DALLAS - Oklahoma Treasurer Scott Meacham said state agencies could face further budget cuts due to a precipitous decline in tax collections that began in January and continued in June.
General fund collections of $5.52 billion for fiscal 2009 were $428 million less than expected and $435 million less than in fiscal 2008.
General fund revenue in June, the final month of fiscal 2009, totaled $441.2 million, Meacham said, which was $156.7 million less than expected. Revenues were down $190.3 million from June 2008.
"It appears very likely at this point that fiscal year 2010 revenues will be less than originally estimated by the Tax Commission," the treasurer said. "That means a revenue shortfall is probable."
General fund revenue declines occurred across the board, Meacham said.
"We're seeing a slowdown in every revenue source," he said. "Only sales tax collections were higher than collections in the prior fiscal year, but they failed to meet the estimate."
There are no indications of a revenue rebound, according to Meacham.
"We have yet to see signs of recovery," he said. "The price of natural gas, due to its large impact on the overall state economy, will need to rise before we begin to rebound."
Meacham, who is the chief budget officer for Gov. Brad Henry, said he would be meeting with the governor and state finance officials this week "to determine if it will be necessary to begin reducing allocations to state agencies to meet the anticipated revenue shortfall."
Henry said agency heads should be prepared for significant cuts in expenditures until revenues recover.
"We certainly hope revenue trends improve and we are able to meet budget obligations, but it is important for agencies to prepare for the worst-case scenario in the event that revenue collections continue to fall below projections," he said.
Most state agencies had their allocations for fiscal 2010 cut by 7% from fiscal 2009. Lackluster collections in the first 11 months of fiscal 2009 forced a 1.4% cut in agency budgets for June.
Oklahoma relied on $630 million of federal stimulus funds to balance the $7.2 billion general fund budget for fiscal 2010, and reserved another $600 million of stimulus funds for fiscal 2011.
Meacham said the state could tap its $600 million budget stabilization fund if revenues do not improve. "The state constitution allows for up to three-eighths of the constitutional reserve fund to be accessed by the Legislature upon declaration of a revenue shortfall," he said.
General fund collections outpaced expectations in the first six months of fiscal 2009, but the recession began significantly affecting Oklahoma during the last half of the fiscal year, Meacham said.
Fiscal 2009 revenue exceeded predictions by $190 million from July through December, but were $617.3 million less than estimated from January through June. Gross production revenues, which are based on the value of energy produced in the state, were 5.5% below predictions for fiscal 2009, but were off almost 82% in June from a year earlier due to lower prices.
Oklahoma's credit is rated Aa3 by Moody's Investors Service, AA-plus by Standard & Poor's and AA by Fitch Ratings.
