Higher oil and natural gas prices are providing a much-needed boost to Oklahoma's revenue collections amid a massive budget shortfall, State Treasurer Scott Meacham announced Monday.
As a result, the state will have about $60 million more to spend in the current budget year and an additional $120 million available in the fiscal year 2011.
Even with the additional revenue, the picture remains bleak; the hole in the current state budget is estimated at $669 million. Some of that gap will be closed by across-the-board cuts to state agencies averaging 7.5 percent. Gov. Brad Henry and legislative leaders also have agreed to provide supplemental funding to education, health care and prisons, although a final deal has not yet been worked out on exactly where that money will come from.
Meacham, Henry's top budget negotiator, said the governor met Friday with House Speaker Chris Benge and Senate President Pro Tem Glenn Coffee, and are nearing an agreement on how much to use from the state's Rainy Day Fund.
Henry has said he wants to spend more from the reserve fund this year, because all requirements for tapping the money have been met. In his executive budget, Henry proposed spending $485 from the fund, while Benge and Coffee wanted to spend no more than $225 million.
"I think we're getting pretty close to getting those details worked out," Meacham said.
For the next fiscal year, which begins July 1, lawmakers will have about $5.4 billion to spend, which is $1.2 billion less than they appropriated last year.
The revised figures will be considered Tuesday by the State Board of Equalization, which certifies how much revenue the Legislature will have available to spend on state programs.
While the news is encouraging, Meacham stressed state agencies still will face significant budget cuts in the upcoming fiscal year.
"There will be pain from the cuts," Meacham said. "In terms of the state's ability to deliver core services to its citizens, there will be an impact."
Meacham said he expects 10 percent budget cuts to state agencies that were ordered in December likely will continue, probably at an even higher level, through the upcoming fiscal year.
The boost in state revenue is mostly attributable to an increase in collections from taxes on the production of oil and natural gas. The December estimate, which is used by the governor to develop his proposed budget, assumed the price of natural gas at $3.92 per 1,000 cubic feet, or mcf. The February estimate increased the assumption to $4.53 per mcf, resulting in a $95 million increase in revenue.
Natural gas currently is trading at about $5.47 per mcf.