Oklahoma governor calls for tighter rein on spending
In his second State of the State address, Oklahoma Gov. Kevin Stitt urged lawmakers to look for efficiencies as the economic horizon darkens.
Stitt’s address Monday came as oil prices continued to drop to near $50 per barrel from recent highs around $65. Bankruptcies in Oklahoma and Texas have accelerated over the past year.
“When I delivered this address last year, 60% more drilling rigs were operating in Oklahoma than exists today,” he said.
“Our first budget together was blessed by a thriving industry. Now, we must look at the realities of a changing and evolving market that is becoming more efficient and less influenced by international volatility.”
Oklahoma’s general revenue fund is estimated to be down almost 1% versus fiscal year 2020, and total spending authority is very close to the same amount, Stitt said.
“But we have nothing to fear,” he added. “We will remain vigilant in recognizing our needs, planning for our future, and shedding waste where operations are outdated or redundant.”
Stitt said he supports effort to raise the constitutional cap on the state’s rainy day fund to 30%, which would require a voter referendum.
Calling the state government “too big and too broken,” Stitt urged lawmakers to improve efficiency and eliminate overlap of services. Two agencies he targeted were the Department of Corrections and the Department of Transportation.
Transportation Secretary Tim Gatz is beginning the process of combining all back office and common functions in the DOT and Oklahoma Turnpike Authority into one shared service entity for both agencies.
“We will maintain separate general management for unique functions, while streamlining operations that are duplicative in nature so we can deliver the highest quality of transportation possible,” he said.
As the state with the highest incarceration rate, Oklahoma has sought to reduce the load that has contributed to a shortage of corrections officers.
“When I came into office, I was told that a change in our prison system wasn’t possible without an immediate injection of $1 billion,” Stitt said. “I was told the Pardon and Parole Board could not take on an increase in casework without more employees and more funding. I was told that it would be logistically impossible to accomplish a large commutation docket to give low-level, non-violent offenders a second chance.
“What did we do? You passed better policy, and we changed leadership in both agencies. As a result: Pardon and Parole Board consolidated its investigators with Department of Corrections. This streamlined the case work all while increasing it by 118% over 2018. They did this without a single dollar more.”
While 2019 was a welcome year of rising revenues after years of budget crises, state Treasurer Randy McDaniel has already told lawmakers to prepare for a change.
Gross receipts during all of 2019 were 5.7% more than during 2018. That growth rate was down from 13.2% in 2018 compared to 2017, McDaniel said.
McDaniel said the slowdown becomes more pronounced when viewed on a quarterly basis. Growth in collections during the first two quarters of 2019 reflected expansion of almost 10%. Third quarter growth fell to 4.2%, while fourth quarter receipts contracted by 0.5% when compared to the fourth quarter of 2018.
“Recent economic trends appear to be primarily related to low oil and gas prices,” McDaniel said. “We are seeing both a direct and spillover effect on some tax collections due to suppressed energy prices.”