The Associated Press
OKLAHOMA CITY — Gov. Brad Henry said Monday he will propose “surgical cuts” to state agency budgets to deal with a projected $309 million decline in state revenue next year.
“There aren’t going to be any new moneys,” Henry said after the state Board of Equalization certified the Oklahoma Legislature’s expenditure authority at about $6.8 billion for the fiscal year that begins July 1, a decrease of 4.4 percent from the current year’s $7.1 billion budget.
“In the short term we’re going to have some challenges to deal with,” Henry said. “I think we have to be very, very cautious.”
State financial officials said a combination of declining energy prices and the nation’s slowing economy are responsible for Oklahoma’s revenue downturn. But the governor said the state’s finances are in better shape than other states, including some that are experiencing budget shortfalls of $1 billion or more.
“Compared to most other states around the country, we’re doing quite well,” Henry said. “There’s no need to panic. We’ll get through this.”
Henry, who will use the projections to prepare his Executive Budget, said he believes there is no need for worker furloughs or across-the-board cuts to state agencies but that it will be difficult to find money for lawmakers to pass teacher and state worker pay raises during the 2009 Legislature, which convenes on Feb. 2.
The board, which is headed by Henry and comprised of other statewide officials, certifies the level of revenue available for state lawmakers to spend. It will meet again to make a final certification in February, when Henry said the state’s revenue picture could be different.
“It could get a little bit worse,” he said. “Each month down the road we’ll have a better and more clear picture.”
Henry also said he will resist suggestions that the state dip into the constitutional Rainy Day Reserve Fund to supplement lower revenues next year. The fund contains almost $600 million.
The governor recalled that the fund contained only about $72 million during his first year in office in 2003 when the state experienced its largest budget shortfall in history, almost $700 million.
“I don’t want to have to face that situation again,” the governor said.
The revenue figures, first unveiled on Friday by state Treasurer Scott Meacham, reflect decreases in individual income tax collections, oil and natural gas revenue and motor vehicle tax collections. Lower income tax collections are due to the faltering economy and tax cuts adopted by lawmakers in recent years, officials said.
Mike Clingman, director of the Office of State Finance, said the state will not meet a trigger next year to further reduce the state’s top income tax rate from 5.5 percent to 5.25 percent.
The state must have growth revenue of 4 percent, about $311 million, plus the impact of standard deduction increases to implement to tax cut.
Income tax cuts adopted in recent years have reduced individual income tax collections by $581 million a year. And Henry said the state’s bleak revenue forecast will short-circuit any consideration of additional tax cuts next year.
“We’ve got to balance the budget,” he said.
But he said he was heartened by projections that the state’s economy will begin to rebound next year and will strengthen in 2010.
“I thought the long-term projections were very encouraging,” he said.
Clingman said economists believe the state will outpace the nation in both job growth and growth in per capita personal income by 2010.
“We have some reason to be hopeful,” Clingman said.
