DALLAS - Oklahoma extended a 5% reduction in state agency spending through September as tax revenues continue an eight-month slide.
Treasurer Scott Meacham said Tuesday that revenue collections for August totaled $335.2 million, which is $131.9 million less than expected and $154.9 million less than collected in August 2008.
"State revenue for August was below estimate and the level necessary to fund allocations to state agencies," Meacham said.
Finance director Michael Clingman has ordered a continuation of the 5% cutback in September allocations to each state agency that was instituted in August. The reduction in the monthly allocation from annual appropriations represents a total cut of $21 million.
"September allocations are being reduced by 5% due to the less-than-anticipated collections for the month of August," Clingman said. "As we did last month, we were able to minimize the impact of the collections shortfall this month by transferring cash reserves."
General revenue collections in the first two months of fiscal 2010 total $672 million, which is $209.7 million less than the estimate and $275.3 million less than in the first two months of fiscal 2009.
The state cut agency budgets by 1.4% in June, the last month of fiscal 2009, and 5% in August.
The Oklahoma constitution mandates across-the-board cuts in state spending if actual collections are less than the amount appropriated in the state budget. Lawmakers cannot allocate more than 95% of official revenue estimate by the Oklahoma Tax Commission.
Meacham said agency allocations would have been cut 25% in September if officials had not swept $80 million of unspent funds from state bank accounts. The state has taken a total $160 million from its cash reserves since July 1, which must be repaid before fiscal 2010 ends next June 30.
Gov. Brad Henry said he expects revenues to begin to increase, but warned that a special legislative session could be needed to balance the budget if the decline continues.
"It is likely that revenue trends will improve in the months to come, but we may not have the luxury of waiting for that to occur if revenue conditions continue to deteriorate," Henry said.
Meacham attributed the revenue drop to lower energy prices and the effect of the national recession on Oklahoma's economy. He said the monthly reductions may continue until the Legislature meets in February, and possibly through fiscal 2010.
