Okahoma may have to tap savings fund to balance budget
As agencies face more cuts, governor says legislators are running out of budget options
BY MICHAEL MCNUTT
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Published: October 28, 2009
Gov. Brad Henry, who has resisted using the state’s savings account since it last was used six years ago, said Tuesday that legislators may have no other option to balance this fiscal year’s budget.
Governor Brad Henry speaks during his State of the State address to the Tulsa Metro Chamber August 5, 2009. MIKE SIMONS/Tulsa World
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In addition to cutting monthly allocations to state agencies, state officials have borrowed $130 million from other funds to meet state expenses. Those funds have to be repaid by the end of the fiscal year, June 30.
Henry said if revenue trends do not improve significantly, state leaders will have to tap the nearly $600 million in the Rainy Day Fund to balance the budget and protect important programs in education, health care, public safety and other vital areas from deeper cuts.
"As governor, I have scrupulously guarded the Rainy Day Fund so that we would have a safety net in place when
Oklahoma faced a true emergency,” Henry said. "With revenues continuing to decline and important services facing larger and larger cuts, I believe we are facing such an emergency.”
Oklahoma faced its last revenue shortfall in 2003, Henry’s first year as governor. The state then had about $70 million in the Rainy Day Fund; all but $100,000 of it was spent.
State revenues have come in about 26 percent below estimates for the first quarter of this fiscal year. State agencies, many of which already had their budgets cut by 7 percent for this fiscal year, were told to cut their state allocations by 5 percent each of the first three months of this fiscal year.
Five percent cuts will continue for the remainder of the fiscal year, officials confirmed Tuesday. Budget officials speculated earlier that the cuts likely would continue.
House Speaker Chris Benge said he is hoping the 5 percent cuts will be enough, "but I have been listening to Oklahoma economists and business leaders who fear the economy may not rebound anytime soon, which may mean deeper cuts will be needed this fiscal year.
"We must work to find the delicate balance between deeper cuts and use of our savings fund to ensure we balance our budget this year, while also positioning ourselves to be able to withstand likely continued declining revenues into the foreseeable future,” said Benge, R-
Tulsa.
For a time, there was speculation legislators would return in special session to deal with the revenue shortfall. From Henry’s comments, that no longer appears likely.
"When the regular legislative session convenes in February, we will have a better picture of the overall revenue outlook and more tools available to address the shortfall,” Henry said. "We know the cuts will cause additional hardship for agencies and programs, but given the short-term fiscal outlook, there are no good options available.”
The governor, Benge and
Senate President Pro Tempore Glenn Coffee said they had hoped to see improvement in September revenue, a historically strong collection period. But when the figures came in earlier this month, totals again fell short of the monthly allocation and estimate.
Legislative leaders said they would be reviewing agency budgets in the coming weeks.
"Our state continues to face uncertain revenue prospects for the foreseeable future, and the correct course of action is to continue to pare back expenditures throughout state government until better days return,” said Coffee, R-
Oklahoma City. "We will continue to be conservative in our budgeting processes and look for waste or duplication in government services, and see the state through this challenging time.”
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Concerned, Memory is a little vague, but as I remember The Stipe and his type deal was earmarks or special projects which are in the budget. That is visible to all and creates a paper trail as far as the state’s side. In that case the evidence was in happened after Phipps got the money.
Tax credits are much more sinister in this is a way of diverting incoming revenue before it is counted as state revenue, leaving no paper trail. With the program operated in secrecy and only one person having access to enough information to know what is occurring. That one person has been reporting false deceiving and misleading information to prevent the public from learning. Actually was force into false reporting because in the beginning there were no reports at all. Then when Open Books required reporting, telling the truth would expose the fraud.
Not to lessen the wrongs of Stipe and his type, but everyone thought he was a crook and where watching. While all eyes were focused on Stipe the ones we thought were protecting us where stealing far more than Stipe was involved. Tax credits involve more people, and takes more to share the booty.
