The Legislature went back to work on Monday facing a $1 billion shortfall.
Gov. Brad Henry met with legislators last week, reaching an agreement to make necessary cuts and to preserve funds.
To balance the budget for fiscal year 2009, which ends June 30, lawmakers propose to spend about $600 million in federal stimulus funds and pull another $600 million from the state’s Rainy Day Fund, State Representative Joe Dorman said.
“We had to borrow money from our cash reserves to cover the cost of too big a budget,” Dorman said. “It will take $230 million to back-fill last year’s budget, which must come out of the Rainy Day Fund, so we have less in the fund than the public has been told. We have to fill in the gaps in the 2010 budget before we get to start on the 2011 budget.”
“We just put a Band Aid on the budget to get it through,” said Rep. Leslie Osborn. “We don’t have a lot to say as members, the decision was made by the governor, the treasurer and the heads of the house and senate. But I was glad they left us a really good cushion for next year.”
Osborn predicted lawmakers will have to use all of the RDF and that there will still be cuts to many agencies.
“There will be 10 percent cuts at least and I’m sure there will have to be more targeted cuts,” Osborn said.
Within the next four months, Gov. Brad Henry is expected to hire an information person in an effort to remove redundant functions that several agencies do Osborn said.
“There’s no doubt it’s going to be difficult,” Osborn said.
“We have to stretch our dollars and will use stimulus money and the Rainy Day Fund, but we can only use some. We can’t afford to use all of it; we can’t fill all the holes,” Senator Ron Justice said. “ Some agencies will have serious problems, but others expected cuts and are working to make the best of the situation.”
While some agencies, like public schools, higher education, health care and the correctional system, will receive supplemental appropriations, other agencies have already faced cuts in August, December and January, for a total of about 7.5 percent overall.
“There will be some cuts straight across the board, but there won’t be a full 10 percent cut in all areas,” Justice said.
Depending on what the state’s finances do, Justice said if things worsen, it’s back to the drawing board.
“But if they improve, we hope to continue to do things to help. It’s a difficult situation,” Justice said.
“I’m worried about how we’re going to fund many essential services this year and I’m very worried about next year,” Dorman said. “We’ve seen several agencies running on smaller budgets and several programs have not been reinstated. For instance, in Lawton there was a program where teachers could exchange equipment and tangible goods for their classrooms which has been eliminated by the state.”
Dorman said the tax commission has also shut down its Lawton office.
“It was a huge hit for Lawton, all the CPAs relied on that office for a rapid response because it was local,” Dorman said. “If the downturn keeps on, I don’t see how agencies can help but eliminate jobs. We are definitely seeing agencies going through the furlough process right now. We hope to do everything possible and eliminate jobs as a last resort.”
Dorman said the legislature is also looking at a reduction in salaries.
“There’s no way we can get around it, people have to tighten their belts,” Dorman said.
Next year’s revenues are expected to be even lower, with a predicted drop of an additional $1.3 billion.
There are those who believe past tax cuts have contributed to the current deficit, and some say the amount of the tax cuts and the amount of the deficit match dollar for dollar.
Justice says there really isn’t a correlation between the two.
“There were tax cuts of about 15 percent made, but gross production is way down and we didn’t change tax on oil and gas. That’s where we took the biggest hit,” Justice said. “Plus there has been a huge increase in spending over the last 10 years.”
In true politician’s form, Dorman laughingly answered, “Yes and no,” to the question of a correlation between tax cuts and the deficit.
“If we had not done the tax cuts, there would have been more money in the budget last year, which would have resulted in a bigger budget and a bigger shortfall this year,” Dorman said.
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Legislators tackle budget
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