Oklahoma faces $878 million shortfall for upcoming year

By Sean Murphy - Associated Press

OKLAHOMA CITY (AP) — Without some new sources of revenue, a hole in next year’s state budget that has now grown to $880 million threatens to result in catastrophic cuts to public schools, child welfare and public health and other state agencies, Gov. Mary Fallin warned on Tuesday.

After a meeting in which the governor and other elected leaders certified the hole in next year’s budget to be $878 million, Fallin urged lawmakers to come up with ideas to close the budget gap and prevent deep cuts to state programs.

“If we want to prioritize public education, prioritize public safety, health, transportation, we have to act,” Fallin said.

The governor also threatened to veto any general appropriations bill approved by the GOP-controlled Legislature that closes the budget gap solely with cuts to agency budgets.

The State Board of Equalization also determined that a revenue failure exists for the current fiscal year that will force state finance officials to order cuts totaling $34.6 million to all state-appropriated state agencies beginning next month because of lagging revenues. Public schools will receive the largest cut of about $11.1 million. Cuts to colleges and universities and to the Health Care Authority will total about $4.6 million each.

Public schools also will face an additional cut of $39.2 million because of a revenue shortage in a separate fund earmarked for education, State Superintendent of Public Instruction Joy Hofmeister said.

The board also determined that revenue collections weren’t enough to trigger a further reduction in the state’s individual income tax rate from 5 percent to 4.85 percent.

Secretary of Finance Preston Doerflinger, Fallin’s chief budget negotiator, warned that without an infusion of new revenue, large agencies like the Department of Human Services, Health Care Authority and Department of Public Safety will be forced to furlough employees. He said the state prison system would be unable to pay private contractors for prison beds and Medicaid reimbursement rates would be slashed by 25 percent.

“As it’s known, we’ve made bold proposals to change the trajectory of our revenue collections, but action must be taken now,” Doerflinger said.

Fallin has proposed a massive overhaul of the state’s tax code to include increases in the tax on cigarettes and motor fuel and expanding the sales tax to 164 separate services that are currently exempt. In exchange, her plan eliminates the state sales tax on groceries and the corporate income tax, a notoriously unpredictable source of revenue.

But those plans are facing increased resistance among rank-and-file Republicans, and the House Democrats whose votes would be needed to reach the 76-vote threshold needed to pass a tax increase said they want to see recently enacted tax cuts on individual income and oil and gas production rolled back as part of any deal.

“The solution is easy,” said House Democratic Leader Rep. Scott Inman, D-Oklahoma City. “Just restore the cuts that they implemented to the income tax, gross production tax and tax credits and exemptions. And if they don’t, then the voters of Oklahoma need to know that the governor is coming after your pocketbook.”

By Sean Murphy

Associated Press

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