Governor, legislative leaders announce budget agreement
Author:  Shawn Ashley 
Date:  05/15/2009

(OK) Gov. Brad Henry, House Speaker Chris Benge and Senate President Pro Tempore Glenn Coffee announced a budget agreement Friday that includes cuts for most state agencies, increases for a handful of others and standstill appropriations for some.

"Because of the uncertain economic conditions and projected decline in state revenues, this was a very challenging budget process that required many difficult decisions," Henry said in a press release. "With the help of stimulus funds, we were able to protect a number of priority areas, including education, health care, transportation and public safety, but we were also forced to cut many worthy agencies and programs in order to live within our means and balance the state budget. Obviously, we would have liked to do more to shield services from cutbacks, but the budget reality just would not allow it."

Coffee, R-Oklahoma City, said in a meeting Friday afternoon with reporters, "I am very proud of this budget particularly considering the touch fiscal realities facing us today. We were able to keep the core functions of government from cuts and are asking other agencies to watch their bottom lines."

Benge, too, stressed that the agreement protects transportation, health care, education and public safety.

"This budget is a reflection of the surgical cuts we promised the people of Oklahoma early in session," Benge, R-Tulsa, said in a press release. "The easy route would have been to cut every agency by the same amount and go home. But, I commend the budget committee and subcommittee chairmen who studied each agency budget for areas that could be cut with minimal impact. This effort will maintain many of the core services upon which Oklahomans depend each and every day while ensuring our government is as efficient as possible."

Meeting with reporters, Benge said, "I can't stress enough that I think this is a fiscally responsible product, and we are going to be able to do this without burdening hardworking Oklahomans."

According to information provided by the governor and legislative leaders, the Legislature will appropriate $439.4 million fewer state dollars for FY2010 than it did for the current fiscal year, a decrease of 7 percent. However, $631.3 million of federal stimulus money also will be appropriated by the Legislature, resulting in a 1.9 percent increase in total appropriations.

Without the availability of the federal stimulus money, Coffee said, "We would have either had to make a decision about accessing the Rainy Day Fund or significantly deeper cuts."

Common and higher education, along with various public health and human services agencies, will receive the bulk of stimulus money, the legislative leaders said. House Appropriations Committee Chairman Ken Miller, R-Edmond, said common education will receive approximately $167.5 million, and higher education will receive nearly $69 million of stimulus funds. The money to public health and human services agencies will be spread among numerous agencies, Miller said, including the Oklahoma Health Care Authority, the Department of Mental Health and Substance Abuse Services, the J.D. McCarty Center, University Hospitals Authority and others.

The cuts range from 0.5 percent or $357.2 million at the Department of Health to 7.3 percent or $3.5 million at the Oklahoma Tax Commission, according to the information distributed Friday. Most agencies receiving cuts will see their appropriations reduced by 7 percent, the information shows.

"Considering what other states are experiencing this year, this is an extraordinary accomplishment," Coffee said.

Even the House, the Senate and the governor's office will see 7 percent budget cuts, the information provided to reporters shows.

Coffee said he would work with his chief of staff to determine how to implement that cut.

Benge said it largely would be up to agency heads to determine how to implement their agencies' cuts.

"We're leaving that up to the agency directors. Overall, I think it would be important to all the agencies, school districts and anyone who receives state dollars to continue to be very careful how they budget their dollars this year," Benge said.

Miller said a variety of factors went into deciding which agencies were cut and which received increases.

"Some of the agencies' budgets were dictated a lot by the stimulus dollars," Miller explained. "Public health, transportation and education are receiving a significant amount of federal dollars, so that is going to determine their funding levels.

"Other areas that were targeted for more surgical cuts were those that we believed because of their carryover funds could mitigate [possible cuts] to their services," he added. "Another area was places where we felt they could absorb cuts better than other areas."

The largest proposed increase is planned for the Oklahoma Health Care Authority, which would see an increase of $127.7 million or 15.2 percent under the plan. The Oklahoma State Regents for Higher Education will see an increase of $31.6 million or 3 percent under the plan and the State Department of Education will see its total appropriations grow by $40.5 million or 1.6 percent.

Ten agencies will receive standstill budgets, according to the agreement, including the Department of Corrections and the Department of Career Technology Education.

The budget agreement does not call for appropriating any funds from the Constitutional Reserve Fund, also known as the Rainy Day Fund.

"The Rainy Day Fund is still untouched, and for that we will all be grateful next year if we have our umbrellas out," Coffee said.

The budget calls for increases in certain fees, said Miller and Sen. Mike Johnson, R-Kingfisher, chairman of the Senate Appropriations Committee. But, those increases are targeted at users of specific services and are not broad-based fee increases.

"There aren't any consumer-based or widespread fee increases for the general public," Miller said, "like [motor vehicle] tags or drivers licenses or other fees that touch everybody. There are none of those."

Miller said there was a proposal to increase a fee at the attorney general's office and a fee at the Alcoholic Beverage Laws Enforcement Commission.

In addition to the stimulus funds and limited fee increases, the budget includes additional revenue from several sources, including a proposal involving accelerating individual income withholding and a proposal to increase some fines and penalties for delinquent taxes, Johnson said.

The budget also does not include any tax cuts, Coffee and Benge said, although previously scheduled increases in the standard deduction and an increase in level of the estate tax exemption will go into effect as planned.

"It would be difficult to do anything with tax cuts this year," Coffee said, pointing to the expected decline in state revenues.

Benge put it more bluntly: "That's a dead issue."

While the primary focus was on an FY2010 agreement, legislative leaders said an eye also was cast toward FY2011.

"We were trying to address the needs [for the current fiscal year] versus the long-term consequences of additional spending," Johnson said.

Johnson and Miller said approximately $600 million of federal stimulus funds will be available for the Legislature to appropriate for FY2011.

"We really planned this budget like a two-year budget planning phase, knowing that we could very well experience a difficult or more difficult situation next year. So, we kept 2011 in mind while we were planning 2010," Benge said.

The process of formalizing the budget is expected to begin Monday, Coffee and Benge said. Each chamber's General Conference Committee on Appropriations is expected to begin taking up the bills necessary to make the budget a reality. The primary component will be a general appropriations bill that directs the agreed-to funds to each agency. That will be followed by a series of budget limitation bills that directs the agencies how to spend the funds they will receive.

Currently, the Oklahoma Supreme Court is considering a lawsuit filed by Coffee and Benge against Henry that challenges his ability to line-item veto portions of budget limitation bills. Coffee and Benge said Friday they hoped vetoes of this year's budget limitation bills could be avoided.

"The best way to handle that is with good communication with the governor," Coffee said. "I want to tell you today that I think the governor worked very well with us through the process and hopefully we will have good communication and not get into that situation with this budget. I don't foresee that."

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