DALLAS – Oklahoma Gov. Mary Fallin announced a budget agreement with legislative leaders that will nearly eliminate a $1.3 billion revenue shortfall.
The agreement maintains education funding at current levels, averts closures of hospitals and nursing homes and reduces the shortfall by $969.3 million, she said.
The agreement would set fiscal year 2017 appropriation levels at $6.78 billion, which is $360.7 million, or 5%, less than fiscal year 2016 appropriations before mid-year reductions.
The state declared a midyear revenue failure amid a virtual collapse of prices for oil and gas, which provide a large share of state revenue. Even after those spending cuts, the proposed budget is $67.8 million, or 1%, lower than the current year's spending.
With lawmakers facing a record $1.3 billion budget hole, public schools braced for state aid reductions of up to 20%, and the Oklahoma Health Care Authority had prepared to initiate provider rate cuts of up to 25%, which Fallin said would have caused some hospitals and nursing homes statewide to close or dramatically reduce services.
"Thankfully, those worst-case scenarios can be averted by passing this budget," Fallin said after reaching the agreement with Senate President Pro Tem Brian Bingman and House Speaker Jeffrey Hickman. "This agreement closes a sizeable portion of a monumental budget hole and prevents the dire, unacceptable outcomes so many Oklahomans have feared may happen this session."
The legislative leaders said the agreement can be passed by Friday's 5 p.m. constitutional deadline to adjourn.
"For months, the public has been concerned about the possibility of four-day school weeks and mass closings at rural hospitals and nursing homes because of drastic budget cuts," Bingman said. "The budget agreement is a practical solution that closes the shortfall while avoiding extreme cuts and worst-case scenarios in our schools, our hospitals and nursing homes."
Hickman called the agreement "a balanced approach that reins in tax breaks, responsibly bonds long-term infrastructure and causes agencies to make the difficult spending reductions necessary in a historic oil bust.
"We committed months ago to leading our state out of this hole and now we must be committed to seeing this budget through to the finish line," he added.
David Blatt, executive director of the Oklahoma Policy Institute, said "lawmakers have not risen to the challenge" of a historic budget shortfall.
"The budget makes these dire cuts even though lawmakers have left hundreds of millions on the table by not stopping a reckless tax cut that was never supposed to happen in these conditions, using far less than the full available three-eighths of the Rainy Day Fund, failing to increase the cigarette tax, and refusing available federal funds to save rural hospitals," he said. "The secretive process and last-minute unveiling of the budget has also already forced schools to lay off teachers and left vulnerable seniors and other Soonercare patients and providers facing months of extreme anxiety."
Standard & Poor's placed a negative outlook on Oklahoma's AA-plus general obligation bond rating on April 6. Fitch Ratings also has a negative outlook on its equivalent rating.
Moody's Investors Service placed a negative outlook on its Aa2 rating on Dec. 23.
