In January, I wrote an article about the state budget shortfall.  In December the State Board of Equalization declared the state would have $900 million less for appropriations to state agencies than it had when we wrote and passed the budget last year.  I said by the time the board made its final certification in mid-February, it was likely that shortfall would be much larger—as much as $1.3 billion. Thompson Roger 1
On Thursday, the state’s secretary of finance announced that the shortfall would indeed be $1.3 billion. According to the secretary’s press release, between the board’s initial FY 2017 estimate Dec. 21 and Wednesday, oil prices fell 21 percent from $34.74 per barrel to $27.45 per barrel, Oklahoma lost at least 500 more energy sector jobs and major energy firms announced plans for further employment reductions in the coming months. Since June 2014, Oklahoma has lost at least 12,500 energy sector jobs as oil prices have fallen 75 percent.
There is no way to make $1.3 billion in cuts in the state budget without impacting core services, including education, public safety and healthcare programs.  Those are among the agencies that receive 91 percent of all appropriated dollars.  The agencies that fall in categories outside of what are viewed as providing core services don’t receive enough in state dollars to even begin to make a dent in the budget shortfall.
Further, as I’ve stated before, we must address some of the other issues which compounded the budget shortfall’s effect on the budget.  We must reexamine off-the-top allocations for programs, which divert money from state revenues directly to earmarked programs, reducing the amount of money available to appropriate each year.
We also must take a hard look at tax credits and incentives, which combined represent more than $1 billion.    Some of them have been proven to create jobs and boost our economy.  But we don’t have definitive data on the impact of others. The Senate Finance Committee has begun the process of looking at these tax preferences.  Many, many will be examined, and it is really far too early in the process to know which ones may be targeted.  And it is too early to say what the approach will be—whether it is to end some preference all together, reduce the size of most or all of them, or temporarily suspend some or all credits.
Already there has been push back, just as we knew there would be.  The governor called on lawmakers to reexamine these credits and incentives in her State of the State, but this week urged Finance Committee members not to even consider one of them, saying that just the discussion of temporarily suspending an aerospace credit prompted one company’s decision not pursue two projects here.  But that’s a disappointing turn, especially considering nothing is close to being decided upon at this point.  And it is certain that any business or person who currently takes advantage of a tax break will be putting the pressure on the governor and lawmakers not to touch that credit.  The alternative to refusing to reexamine any of these or look at other possibilities, including sales tax exemptions, means we will have no choice but to make more than $1 billion in cuts, and I think that would be devastating for our citizens.
None of the decisions we’re facing will be easy ones.  But unlike the federal government, we can’t spend money we don’t have.  Our constitution requires us to write and pass a balanced budget.  No matter what is ultimately done regarding tax credits or exemptions, there will have to be cuts.  People’s lives are going to be directly impacted by the end result.  My hope is that the Legislature will work together with the governor to do what’s necessary to reduce the size of the cuts and embrace reforms that will keep this from happening again in the future.
I appreciate your input, so please feel free to contact my Capitol office regarding legislative issues or other questions about government.  You can call 405.521.5588 or email This email address is being protected from spambots. You need JavaScript enabled to view it.. Thank you.