Oklahoma Gov. Mary Fallin reached agreement on a $7.1 billion budget that follows an income tax cut.

DALLAS — Oklahoma Gov. Mary Fallin reached agreement with state legislative leaders on a $7.1 billion budget that increases education spending by $80 million while relying on spending cuts to close a $188 million shortfall, the governor's office announced May 16.

"We have gone to extraordinary lengths — even with a sluggish revenue year — to add substantial new resources to common education in Oklahoma," Fallin said.

The 2015 fiscal year budget of $7.12 billion will be $102.1 million, or 1.4% less than the current budget of $7.22 billion.

The proposed budget includes $36.8 million for pay raises for 12,378 state employees, including corrections workers, state Highway Patrol troopers, child welfare workers, and the state's most underpaid employees as identified by the state's recent comprehensive employee compensation study.

The agreement would also authorize $110 million in supplemental funding for the current fiscal year ending June 30 to provide ad valorem reimbursement to local school districts, reduce provider rate cuts and service interruptions at the Oklahoma Health Care Authority, address operational needs at the Department of Corrections, continue drought relief efforts, and maintain state property assets.

"We knew from day one this session would be difficult fiscally," said Senate President Pro Tem Brian Bingman, R-Sapulpa. "Unlike Washington D.C., we have to balance our budget each year, which in a year with a $188 million shortfall requires tough decisions."

The budget "reflects the House of Representatives' dedication to properly funding and improving education in Oklahoma," said House Speaker Jeff Hickman, R-Fairview.

"Our agreement will also put in place a plan to make long overdue repairs to the Capitol Building and includes an oversight committee to ensure the project is completed in an efficient and fiscally conservative manner," Hickman said.

The agreement comes 18 days after Fallin signed an income tax cut measure that reduces Oklahoma's top income tax rate from 5.25% to 4.85% over several years. The cuts are dependent on revenue triggers, meaning general revenue in Oklahoma must see an increase before the cuts take effect.

In a separate bill, lawmakers last month approved up to $160 million of bonds to repair the nearly 100-year-old state Capitol.

The original bill called for vote of the people on whether to issue $120 million in bonds to pay for repairs, but the Senate amended it to authorize a bond issue of up to $160 million without a public vote.

In the 2013 legislative session, lawmakers passed and Fallin signed a bill that combined the income tax cuts with funding for Capitol repairs. That bill was ruled unconstitutional by the Oklahoma Supreme Court because it violated a ban on "logrolling," which is combining unrelated measures in a single bill.

The Capitol is in need of repair after being flooded with raw sewage and showing other signs of wear. Last week, a piece of concrete fell through a roof into a legislative office while the office was vacant.

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