If the secrecy isn’t enough to wake people up think about the other punishment. Remember our lawmakers vote unanimously to operate this program in total secrecy and there no punishment. In the event anyone is found guilty of violating a law in receiving these tax credits the state is prohibited from recovering the stolen money and the max punishment is a loss of eligibility to use the same program again.
The public should be calling their lawmakers and demanding to know why this money is being handed out in secrecy. Demanding that they get the facts out in the open and let the public see for its self. That is the way it is supposed to be, we let them take away our right to know.
Nite, do you happen to know if this is the same program that Steve Phipps used to fill Gene Stipe's, Mike Mass's, & Jeff McMahan's pockets?
Here is part of the tax credit that OTC was withholding. Even that doesn’t tell the whole story. There is more than adequate information to suggest some of these tax credits are being reported under the wrong program to disguise what is really occurring. Example, the fraud program of choice is the Rural Small Business Capital Credit which allows 30% of the amount invested in tax credits. We find most of the tax credits reported under the less controversial Oklahoma Investment/New Jobs Credit, which only pays 1 or 2% tax credits. Now back some of these numbers out to see how much would have needed to be invested to get say Weyerhaeuser $54 million. That comes to about $2.7 billion, and a far cry from the $160 million Weyerhaeuser headquarters website shows was invested in Ok for the 5 year period of 2004 thought 2008.
How do they pull this off? How many of you readers are familiar with the details of these programs? How many just assume what they see on Open Books is true? Well someone is lying in all the SEC forms for these companies that tell a completely different story than what OTC is reporting. Folks, this is only a tiny fraction of the story.
Why isn’t the Oklahoman on this story. Look at the bottom and you will see one reason. And, there are some other even more compelling reasons, found at prowlingowl.com
Here is only 12 of some of the 930 that were withheld
Weyerhaeuser Co & Subs $54,420,349 Oklahoma Investment/New Jobs Credit
Kaiser, George $18,381,308 Credit For Venture Capital Investment
Ward, Tom & Schree $10,504,593 Rural Small Business Capital Credit
Iboc-Laredo $6,740,000 Rural Small Business Capital Credit
Hendricks, Thomas & Mary $5,728,345 Oklahoma Investment/New Jobs Credit
Mcclendon, Aubrey & Kathleen $3,803,267 Small Business Capital Credit
Sinclair Oil Corporation $3,567,045 Oklahoma Investment/New Jobs Credit
Webco Industries,Inc & Subs $3,230,462 Oklahoma Investment/New Jobs Credit
Oneok,Inc & Subs $3,219,223 Oklahoma Investment/New Jobs Credit
Oliver, Roy & Rebecca $2,801,216 Rural Small Business Capital Credit
The Oklahoma Publishing Co & Subs 236,620 Credit For Qualified Rehabilitation Expenditures
The Oklahoma Publishing Co & Subs 96,685 Oklahoma Investment/New Jobs Credit
For those who may have missed the recent news the now defunct First State Bank Altus was being used to hand out $642 million in fake loan documents. This fake loan documents were then used to claim $193 million in tax credits through one of our 30% economic development tax incentive programs. All we have to show is a failed airplane manufacturer that only received $32 million of the $642 million. Another, Oak Hills claimed investing $75 million in 7 in name only businesses sharing one mini storage unit address in Yukon. Another $22.5 million in unearned profits and not one job. Scissortail claimed investing $89 million in several other non existent business and received $27 million in tax credits. Those businesses included the Ardmore MG plant that never happened, a PO Box in Shawnee that leads to a private individuals personal corporate jet, a business in Arizona. We just learned Weyerhaeuser received $54 million in tax credits for no one knows what. Ad nausea.
What we were all told was money going to create jobs is going straight to thievery.
