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Governor says legislators are running out of budget options

Governor says legislators are running out of budget options



Okahoma may have to tap fund as agencies face more cuts


Published: October 28, 2009

Gov. Brad Henry, who has resisted using the state’s savings account since it last was used six years ago, said Tuesday that legislators may have no other option to balance this fiscal year’s budget.
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In addition to cutting monthly allocations to state agencies, state officials have borrowed $130 million from other funds to meet state expenses. Those funds have to be repaid by the end of the fiscal year, June 30.

Henry said if revenue trends do not improve significantly, state leaders will have to tap the nearly $600 million in the Rainy Day Fund to balance the budget and protect important programs in education, health care, public safety and other vital areas from deeper cuts.

"As governor, I have scrupulously guarded the Rainy Day Fund so that we would have a safety net in place when Oklahoma faced a true emergency,” Henry said. "With revenues continuing to decline and important services facing larger and larger cuts, I believe we are facing such an emergency.”

Oklahoma faced its last revenue shortfall in 2003, Henry’s first year as governor. The state then had about $70 million in the Rainy Day Fund; all but $100,000 of it was spent.

State revenues have come in about 26 percent below estimates for the first quarter of this fiscal year. State agencies, many of which already had their budgets cut by 7 percent for this fiscal year, were told to cut their state allocations by 5 percent each of the first three months of this fiscal year.

Five percent cuts will continue for the remainder of the fiscal year, officials confirmed Tuesday. Budget officials speculated earlier that the cuts likely would continue.

House Speaker Chris Benge said he is hoping the 5 percent cuts will be enough, "but I have been listening to Oklahoma economists and business leaders who fear the economy may not rebound anytime soon, which may mean deeper cuts will be needed this fiscal year.

"We must work to find the delicate balance between deeper cuts and use of our savings fund to ensure we balance our budget this year, while also positioning ourselves to be able to withstand likely continued declining revenues into the foreseeable future,” said Benge, R-Tulsa.

For a time, there was speculation legislators would return in special session to deal with the revenue shortfall. From Henry’s comments, that no longer appears likely.

"When the regular legislative session convenes in February, we will have a better picture of the overall revenue outlook and more tools available to address the shortfall,” Henry said. "We know the cuts will cause additional hardship for agencies and programs, but given the short-term fiscal outlook, there are no good options available.”

The governor, Benge and Senate President Pro Tempore Glenn Coffee said they had hoped to see improvement in September revenue, a historically strong collection period. But when the figures came in earlier this month, totals again fell short of the monthly allocation and estimate.

Legislative leaders said they would be reviewing agency budgets in the coming weeks.

"Our state continues to face uncertain revenue prospects for the foreseeable future, and the correct course of action is to continue to pare back expenditures throughout state government until better days return,” said Coffee, R-Oklahoma City. "We will continue to be conservative in our budgeting processes and look for waste or duplication in government services, and see the state through this challenging time.”

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