OK-Henry: FY2010 revenue posses challenge
Author:  Shawn Ashley 
Date:  12/22/2008

(OK) An estimated $309.6 million less to spend for fiscal year 2010 poses a challenge for state budget writers, Gov Brad Henry said Monday after the Board of Equalization approved a revenue estimate that will make $6.8 billion available to spend for the upcoming fiscal year.

"It will be a challenge," Henry said when asked what to expect in his FY2010 budget that will be presented to lawmakers in February. "It is going to be difficult to do like things like raise teacher pay and state employee salaries."

But, Henry added, he faced a bigger challenge when he first entered office and the state faced a $700 million current-year shortfall and very little money available in the Constitutional Reserve Fund, or Rainy Day Fund, to help address the state's financial needs.

"We've been through much, much worse," Henry said.

Monday's action was the first look at funds available for appropriation during the 2009 legislative session, which gets under way Feb. 2. The board will meet again shortly after the session begins to certify a final number. In the meantime, Henry will draft his budget using the figure approved Monday.

"We are all in this together," Henry said. "Every agency is going to have to tighten its belt. It's what we have to do when we have a shortfall."

Henry, however, said he would prefer to look at "surgical cuts" suggested agency-by-agency, rather than across the board cuts.

"I would much rather it comes from (the agencies)," Henry said. "They know their budgets better than I do or the Legislature does."

Henry said he did not believe it would be necessary to eliminate any state jobs to balance the budget.

The biggest decline in funds available for appropriation is forecast to be felt in the General Revenue Fund, which is the largest source of legislative appropriations. General Revenue Fund money available for appropriation is forecast to fall $296.0 million or 5.0 percent, according to the estimate approved Monday.

The biggest declines are expected to result from a drop in oil and natural gas prices, which will push General Revenue Fund collections down $234 million. A decline in individual income tax receipts for the General Revenue Fund also is forecast. Part of that decline, board member Treasurer Scott Meacham noted is the result of earmarked funding, such as Department of Transportation money for roads and certain tax credits, being charged against the income tax revenue to the General Revenue Fund.

Henry said budget writers will have to be "very, very cautious."

Although he stopped short of ruling out tapping the Rainy Day Fund, Henry said he would be reluctant to do so.

"I have not seen evidence that warrants tapping it," the governor said, adding, "but you can never say never."

The fund has a balance of approximately $596 million.

In other action taken by the board Monday, Oklahoma's top individual income tax rate will drop Jan. 1 from 5.65 percent to 5.5 percent but will not fall to the lower 5.25. The additional step required that the board find a $311 million increase in General Revenue Fund collections, Office of State Finance Director Michael Clingman said. Absent the estimated increase in revenue, the additional step is not taken, Clingman explained.

The board also approved a request from the State Regents for Higher Education for $54 million to fund the Oklahoma Higher Learning Access Program.

©2008 eCapitol, LLC. All rights reserved.