Capitol Insider: Lawmakers ‘Cash, Cut’ And Go Home With Larger Hole On Horizon

Nov 17, 2017

A bill to cut several state agency budgets and cash out state savings accounts has made it to Governor Mary Fallin’s desk. The Oklahoma Senate passed HB1019X Friday, after the state House of Representatives refused to pass options increasing state revenue over the eight-week special session. Both chambers have adjourned, ending the session, and leaving Fallin to decide if she will sign or veto the bill.


Fallin had said she would not approve “severe” cuts of more than $90 million. The plan on her desk cuts $60 million out of agency budgets. She also made clear she didn’t want to drain the state’s ‘rainy day fund’, as the state is expected to start the next fiscal year with an estimated $678 million hole. The bill approved by lawmakers leaves $30 million in state coffers.

As the state Senate voted on the measure that will cut 49 state agencies by nearly 2.5 percent, Fallin sat in the gallery alone, facing lawmakers, as the bill passed 24-14. eCapitol news director Shawn Ashley tried to speak with the governor after the vote.

“You could tell she was still somewhat shaken by the fact that this is how the legislature has, in the case of the House, decided to solve the problem, and in the case of the Senate, as members said, had no other choice but to solve the problem this way.” Ashley said.


From the beginning of the special legislative session, Fallin urged lawmakers to find additional sources of revenue to fill the $215 million hole. The Senate tried, passing a measure to increase the motor fuel tax, cigarette tax, and the amount producers pay on oil and gas. Branded the “A+ plan,” it failed in the House.

Fallin called continued cuts and an unwillingness to find additional sources of revenue “embarrassing.”

“We are setting Oklahoma up for failure.” Fallin said in a press release.


Dick Pryor: This is Capitol Insider, an inside look at Oklahoma politics and policy. I'm Dick Pryor with the eCapitol news director Shawn Ashley. Shawn, after eight weeks, the legislative special session is over as lawmakers finally decided to slash agency budgets to fill most of the $215 million budget hole.


Shawn Ashley: This bill provides for a number of cuts to state agencies on an average of 2.44 percent, although there are some agencies that receive no cuts, such as the Department of Education and the Department of Corrections. It also appropriates money from the rainy day fund, authorizes agencies to spend about $60 million of their agency revolving funds, money they were holding in savings. Overall, there's about $60 million of cuts in the bill. All of this to make up for the tobacco cessation fee that was found unconstitutional by the Supreme Court back in August.


Pryor: Shawn, there was a lot of talk about raising revenue during the special session, but ultimately the legislature went with the “cash and cuts” strategy. Was that really just baked into the special session?


Ashley: To a certain extent, that appears to be the case. If you'll remember back during the first week of the special legislative session, the House was scheduled to consider a bill that simply would have replaced the tobacco cessation fee with the tobacco tax, which would have required a three-quarters vote. However, House leadership pulled that off the floor, saying that House Democrats would not support the plan and something new would need to be developed. Ultimately something new was developed that included the tobacco tax, the motor fuel tax and an increase in the tax on low-point beer. But, that bill failed on the House floor. We saw time and time again these efforts where House leadership would say “we would put 75 percent of our members up in favor of a revenue-raising measure” but when the time actually came, whether it was in committee or on the floor, that didn't happen.


Pryor: Governor Mary Fallin threatened to veto more spending cuts. Will she sign these bills that will do just that?


Ashley: She said first of all, that what she would consider “severe cuts” were those of $90 million or more. In the case of House Bill 1019, there are approximately $60 million of cuts included in it. So it doesn't meet that criteria. Her other criteria concerned whether too much one-time money would be spent. This bill leaves approximately $30 million of one-time money on the table. So the governor will have to decide whether that's enough or not enough as she considers whether to sign or veto the bill.


Pryor: Governor Fallin said, "We are setting Oklahoma up for failure that will take many years to undo the damage we have done to our state's image." And that's a quote. She's concerned.


Ashley: I think she showed that concern when the Senate was considering the bill and she came and watched the question-and-answer period and much of the debate by herself. And I spoke to her just very briefly after the vote occurred, hoping to get a comment. And you could tell she was still somewhat shaken by the fact that this is how the legislature has, in the case of the House, decided to solve the problem, in the case of the Senate, as members said had no other choice but to solve the problem this way.


Pryor: The bill drains most of the state's cash reserves, leaving only about $30 million that lawmakers can use to fill another budget hole next year. And estimates for that shortfall range up to about $678 million. Being an election year, it's not very likely that revenue-raising measures will be able to pass next year.


Ashley: Most members aren't going to be willing to vote for a tax increase because it is an election year. You don't want to give your opponent that opportunity to put that in a flyer and say that you voted for tax increases.


Pryor: As lawmakers were trying to fix the budget during the special session, late in the special session, the Board on Legislative Compensation voted to cut legislator pay by 8.8 percent, beginning in 2018. Admitting citizen frustration with the legislature, the board maintained the cuts were not punitive but they were made to bring Oklahoma legislative pay more in line with other states in the region. Still, Shawn, that was a stunning move.


Ashley:  I have been here more than 21 years and have watched the Legislative Compensation Board meet every other year and while they have held legislative compensation flat, there has never been an indication that they would cut it. They indicated for the first time when they met in October that that might be on the table. And it really came to fruition when they voted to cut pay by 8.8.


Pryor: It's been quite an ordeal. But now the special session is over. Thanks, Shawn.


Ashley: You're very welcome.


Pryor: That's Capitol Insider. Until next time, with Sean Ashley, I'm Dick Pryor.