State agencies in Oklahoma are being told to brace for budget cuts after a state board led by Gov. Mary Fallin certified that the Legislature will have $611 million less to spend this year.
The State Board of Equalization met Tuesday in Oklahoma City and formally certified the amount of revenue that is available for the Legislature to appropriate to state agencies for the fiscal year that begins July 1.
“The gap more than doubled,” Secretary of Finance, Administration and Information Technology Preston Doerflinger said in a statement. “We were prepared to climb the hill we faced before and we’re prepared to climb the mountain we face now. It will be difficult, but all options are on the table and the state will meet the challenge.”
The Oklahoma Legislature appropriated about $7.2 billion for the budget for the current fiscal year. But the amount available for them to spend on next year's budget is about $6.6 billion.
Fallin already had suggested legislators tap state agency revolving funds and the state's Rainy Day Fund to help ease the budget cuts for state agencies.
Doerflinger blamed the shortfall in part on a 55 percent drop in oil prices since June, citing Oklahoma Tax Commission figures indicating the state may lose 3,800 energy sector jobs this year.
“We have monitored the oil situation closely for months through regular contact with energy firms, analysts, financial firms and others. The energy sector is certainly facing short term pain, but experts we talk with doubt it is facing a long term bust. Once market prices return to profitable levels, state revenues should start rebounding, as well,” Doerflinger said.
Lt. Gov. Todd Lamb said shortly after the numbers were certified that even though Oklahoma will always rely on the oil and gas industry, economic diversification should be top of mind.
"We need to re-examine the certification process," Lamb said. "When the December projections were given, we all intuitively knew they would not hold. We must find a way to improve this process so numbers like today are not so far away from initial projections.”
Oklahoma Policy Institute Executive Director David Blatt says the state could close the budget gap by canceling a scheduled cut to the top income tax rate, tapping a portion of the Rainy Day Fund, or accepting federal funds for expanded health coverage under the federal Affordable Care Act.
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