal Year 2011 process could be less stressful than just-concluded FY 2010, Blatt said he is “worried about the 2012 and 2013 processes.
Blatt concluded that the loss of federal stimulus dollars and a tight supply of money for reserve funds means “it will be hard to balance future budgets without additional revenues or further budget cuts.”