Oklahoma’s state budget took effect July 1, and hinges on the outcome of several lawsuits before the Oklahoma Supreme Court. The cases question the constitutionality of revenue raising measures including the $1.50 cigarette fee and 1.25 percent sales tax increase on motor vehicles. If the state Supreme Court rules the measures are unconstitutional, the legislature could reconvene to again try to fund core services.
KGOU’s Dick Pryor and eCapitol news director Shawn Ashley spoke with Preston Doerflinger, the Secretary of Finance, Administration and Information Technology. He leads the agency tasked with helping craft and execute the governor’s annual state budget.
Pryor: This is Capital Insider, connecting Oklahoma people policy and politics. I'm Dick Pryor with the Capitol News Director Shawn Ashley and Preston Doerflinger Director of the Office of Management and Enterprise Services for the state of Oklahoma. Preston, how strong does Oklahoma's budget situation look heading into the new fiscal year.
Doerflinger: I'm not sure that strong is the word I would use but, certainly we're seeing a little bit of uptick in collections and hopefully be positioned somewhat better. But again, through our actions we've artificially created a hole heading into next year as well.
Ashley: What creates that hole for this fiscal year?
Doerflinger: You know fundamentally, Shawn, and you know I've had this conversation numerous times, it is a reliance and overreliance on the utilization of monies that are only available one time and thereby are not available again in the next fiscal year and create this artificial hole that we've been battling year in and year out.
Ashley: The governor has talked several times about addressing that issue. But the legislature seems unwilling to do so. Why is that?
Doerflinger: You know I think you know there are a number of reasons. One fundamentally sometimes is because it's our idea. Sometimes that's just enough not to take action. But you know we've been year in and year out in every executive budget showing ways that we can address the structural problems within our budget and the use of one time monies being part of that problem. I'll tell you where I'm at now is at some point the legislature and others can hear us now or they're going to hear it later. And we're trying to do things to position the state better for the next administration so that we don't compete, continue to repeat this cycle of having to have these types of problems because it really is challenging.
Pryor: Preston the state of Oklahoma came in better than expected for FY 17 it was able to give back more than $30 billion to state agencies. That's good news. But these agencies are always operating in a state of flux.
Doerflinger: Yeah it is positive news and we know we pointed to that as a little bit of positive or good news for that matter. But I guess the thing I would share if you look at that whole process holistically, if anything the way we finish the year demonstrates that all of this kind of works and did work the way it was designed to do and although we've experienced challenges with our budget the state’s routinely recognized for pretty strong and pretty good fiscal management overall.
Pryor: And Preston, all of these issues can lead to a downgrading of the bond rating which is actually happened in Oklahoma. Why did that happen?
Doerflinger: I mean this is basically the manifestation of what they've been telling us, that they want to see less reliance on one time sources of revenue. And really looking at creating new revenue streams to address the needs of state government.
Pryor: What is the effect on the state when the bond rating is lowered?
Doerflinger: I think the simplest way to put it for your listeners is it's like in like interest rates. When we go out to borrow for bonding, those ratings are going to affect the cost of borrowing that money. And so, in the most simplest terms, most of us when we get a mortgage or a car loan we want to pay the lowest interest possible. And certainly the state wants to be in that same position when going out to borrow for capital projects.
Ashley: As you look toward the 2018 legislative session and all these issues which you've mentioned, do you see a willingness in the legislature to potentially address some of them?
Doerflinger: I think that there's there are some fundamental philosophical differences between the legislature and the governor's office. And, you know, we have regular and ongoing conversations with the speaker and with the pro tem and trying to bridge some of those gaps where there are differences. I think the speaker, if I can speak for the speaker, is very interested in realizing all the efficiencies that we possibly can and extracting as much efficiency and making sure that government is operating as effectively as possible. You never stop doing that. No organization should. But I'm here to tell you that I fundamentally do not believe that we have enough resources to meet the needs of providing just the core services of government. And we're so far behind in funding some areas that we're just trying to get back to a level that's even remotely appropriate. DOC being the perfect example.