DALLAS — Recent increases in monthly revenue collections will mean Oklahoma lawmakers won’t face a shortfall when they convene in January, but little growth is expected in next year’s budget.
Fiscal 2012 revenues are expected to exceed fiscal 2011 numbers by slightly more than $500 million. For various reasons, including the use of one-time revenues to balance the current $6.5 billion general fund budget, the increase in available funds will be about $161 million, the Oklahoma Policy Institute said in a new report.
State finance director Preston Doerflinger said he warned agency directors to prepare for a flat budget in 2013. Budget briefings with officials are under way this week in Oklahoma City, the state capital.
“Overall, we are expecting that fiscal year 2013 budget will be relatively flat, which is an improvement over the recent series of revenue shortfalls linked to the national recession,” said Doerflinger, who is secretary of finance under Gov. Mary Fallin.
Doerflinger said up to $85 million of pending energy-tax rebates and credits will “substantially reduce” the amount of oil and gas severance taxes that will flow into the general fund in fiscal 2013.
In addition, an automatic reduction in the state income tax rate to 5.25% from 5.5% will cut revenue by $70 million in fiscal 2013.
Doerflinger will present a revenue outlook to the Oklahoma Board of Equalization on Dec. 1. The board will provide a preliminary estimate that will be the basis of the governor’s executive budget.
Collections in the first four months of fiscal 2012 total $1.7 billion, which is 6% more than expected and 10% more than in the same period of fiscal 2011.
Fallin said while it is an encouraging sign that revenues are up, the state can no longer rely on one-time sources to balance its budget. “Revenues are increasing, but still below pre-recession, 2008 levels,” the governor said in a statement.
“All of that means that state agencies can expect the budget to be relatively flat,” she said. “My administration is focused on right-sizing government, making our agencies run more efficiently and effectively, and doing more with less.”
Revenues in fiscal 2011 were $249 million more than expected. The money went into the depleted rainy-day fund, which at one point slipped to barely more than $2.
Fallin said she wants to bring the emergency fund back to $600 million, where it was before it was tapped to cover revenue holes as collections plummeted.
David Blatt, policy director of the Oklahoma Policy Institute, said despite the slight increase expected in next year’s budget, spending will remain 6% below pre-recession levels, taking into account inflation and population growth.
State agencies took a 7% cut in fiscal 2012 from 2011 allocations and it will be some time before those reductions are restored, Blatt said.
“Our budget outlook is improving, but all signs point to an incomplete recovery,” Blatt said, “It looks like it will be at least fiscal 2014 or even fiscal 2015 until budgets return to nominal pre-downturn levels.”
“Given higher operating costs, increased population and caseloads, and new responsibilities, many state agencies will need additional state funding to maintain existing service levels,” he said.