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Oklahoma legislators, governor seek new budget deal

BY MICHAEL MCNUTT Published: December 27, 2009
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Legislative leaders and the governor hope by the middle of next month to reach an agreement on how to handle this fiscal year’s critical revenue shortfall.

An agreement would make it unlikely that a special session to deal with the budget crisis would be called before legislators return Feb. 1 to the state Capitol.

Gov. Brad Henry has said he wouldn’t call legislators into a special session unless an agreement was reached about how to deal with revenue collections coming in about 22 percent below estimates. Time is running out for a special session even if a deal is reached.

State officials last week declared the state faces a $729.4 million revenue failure for this fiscal year.

"The outlook is very, very challenging,” Henry said.

Legislators and the governor can use a combination of further budget cuts and reserve funds to make up the amount; cuts already announced have reduced the projected deficit to about $530 million.

Setting a goal
State Treasurer Scott Meacham, the governor’s chief budget adviser, said Republican legislative leaders and the Democratic governor have set a goal to reach a budget deal by Jan. 12. That’s when December tax collections will be allocated to state agencies. State leaders and budget officials will know then whether a 10 percent across-the-board cut to agencies will be sufficient.

December is usually one of the strongest revenue months for the state, Meacham said. If collections are sufficient to fund state government without tapping further into cash reserves, there’s no fiscal reason to hold a special session when legislators are scheduled to return in regular session less than three weeks later, he said.

"Do you really need to go to the expense of having a special session if you’ve got the money already?” Meacham asked. "Is it really worth $700,000?”

The state has dealt with the revenue shortfall by implementing 5 percent budget cuts from August through November. The cuts were increased to 10 percent this month. Henry and legislative leaders have agreed to another 10 percent cut in January.

"I don’t know that we need a special session,” Henry said.

Transferring money
In addition to cutting agency funds, state officials also have transferred about $233.8 million from other accounts. That money has to be paid back by June 30, the end of this fiscal year.

Legislative leaders are becoming fidgety about the transfers. Senate President Pro Tempore Glenn Coffee said the transfers could be considered as using some of the nearly $600 million in the state’s savings account without legislative approval.

Republican legislative leaders don’t want to see any more transfers, said a source familiar with the discussions but who was not authorized to speak.

Coffee, R-Oklahoma City, and House Speaker Chris Benge, R-Tulsa, said last week they intend to continue discussions in hopes of reaching a budget agreement.

Henry said he and legislative leaders agree budget cuts should be targeted, and the practice of across-the-board cuts — the only option available to state budget leaders when legislators are not in session to take up funding matters — is ineffective.

"Across-the-board cuts are not the best way to do business,” he said.

Rainy Day Fund
The governor said money from the Rainy Day Fund and nearly $600 million in available federal stimulus money may be used to restore funding for core services that have had funding cuts.

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