Speaker Benge’s energy stabilization fund measure on floor calendar
By Patrick B. McGuigan
Speaker of the House Chris Benge is advancing innovative legislation designed, as he put it, to “smooth out the rough spots” in state revenue collections. The state’s reliance on energy prices and taxes remains a source of volatility in budget cycles, and this year has been no exception. Benge told CapitolBeatOK he looked forward to further discussion of the issue on the House floor next week.
When the proposal was outlined last month, House staff summarized the measure’s intent, “The plan calls for an automatic collection of any gross production taxes above a simple three-year average for deposit into the fund. In years when gross production taxes collected fall below the three-year average, the fund will automatically deposit the difference into the state’s general revenue fund to help mitigate budget shortfalls. The automatic deposits and collections will help minimize the impact of the constant fluctuations in energy prices, which often heavily influence revenue collections and the state budget.”
The proposal, House Bill 3032, has attracted strong support from across the political spectrum. Brian Downs, Executive Director of Oklahomans for Responsible Government, told CapitolBeatOK, “The idea of evening out the natural fluctuations in gross production revenue is a good one. At the same time, it is important for state government to cut unnecessary spending when revenues fall below projections.”
H.B. 3032 is co-sponsored by state Rep. Mike Jackson of Enid and state Sens. Patrick Anderson of Enid and John Sparks of Norman. Jackson, Anderson and Benge are Republicans, while Sparks is a Democrat.
A detailed positive assessment of the Benge plan came from the Oklahoma Policy Institute’s David Blatt, who commented, “According to a spreadsheet accompanying the Speaker’s press release, had the Energy Stabilization Fund been in effect over the past decade, its balance would have grown to $909 million by FY ’09, of which $576 million would have flowed back to the GR Fund this year and next (FY ‘10-11) as collections fell.”
On February 25, the House Appropriations and Budget Committee gave unanimous 16-0 approval to H.B. 3032, which today (Wednesday, March 3) went onto the House calendar for floor consideration. Observers widely anticipate the measure will pass early next week, before the Thursday (March 11) deadline for House measures to be forwarded to the Senate.
Speaker Benge told CapitolBeatOK: “The unanimous support this bill received in committee shows this isn’t a partisan issue; this is about what is good for our state in the long-term. I look forward to discussing the creation of this fund on the House floor next week. This legislation is still a work in progress and I am willing to work with other members to determine the best way to structure this stabilization fund in order to minimize the uncertainty energy price volatility brings to our budgeting process.”
Blatt of OPI, in his Oklahoma Policy blog, commented that it’s not clear to him what impact this particular energy stabilization fund might have on Rainy Day Fund deposits. However, he said projections based on a similar proposal “found that mid-2000s revenue growth was vibrant enough to have allowed for the Rainy Day Fund to be filled up to its 10 percent cap and beyond even with surplus gross production revenues directed to a separate reserve.”
Blatt’s group previously advocated the stabilization concept in legislation touted by state Sen. Ken Corn, a Poteau Democrat. Blatt said at that time “increasing the cap on the Rainy Day Fund and creating a specific Gross Production Tax Reserve would greatly increase available reserves heading into a downturn and cushion the magnitude of budget cuts once revenues fall. Increasing the size of our reserve funds would involve accepting more modest spending growth during the peak years of growing revenues. That is a trade-off most Oklahomans are likely to endorse.”