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Oklahoma treasurer says limit on account is too low

Oklahoma treasurer says limit on account is too low

BY MICHAEL MCNUTT   - The Oklahoman

Published: November 8, 2009

Oklahoma needs a larger savings account, state Treasurer Scott Meacham said.

The state constitution limits the capacity of the fund to 10 percent of the previous year’s certified general revenue receipts. Gov. Brad Henry tried in 2006 to get the cap raised to 15 percent.

"The Rainy Day Fund is not enough,” said Meacham, the governor’s chief budget adviser. He said the 15 percent cap would be in place, "but for the fact that it hit a brick wall in the Legislature.”

Had legislators gone along with the idea, voters would have had to approve it because it alters the Oklahoma Constitution.

Ten percent is not enough "when you’re such an energy-dependent state as Oklahoma,” Meacham said.

Taxes on natural gas and oil production provide a large chunk of the state’s yearly revenue.

The Rainy Day Fund, approved by voters in 1985 after the oil bust a couple years earlier, was filled to capacity for the first time in 2005.

In 2004, Oklahoma voters overwhelming approved Henry’s proposal to tighten spending restrictions on the reserve fund.

In past years, the money from the fund went not only to solve state budget crises, but for such things as golf courses and cloud seeding. Some of the money still could be used for nonemergency purposes such as a weather center, but not as much as before.

Oklahoma faced its last revenue shortfall in 2003, Henry’s first year as governor. The state faced a $700 million shortfall and had about $70 million in the Rainy Day Fund; all but $100,000 of it was spent.

Since then, the reserve fund has been built up. It has been at its maximum amount since 2005 and has nearly $600 million.

Before the changes approved in 2004, the Legislature and the governor were able to spend up to half the money each year on whatever projects they labeled as "emergencies.”

The new law allows the Legislature and governor to spend only 25 percent of the money on projects labeled emergencies and makes more money available for years with budget shortfalls. The remaining 75 percent is for budget stabilization, which means shoring up the budget when revenue collections fall short of estimates.

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