Dipping into the state’s savings account may be necessary this fiscal year if revenue continues to fall below projections, budget leaders said.
"We don’t know yet exactly where we’re going to bottom out,” state Treasurer Scott Meacham said. "We have to be ready for it. It could go lower.”
Gov. Brad Henry and legislative leaders have resisted calls the past two years to take money out of the Rainy Day Fund because of the economic slowdown in the state.
They were able to develop a $7.2 billion budget for this fiscal year without using Rainy Day Fund money, largely because the state used about $630 million in federal stimulus money.
Less than three weeks into the 2010 fiscal year, Meacham, the governor’s chief economic adviser, is asking agency heads to come up with budget cuts. Revenue reports last week showing state money collected in June, the last month of the 2009 fiscal year, fell 30 percent below the previous year are a reason for concern, he said.
The state has another $600 million in stimulus money set aside for the 2011 fiscal year. The Rainy Day Fund, under Henry’s watch since 2003, has grown to its highest-ever amount of nearly $600 million.
The governor and legislative leaders said earlier this year they avoided using Rainy Day Fund money for this fiscal year’s budget. Because of likely sour economic conditions, it was likely, they said, it would be needed for the 2011 fiscal year.
Meacham said the governor and lawmakers may have no choice but to use money from the Rainy Day Fund this fiscal year. He’s predicting the state will experience a revenue shortfall as actual collections fall below state Tax Commission estimates.
Rep. Ken Miller, chairman of the House Appropriations and Budget Committee, said using money from the Rainy Day Fund this fiscal year is an option.
"I don’t want to say that that’s the course that will be pursued, but we have to be prepared to use all the tools that we have available to us and that’s certainly one of those tools,” said Miller, R-Edmond. "We’ll just have to wait and see how things progress over the next few months and see the trend.”
Cutting appropriations to agencies would be the first action. Meacham is asking state agency directors, many of whom are dealing with 7 percent cuts this fiscal year, to look for further reductions because of the likelihood of a revenue shortfall.