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Oklahoma budget negotiators kept 2012 fiscal year in mind

Even though the Democratic governor and GOP legislative leaders won’t be at the state Capitol next year, they worked to leave some funds available for the next governor and House and Senate leaders.

BY MICHAEL MCNUTT Published: May 23, 2010
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.

Revenue Proposals
In addition to making cuts to state agencies and using nearly $1 billion in cash, savings and federal stimulus funds, the 2011 fiscal year budget package depends on several proposals to generate new revenue to help make up a $1.2 billion shortfall.

The proposals are projected to raise about $180 million. They include:

• Expanding the state’s vehicle insurance verification program by using cameras mounted on state highways to record and ticket motorists driving without insurance. The idea is expected to raise about $50 million. The Public Safety Department is seeking proposals on the idea, but the system likely would involve cameras taking pictures of vehicle tag numbers. The computerized system will check the tag against a national database; if it’s determined the vehicle is not insured, a citation will be generated and issued to the vehicle’s owner. The system would not keep tag information on motorists who have vehicile insurance, state Treausrer Scott Meacham said.

• Develop a procedure to collect sales tax on Internet and catalog sales not currently being collected. Out-of-state businesses without a store or building in the state are not collecting sales taxes on sales made over the Internet, telephone or via mail order. Oklahomans are supposed to calculate the amount of state sales tax owed on such orders and pay the tax when filing their income tax returns. The state will spend money to make taxpayers aware that they owe the tax, and will work with merchants to point out the total does not include sales tax that is owed the state. It’s expected efforts would produce about $36 million.

• A new 1 percent fee insurance companies will pay on health care claims, which is expected to generate $78 million. The insurance fee will be used to stabilize the state’s Medicaid program. Money will be placed into an account with the Oklahoma Health Care Authority, which manages the state’s Medicaid program. The money should be matched 3-1 with federal funds.


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