By Rep. Mike Sanders
At the start of the year, as oil and natural gas prices fell, we began to brace ourselves for a tough budget year. Things started to look up as the governor unveiled a plan to pull money from revolving funds to fill the budget shortfall hole. Now, the latest Board of Equalization estimates show a growing hole, nearly double the size of their last estimate.
The current budget hole is a product of many factors. First, we have a lot of “off-the-top” funding streams, which have increased the money for core services – specifically road and bridge repairs and higher education scholarships. The Board of Equalization estimates money available for appropriation. Off-the-top funding, which is not included in that estimate, has grown every year. In years of revenue growth, this hasn’t presented a problem.
However, this year is not a revenue growth year, because of falling oil prices. We also have tax credits, which impact revenues. Tax credits are another complicated problem, because some bolster the oil and gas industry and other important sectors of the economy. Take all of them away and we end up with a worse oil and gas and general business climate.
So, how do we address these complicated problems? There is a plan proposed that would take $100 million from revolving funds, $100 million from “rainy day” funds, $40 million from the unclaimed property fund and $60 million from cash flow. That would provide $300 million to address a portion of the shortfall. We would still need to make a 2.5 to 3 percent cut to the overall budget, but that is much better than an almost 9 percent cut that would be required otherwise.
Revolving funds are basically forgotten funds created in past sessions that never ended up being used. They have basically become holding places for taxpayer dollars that could be better spent on core services. The “rainy day” fund was set up specifically to deal with shortfalls. There is currently $535 million in the fund, but the idea is to never drain it completely. The cash flow fund is similar to a revolving fund; it is generally used to help smooth the transition from one fiscal year to the next.
With every passing year, we have gotten more and more creative in how we address budget snafus. It is why we have been able to increase education, public safety and road and bridge funding continually, even though we still receive criticism for not increasing monies for core services even more than we currently do. Unfortunately, the expectations often exceed reality.
I will continue to keep you updated on the budget and other policy issues. My door is open to you at all times. You can reach my legislative office at (405) 557-7407, e-mail email@example.com or stop by Room 205 at 2300 North Lincoln Boulevard in Oklahoma City.
Budget Discussion Getting Tougher
Do you like this post?