This fraud is operated out of the Oklahoma Tax Commission, under the direct control of Tony Mastin, the head dude, which has been withholding this tax credit information from Open Books to hide what is occurring and were the money is going.
OTC had been reporting the 2007 tax credits were $69 million until exposed. Last Friday when OTC brought the 2008 tax credits online, which is woefully low, it slipped in unannounced another $168 million of missing 2007 tax credits. For any who might think this delay might be for a legit reason, forget it. All the extensions etc where long past due when OTC was 3 months late in reporting 2007 tax credit info.
If you visit the tax credit section of Open Books you will find that section is a stripped down version of the rest of Open Books that gives no totals or breakdowns, and limits a visitors to only viewing 25 lines out of 11,100 lines at a time. That is why Mastin thought he could cover up and avoid false reporting charges by slipping in under the radar while everyone would be looking at the new 2008 info.
What we have now is far short and doesn’t include the state income tax credits that were used to avoid paying Gross Production Taxes. Chaparral Energy’s SEC filing states it used $30 million in these tax credits to save $30 million in GPT. Those same SEC filings reveal Chaparral received that $30 million in tax credits by paying $15,000 for its share of interest in the front LLC that used the fake FSB Altus loans to scam tax credits.
That is a major and unconscionable reason for part of our revenue shortfalls. You can find far more at Prowlingowl.com. Wake up Oklahoma! It is time to learn what we are not being told, and have been stripped of out right to know.
Why not go ahead and stroke out now, and save us all the misery of listening to your anti-social ramblings.
LOL.
They refer to him as the "last flat-earther" Close, but not quite true. His "flock" (those idiots who continually keep putting him in office) are as much "flat-earthers" as he is.......
I too find it pretty disgusting how our legislative leaders want to be declared as conservative and wise about fiscal matters when their actions in the last few years are anything but wise.
The last few sets of tax cuts were based on Laffler principles- cut the taxes and more money in citizens pockets will be used to generate new business and pay taxes and presto magic- the lost revenues will be made up for. It is a interesting concept, but it is also a discredited concept, since originally articulated in this particular way tax cuts like this have NEVER generated income equal to or exceeding the lost revenues- ever, anywhere.
TeddyR, how are you doing today- another part of the "whammy" was that basically one time revenues from oil and gas were used as the logic for the tax cuts- even though it was understood that those dollars were not an actual part of the long term cash flow.
Louis Friend- hope Norman is well today! I would agree that if one can afford the buy the team, then they can afford to pay the cost of all the associated issues of the team, or they should not be buying the team. I need sometime to sit down and caculate the actual cost of the buying the team and then see what has been provided by the city and state in funding for the same- any guesses which will be the lessor amount when all totaled?
Mr.s benge and coffee need to go home and leave the budget alone, their track record at this point is not too good IMHO. They might discover their law firms would not have so much business from large companies wanting to make money off the state if they were not in the positions they currently hold....
On a side note, our dear idiot senator is at it again:
http://www.washingtonpost.com/wp-dyn/content/article/2009/10/27/AR2009102702845.html?wprss=rss_politics
But what about the future? The waste and duplication in State government is pretty much gone. The only thing left is to cut services. Budget cuts must be distributed equally, across the board, so all agencies will be impacted, except maybe education, where there is some stimulus money left that can assist here. Our Legislators need to reassess every tax exemption and credit and continue to look for ways to make the State run more efficiently. They need to look for new revenue sources. They need to eliminate the automatic tax cut trigger. Which is worse, admitting that the tax cuts did not work as advertised and remedying that situation or refusing to admit to the mistakes and not doing anything about it? Maybe this Legislative session will focus more on State budgetary issues rather than fluff matters such as helicopter hog hunting, Ten Commandment monuments or abortion documentation.
Perhaps then you'd actually start pulling this dirtpatch out of the gutter.....
Do everyone in Oklahoma a favor and shut the F up. Go back to spanking your monkey, or whatever it is you do for a living.
Dolts.