Record State Budget Projected
Oklahoma state government operates on a fiscal year that runs from July 1 in one year, through June 30 of the next year. The current fiscal year, called Fiscal Year 2019, began July 1. The Legislature passes, and the governor approves, budget appropriations for the coming fiscal year during the legislative session which is usually completed by May.
The Legislature completed their work early this year, and in April, Gov. Mary Fallin signed the Fiscal Year 2019 budget bill (Senate Bill 1600) into law. The budget put significantly more money toward education, mental health services, and public safety, and for the first time in years, no agency received a cut. The Fiscal Year 2019 budget spends $7.6 billion taken from Oklahoma taxpayers, which is an 11% increase from the previous year. It was the largest appropriated budget in state history. When adjusted for inflation, it marked the highest appropriated budget since 2015. Mostly due to the decline in oil prices, the budgets for the three following fiscal years saw budget cuts for most agencies.
All indications are that when the next Legislature writes the budget for Fiscal Year 2020, it will again set a record. While some of the current budget increase was enabled by the nearly half-billion dollar tax increases, Oklahoma and the nation was already experiencing the benefits of an improving economy. The up tick in the economy not only helped the people’s pocketbooks, but also resulted in new revenues for government.
During the just completed Fiscal Year 2018, which ended June 30, Gross Receipts to the Oklahoma Treasury increased by $1.2 billion, or 11.1 percent, compared to Fiscal Year 2017. Gross Receipts during the 12 months ending in June, was $12.18 billion, an all-time high. State Gross Receipts includes all revenue, not just what is available for appropriation. The General Revenue Fund receives less than half of the state’s gross receipts with the remainder paid in rebates and refunds, remitted to cities and counties, and placed into off-the-top earmarks to other state funds. Tax increases on cigarettes, fuel and gross production signed into law in late March took effect on July 1and had no impact on the last fiscal year collections.
Oklahoma’s Constitutional Reserve Fund, also known as the Rainy Day Fund, was depleted as lawmakers scrambled to fill the budget shortfalls. When there is an excess in revenues above the appropriated budget, the excess is deposited either into the Rainy Day Fund for emergencies or placed into a special cash account that officials can use to make supplemental, midyear appropriations. There were no deposits made to the fund in the last four fiscal years. But, in August, $381.6 million was deposited into the Rainy Day Fund. This was the largest deposit since 2012. About $70 million had been deposited earlier, so this brought the balance to just over $450 million. The current cap on the fund is set at just above $750 million. The Rainy Day Fund was created in 1985 for emergencies, to make up for a shortfall in fiscal year collections, and to make up revenue if next year’s General Revenue Fund collections are forecast to be less than the current year.
The first official certification of revenue will not come until December. That certification will be used by the governor to submit a proposed budget to the next Legislature which convenes in February. New certifications may come during the legislative session, which could make a higher number available for appropriation. Some projections show that the next Legislature could have over one billion dollars of additional revenue available for appropriation next year. So, the big decisions for the next governor, and the Legislature, is where to spend the surplus revenue.
There is little doubt that the Legislature will spend the surplus revenue, and soon, pressure will begin building for yet another tax increase.