State expects $195M less

By Michael McNutt

Published: February 13, 2008

The Oklahoma Tax Commission significantly lowered its estimate Tuesday of how much tax money will be available for the 2009 fiscal year, which starts July 1.

The Tax Commission approved a revised estimate that state taxes will generate about $195 million less than it calculated in December for the 2009 fiscal year.

The biggest projected losses are corporate income taxes, which are $101.8 million below the December estimate, and individual income taxes, which are $65.5 million below the earlier estimate.

What that means to the budget still is being calculated, but the governor's chief budget adviser said Tuesday it appears lawmakers will have less to spend this year than last year. It's been five years since that happened, state Treasurer Scott Meacham said.

"In all probability, there's going to be some decrease,” said Meacham, who serves as secretary of revenue and finance.

It may be necessary for legislators to dip into the state's savings account, the Rainy Day Fund, which has been untouched the past five years, Meacham said. The fund has $571.6 million.

Continuing cuts in the income tax rate resulted in taking away $178.7 million that otherwise would have been available in this year's budget.

Income tax cuts during the 2009 fiscal year will account for another estimated $302 million less in state revenue.

Since taking effect in the 2007 fiscal year, the income tax cuts will amount to about $565 million through the end of the 2009 fiscal year.

"We're going to have to tighten our belt much more than we thought even in December,” Meacham said.

The December estimate showed legislators would have about $32 million more to spend than last year.

House Speaker Chris Benge, R-Tulsa, said he wasn't surprised by the estimates.

"It is something we have been watching and will continue to be cautious as we begin budget negotiations this session,” he said. "This will simply mean we must continue to search out ways to make government more efficient and find savings where we can, which also was supported recently by Gov. Brad Henry in his executive budget.”

The governor's proposed $1,200 teacher pay raises, estimated to cost $68.5 million annually, and a 5 percent pay raise for state employees, estimated to cost $65.4 million annually, appear to be in trouble.

"The governor's priorities remain the same,” Meacham said. "You have to figure out a way to obviously make those priorities work in the overall budget framework.”

Lowered estimates mean less money for roads and bridges. December's estimate showed an economic growth of at least 3 percent, which would have meant $50 million in new funding for the state Transportation Department. Growth less than 3 percent reduces new money for the Transportation Department to $17.5 million.

Corporate income tax collections for the month totaled $9.3 million, falling below January of last year by $15.5 million or 62.4 percent.

Personal income tax collections totaled $249.9 million for the month, falling short of the prior year by $24.2 million or 8.8 percent.

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