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Oklahoma prepares for federal 'fiscal cliff' deadline

Oklahoma state agency heads have been told to make targeted cuts to absorb the estimated $137 million loss in federal money not available to Oklahoma, Gov. Mary Fallin says.
BY MICHAEL MCNUTT Published: February 24, 2013

The “federal cliff,” or sequestration, could result in Oklahoma losing $137 million in direct federal funding as a result of the automatic, governmentwide spending cuts set to take effect Friday. Oklahoma finance officials have said the projected loss of federal funding includes $50 million in funding for education and more than $40 million for health and human services.

Several federal funding streams would not be affected by the looming cuts, including funds for Medicaid, transportation, Social Security payments, food stamps and most veterans' programs.

The state has nearly $600 million in its savings account, the Rainy Day Fund, but Fallin is reluctant to tap that fund to make up for the lost federal funding.

“All options are on the table at this point,” she said. “It's important that we maintain a healthy Rainy Day Fund. Certainly we've grown that back from the previous economic downturn and we need to preserve that as much as possible.

“I'm going to encourage our agencies to find cost savings,” Fallin said.

This is the second time in two months that the country is heading close to the “fiscal cliff;” Congress and the president late last year extended the original Jan. 1 deadline to March 1 on how to agree to reduce the budget deficit and the $16 trillion national debt.

Contingency plan

House Speaker T.W. Shannon, wary that cuts in federal spending to states may be a trend for several years, has introduced legislation that would require state agencies to develop a contingency plan to prepare for a 25 percent reduction in federal funds.

House Bill 1917 would require agencies to develop plans in the upcoming fiscal year that starts July 1, said Shannon, R-Lawton.

“The federal spending machine has spiraled out of control, and the Congress and the president are either incapable or unwilling to do what needs to be done,” Shannon said. “The endless mandates and the lack of leadership from Washington, D.C., have left the states dangerously dependent on federal funds and on the verge of a fiscal emergency.”

The House of Representatives States' Rights Committee voted 9-1 last week to pass HB 1917. It now goes to the House Calendar Committee, which will determine whether it gets a hearing in the House.


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