DALLAS – Amid the threat of a rating downgrade, the Oklahoma House again failed to pass a budget-balancing measure Wednesday.

House Bill 1054 fell five votes short of the 76 needed in the House, despite bipartisan support for the measure that would have capped a six-week special session by closing a $215 million shortfall in the current budget.

Oklahoma Gov. Mary Fallin called for a re-vote on the measure, which would require at least one of the House members who voted “no” to switch to “yes.” Without new revenue, the state will have to cut deeply into state agencies already operating on austerity budgets.

“It will be devastating for many who depend on these services,” Fallin said. “This budget package would have helped set us on a path to long-term sustainability and stability by making more recurring revenue available, helped us to stop balancing our budget irresponsibly with one-time funds, and provided a teacher pay raise as well as a raise for state employees, and tax relief for low-income Oklahomans.”

The bill that has failed to pass the House twice won easy passage in the Senate earlier in the week.

“If we spend everything we have now, there won’t be any money left for other emergencies that could arise,” said state Senate President Mike Schultz after the House failure to pass the bill. “And spending even more one-time money now makes next year’s budget deficit -- already forecast at $560 million -- even larger. The Oklahoma Senate will work to minimize the impact of cuts on core services.”

Moody’s Investors Service, which has a negative outlook on the state’s Aa2 general obligation rating, has already cited the failure to fix the revenue gap as a negative credit factor.

Moody’s analyst Joshua Grundleger noted that lawmakers have provided $328 million in new revenue sources for fiscal year 2018 alongside budget cuts.

“Excluding the current $215 million shortfall, the state needs approximately $405 million of onetime fixes to balance the fiscal 2018 budget plan,” Grundleger said in a recent report. “Moreover, the bills draw the maximum allowable contribution for an emergency provision from the rainy day fund ($23 million) and rely on carryover funds from last year, doing nothing to address the ongoing structural imbalance, which increases the difficulty of drafting a 2019 budget.”

The rainy day fund is expected to fall to just $70 million, or 1.0% of fiscal 2018 appropriations.

The shortfall resulted from an Aug. 10 state Supreme Court ruling that a tax on cigarettes was unconstitutional because it was introduced in the last five days of the regular legislative session, specifically forbidden by the state charter unless a 75% supermajority of both houses approved.

The court’s ruling led Fallin to call a special session to address current and structural fiscal gaps, government waste, funding for a public school teacher salary increase and to clarify exemptions on a vehicle sales tax.

“The budget impasse comes amid a period of low oil prices that has weakened the state’s tax revenue base and contributed to a significant structural budget imbalance,” Grundleger pointed out. “The state has reduced appropriations by 5.3% ($387 million) in the three years since the peak in fiscal 2015, which has helped narrow the structural deficit.”

On the positive side, Oklahoma Treasurer Ken Miller reported Nov. 3 that October gross receipts to the Treasury were up by more than 10% from the same month of the prior year, the first time double-digit growth has been seen in four and a half years.

The report also marks the ninth time since the start of the calendar year that monthly gross receipts to the Treasury were more than the prior year, Miller said.

“Such strong revenue growth is encouraging, with all four major revenue sources in positive territory,” Miller said.

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