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Capitol Insider: How Will Legislators Fill Oklahoma’s $900M Budget Hole?

Apr 14, 2017

 

 


 

What happened at the Capitol this week?

 

Oklahoma lawmakers are plugging away at a 2018 state budget--figuring out where the state’s money will come from and where it will go.

 

 

According to eCapitol news director Shawn Ashley, legislators are starting by finding sources of revenue for the state, since it is currently short by approximately $900 million.

 

“Knowing that they have a nearly $900 million budget hole to fill, they’re going to look at filling that hole first,” Ashley said in his weekly Capitol Insider interview with KGOU’s Dick Pryor.

 

Members of the state’s House of Representatives filed more than a dozen bills Tuesday with proposed revenue sources.

 

But not all of those funding source bills will pass. While some only require 51 House votes before moving to the Senate, others, like a proposed cigarette tax increase, require 76 votes--or a three-quarters majority.

 

Legislative committees could start voting on the bills as early as Monday, according to House Speaker Charles McCall.

 

State agencies could be facing significant funding cuts in the 2018 budget, but lawmakers still have not determined exact cut amounts.

 

“Until they [legislators] know that budget number, we don’t know precisely what those cuts would be agency by agency,” Ashley said.

 

Ashley said those cuts are likely to target specific agencies rather than slashing agency budgets across the board, based on previous statements by Senate President Pro Tempore Mike Schulz, House Speaker Charles McCall, and other state leaders.

 

The state of Oklahoma also needs to pay back a borrowed $327 million, including $240 million from the state savings account or “rainy day fund” by the end of June.

 

What’s next?

 

Legislative committees could start voting on funding source bills for 2018 as early as Monday.

 

The state Senate is also set to take up a proposed $1500 teacher pay raise plan.

FULL TRANSCRIPT OF THIS WEEK’S CAPITOL INSIDER INTERVIEW:

Dick Pryor: Shawn, legislative leaders have been working behind the scenes on the state budget for the 2018 fiscal year. Is it starting to come together?

Shawn Ashley: It is beginning to look as if it is. On Tuesday, 15 what we call “JCAB bills”--joint committee on appropriations and budget shell bills--were filed.

These all have titles indicating that they're going to affect revenue in some way--the individual income tax, sales taxes, or transfer money involving the Department of Transportation.

We heard on Thursday from House Speaker Charles McCall that indeed that is the case. He said these bills will be divided into two categories--what he calls the “51s” and what he calls the “76s.”

The “51s” are changes to tax credits, exemptions, deductions which would only require a majority of the House--51 members--and then a majority of the Senate to win approval.

The “76s” are those bills which would require a three-quarters vote. These are real tax increases like an increase in the cigarette tax.

Speaker McCall said we would see some of those bills as early as Monday. And in fact the House Joint Committee on Appropriations and Budget is scheduled then. So we should see exactly how they plan to begin raising some of that revenue.

Pryor: That sounds serious.

Ashley: It's very serious. This is sort of the first step in the budget process and what it appears that they are trying to do, knowing that they have a nearly $900 million budget hole to fill, they're going to look at filling that hole first--seeing exactly how much money they may have to spend for the next fiscal year, and then begin to look at the appropriations side of the equation.

Pryor: But lawmakers still don't know what kinds of cuts they will have to make?

Ashley: That's exactly right.

As we've talked about before, House Appropriations and Budget chairwoman Leslie Osborn asked state agencies what impact a 14 and a half percent cut would have on them. That was based on the idea of fully funding education, funding the first year of a three year teacher pay raise plan, and then distributing the cuts to everybody.

And agency after agency said that would be very bad for them. But until they know that budget number--how much of the hole they have filled and how much revenue they would have to spend--we don't know precisely what those cuts would be agency by agency.

Pryor: But are the cuts more likely to be targeted rather than across the board?

Ashley: That seems to be what everyone is saying. Senate President Pro Tem Mike Schulz has emphasized time and time again that they would look at targeted cuts. House Speaker Charles McCall has said the same thing.

We've heard that from Kim David, chairwoman of the Senate Appropriations Committee, and Chair Osborn as well.

And we've seen that over the last several years--that rather than a flat, 7 percent across-the-board budget cut to every agency, they have targeted certain agencies for even increased spending while distributing cuts across other agencies.

Pryor: Now about this year, state finance officials have again borrowed money to pay this year's bills.

Ashley: That's right. The Office of Management and Enterprise Services director Preston Doerflinger announced on Tuesday that they were unable to meet the monthly allocations for the month--for April, and as a result had to borrow $31 million more in order for agencies to be able to pay their bills.

That brings the total to $327 million, which has to be paid back by the end of the fiscal year. That's going to be very difficult.

If you look at their own projections, April--because of income tax payments--will be a very good month, but then May and June seem to come in below the numbers that they need.

Pryor: What's the focus going to be over the next several days?

Ashley: Over the next several days, we will have that joint committee on appropriations and budget meeting, as well as the House Appropriations and budget meeting where they will take up the Senate's $1500 pay raise plan for teachers.

And then we'll begin shifting our focus to the floor as Senate bills are considered in the House and House bills in the Senate.

Pryor: And another legislative deadline passed and only a few bills died.

Ashley: That's right. On Thursday was the primary deadline for bills to be heard in committees of the opposite chamber, and just a few bills seem to have fallen by the wayside.

Pryor: eCapitol News Director Shawn Ashley. Thank you.

Ashley: You're very welcome.

 

 

Capitol Insider is a collaborative news project between KGOU and eCapitol. As a community-supported news organization, KGOU relies on contributions from readers and listeners to fulfill its mission of public service to Oklahoma and beyond. Donate online, or by contacting our Membership department. eCapitol is legislative news and bill tracking service. Online content is available via subscription.