The main architects of the state’s proposed $6.7 billion budget for the upcoming 2011 fiscal year — all of whom are serving their final year in office — left some money for their successors, who are expected to face a difficult task developing a state budget for the next fiscal year.
The 2011 fiscal year budget, which will be on the governor’s desk this week for his signature, is for the fiscal year that begins July 1.
"All of us had a sense of responsibility as far as where we were leaving things,” said state Treasurer Scott Meacham, Democratic Gov. Brad Henry’s chief budget adviser. "So it wasn’t like we just wanted to cut a deal and get out of town. We were very concerned about next year and making sure we were posturing next year in a good place,” Meacham said.
Brad Henry and GOP legislative leaders Senate President Pro Tempore Glenn Coffee of Oklahoma City and House Speaker Chris Benge of Tulsa, used the remaining $540 million in federal stimulus funds given the state last year and drained most of the remaining money in the state’s savings account to make up a $1.2 billion budget hole in the 2011 budget.
Meacham said budget negotiators, who met in closed meetings the past several weeks, also had about $225 million in cash to plug the shortfall. About $180 million in revenue enhancement methods and about $150 million to be earned by freezing tax credits also were used to spare state agencies — some reeling from 15 percent cuts — from double-digit deep cuts in the upcoming fiscal year.
The budget is about 7.6 percent less than the $7.2 billion budget legislators approved a year ago. State revenues came in nearly 20 percent below estimates beginning in August. Budget officials earlier this year revised the 2010 budget to about $6.9 billion.
The Rainy Day Fund, the state’s savings account, was filled to capacity with nearly $600 million at the start of this fiscal year. Budget negotiators used about $223.5 million to take care of a nearly $300 million deficit estimated at the end of this fiscal year, set a similar amount aside for the 2011 budget, and set aside $149 million for the 2012 fiscal year.
As a result, the 2011 fiscal year budget includes almost $1 billion of one-time money in savings, available cash and federal stimulus money.
With Oklahoma’s economy struggling, some legislators are concerned lawmakers next year will be looking at a $1 billion budget hole since those one-time funds won’t be available.
"We all have great concern about what next year’s Legislature and new governor faces,” Benge said. "We tried to make decisions based on that and tried to do so in a way that would manage this situation we’re in as best as we could.
"We really did try to write a budget with next year’s Legislature in mind,” he said. "Even though we’re not all going to be here, we realized it’s our responsibility to try to manage that process as best we can.”
Budget negotiators dipped into the Rainy Day money set aside for 2012, leaving $100 million for the next governor and legislative leaders of the next legislative session, Meacham said. The $100 million will be transferred to a fund instead of being kept in the Rainy Day Fund so all the money can be used, Meacham said. The Rainy Day Fund has provisions that would allow the state access to only about $37.5 million next year, he said.
"I really feel a lot better about next fiscal year,” Meacham said. "We’ve started to finally see a bottom and actually an improvement in Oklahoma’s economy over the last few months.”
State revenues have shown some growth the past three months, he said. He looks for that trend to continue. The state’s constitution allows lawmakers to spend only 95 percent of the money authorized in the budget. In most years, lawmakers have the remaining 5 percent to carry forward to the next fiscal year; with the revenue shortfall, lawmakers didn’t have that money available this fiscal year.
Meacham said lawmakers likely will have that 5 percent reserve, or about $260 million, at the beginning of the 2012 fiscal year. Lawmakers also should have a full cash flow reserve fund, or about $380 million.
That $740 million should help lawmakers with the 2012 fiscal year budget "even if the economy is not back all the way,” Meacham said.
This is the eighth and last budget package to be prepared by Henry and Meacham. Henry elected in 2002, cannot seek a third successive term.
Meacham, tabbed by Henry to serve as the state’s finance director, eventually was appointed treasurer to fill the unexpired term of Robert Butkin, who resigned. He was elected to a full four-year term in 2006. Meacham has said he is not seeking re-election.
During Henry’s first year in office, Democrats controlled both the House of Representatives and the Senate. Oklahoma was in an economic downturn and had only about $100 million in its savings account, the Rainy Day Fund.
During his last year as governor, Republicans controlled both chambers. The state was in the throes of a longer, deeper recession. Coffee and Benge cannot seek re-election because of 12-year legislative term limits.
Benge said he, Coffee and Henry realized in August when revenues first started coming in below estimates that "we had a tough job ahead of us.”
"We all pledged or spoke about the need to work together and we’ve done that,” he said.