Oklahoma Agency Budgets Feeling the Pinch From Revenue Drop

DALLAS - The continuing decline in Oklahoma's monthly revenue has forced a 1.4% cut in state agency budgets for June, the final month of fiscal 2009.

Preliminary reports show May general revenue fund collections failed to meet the official estimate for the fifth straight month.

State Treasurer Scott Meacham said total revenues for the first 11 months of fiscal 2009 are 94.9% of the amount estimated when the Legislature approved the current budget.

The state constitution mandates across-the-board cuts if actual collections are less than the amount appropriated. Lawmakers cannot allocate more than 95% of the official revenue estimate by the Oklahoma Tax Commission.

"Unfortunately, revenue collections have dropped well below the official estimate and even lower than Tax Commission projections made in February," Meacham said. "Fortunately, the shortfall is relatively small - only 0.1% on an annual basis."

The state last trimmed agency budgets due to declining revenue in fiscal 2003.

State agencies were to receive a total of $480 million tomorrow in the final disbursement of fiscal 2009, but Meacham said the allotment will be reduced by $6.8 million. He said most agencies should be able to make up June's shortfall by drawing on unspent funds remaining in the fiscal 2009 budgets.

Collections in May totaled $357.1 million, which is $136.5 million, or 27.7%, less than in May 2008 and $99.8 million, or 21.8%, below the estimate.

May collections were less than the estimate in every major category, including income tax, sales tax, energy production taxes, and motor vehicle taxes.

Gov. Brad Henry said fiscal 2009 has been a challenging year for state agencies and programs.

"Fortunately, state agency heads had already been making contingency plans with the worsening revenue picture in mind, and the reduction in the monthly allocation is fairly small," Henry said. "That does not mean it will be easy for all agencies to absorb this reduction, but it certainly could have been much worse."

Meacham said lower-than-expected energy prices are causing tax collections to drop in several sectors.

"It appears low oil and gas prices are driving the economic downturn throughout Oklahoma's economy," the treasurer said. "Income-tax withholding is down $30 million or 15% for the month, gross production tax collections are only 26% of where they were last year, and sales taxes are down more than 10%. The largest area of decline to sales tax collections has been in the oil and gas sector."

The gross production tax on oil and natural gas generated $27.2 million in May, which is $76.2 million, or 73.7%, below May 2008 and $51.1 million, or 65.3%, below the estimate.

General fund collections so far in fiscal 2009 total $5.08 billion, which is $244.4 million, or 4.6%, less than in the same period of fiscal 2008 and $271.2 million, or 5.1%, less than expected.

State sales tax collections totaled $122.7 million, which is $15.1 million, or 11%, less than in May 2008 and $20.1 million, or 14.1%, less than expected.

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