The Joplin Globe, Joplin, MO

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October 27, 2009

Oklahoma: Officials say gencies face monthly cuts through June

The Associated Press

OKLAHOMA CITY — State agency budgets will be cut 5 percent each month through June because of declining state revenue caused by low oil and natural gas prices and the economic downturn, Gov. Brad Henry and legislative leaders said Tuesday.

Henry also said if conditions don’t improve, state leaders will have to dip into the constitutional Rainy Day reserve fund to balance the budget for the fiscal year ending June 30. The fund, which would be tapped to prevent deeper cuts to important educational, health care and public safety programs, contains about $600 million.

“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.”

Five percent cuts in state agencies’ monthly revenue allocations were implemented in August and have been imposed every month since. The most recent cut reduced budget allocations for October by about $21 million.

The state has also used $130 million in cash transfers to support state agency operations since July 1; that money must be replenished before the end of the fiscal year. Officials said cuts to state agency budgets would have been far deeper without tapping into cash reserve accounts.

Tax revenue collected by the state has declined each month since January when compared with the same month a year earlier.

Henry, House Speaker Chris Benge, R-Tulsa, and Senate President Pro Tem Glenn Coffee, R-Oklahoma City, said they had hoped to see revenue improvement in September, a historically strong collection period. But figures made public earlier this month indicated that revenue fell short again.

“With no immediate signs of revenue improvement on the horizon, we think it is best to inform agencies that the 5 percent cut will continue so they can plan their budgets accordingly,” 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 said state leaders will have a better idea of the overall revenue outlook when the Legislature convenes in February and will have more information to address the revenue shortfall.

Coffee said uncertainty about future revenue makes further reductions appropriate for state agency budgets.

“We will continue to be conservative in our budgeting processes and look for waste or duplication in government services,” Coffee said.

Benge said he hopes the 5 percent cuts will bring state spending on taxpayer services more in line with the state’s revenues.

“I am hopeful those 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,” Benge said.

“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,” he said. But Benge cautioned against depleting the Rainy Day fund because of the likelihood of “continued declining revenues into the foreseeable future.”

“We cannot use the Rainy Day fund as an ATM,” he said.

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