DALLAS — Oklahoma Gov. Brad Henry and legislative leaders notified state agencies on Tuesday to expect monthly budget cuts through the remainder of fiscal 2010 as revenues continue to drop below expected levels.

Henry, House Speaker Chris Benge, R-Tulsa, and Senate President pro tempore Glenn Coffee, R-Oklahoma City, said they made the decision to continue the 5% monthly cuts after September’s revenues were 29.2% less than expected when the fiscal 2010 budget was adopted.

The Office of State Finance reduced monthly agency distributions to 95% of fiscal 2010 appropriations in August, September, and October.

State revenues in the first three months of fiscal 2010 totaled $1.1 billion, which is $388.3 million less than expected and $462.1 million less than collected in the first quarter of fiscal 2009.

Henry suggested the state will have to tap the $596 million in its budget stabilization fund to maintain services for the rest of the year, but Benge and Coffee said it’s too early to do that.

“As governor, I have scrupulously guarded the rainy-day fund so that we would have a safety net in place when Oklahoma faced a true emergency,” Henry said. “With revenues continuing to decline and important services facing larger and larger cuts, I believe we are facing such an emergency.”

Henry said there is no need for a special legislative session to deal with the budget before the regular session begins in early 2010.

“When the regular legislative session convenes in February, we will have a better picture of the overall revenue outlook and more tools available to address the shortfall,” the governor said. “We know the cuts will cause additional hardship for agencies and programs, but given the short-term fiscal outlook, there are no good options available.”

Benge said the state must find a delicate balance of budget cuts and draws on the constitutionally mandated reserve fund.

“Using the rainy-day fund as an ATM machine is a big mistake,” he said. “We must make sure we have the money in reserve to get us through this economic downtown.”

The 5% monthly cuts may not be sufficient if tax revenues do not rebound, according to Benge.

“We’re not seeing anything right now that would indicate the revenues are going to turn around in the near term,” he said. “We don’t know if we are at the bottom of this economic downturn.”

Coffee said the state should draw on the rainy-day fund only as a last resort.

“Our state continues to face uncertain revenue prospects for the foreseeable future, and the correct course of action is to continue to pare back expenditures throughout state government until better days return,” he said.

In addition to the 5% monthly cuts, the state borrowed $130 million from internal funds in August and September to maintain services. The money must be repaid before fiscal 2011 begins in July.

In fiscal 2009, revenues were $190 million above predictions from July through December 2009, but were $617.3 million less than expected from January through June.

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