oklahoma budget overview: trends and outlook, june 2010
TRANSCRIPT
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
1/48
OKLAHOMA BUDGET OVERVIEW
Trends and Outlook
FULLY UPDATED June 17, 2010
David Blatt
Oklahoma Policy [email protected] - (918) 794-3944
mailto:[email protected]:[email protected] -
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
2/48
Oklahomas Path to Prosperity
OUR STARTING POINTGovernment is among our means of
achieving our common goals as astate --- alongside private businesses,non-profit organizations, faith groups
and families.
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
3/48
Oklahomas Path to Prosperity
OUR STARTING POINTWithout a strong and effective public sector, ourfamilies, communities and businesses cannot thrive
We depend on our state and local governments to
help: Educate our children and train our workforce;
Protect our streets and investigate crimes;
Maintain and upgrade our roads and bridges;
Pay for much of the medical care provided by private doctors,
nurses, therapists, home health aides, etc.
Inspect our water supply;
Support our farmers, investors, and manufacturers;
Take care of those at risk of harm and abuse.
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
4/48
Oklahomas Path to Prosperity
We Already Lag Behind Oklahoma already underfunds most of our publicstructures and falls short of many of our common goals asa state. For example:
Our teacher pay is among the lowest in the nation;
We have among the highest rates of heart disease, obesity,smoking, and uninsured;
Our community-based social service providers have gone yearswithout rate increases;
Our correctional facilities are overcrowded and understaffed.
The ongoing state budget crisis risks a serious andlong-term corrosion of our public structures that willweaken our prosperity, security and well-being.
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
5/48
Budget Trends: FY 02 FY 09
Annual Appropriations Totals,FY 00FY 08(Includes Supplementals thru FY 08 and Rainy Day spillover Funds for
Recurring Agency Expenditures) - in $millions
FY 02 FY 08: Bust and BoomState budget suffered steep downturn, deep cuts, 02 - 04
Strong economy led to robust revenue growth and increased stateappropriations between FY 06 and FY 08
$4,981
$5,389 $5,491$5,191 $5,145
$5,459
$6,217
$6,760$7,043
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
FY'00 FY'01 FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
6/48
Where did the growth revenue go?
Covering rising costs of basic services and supportingtargeted investments for shared goals;
80 percent of new dollars went to six core agencies.
Increased State Appropriations, Selected Agencies,FY 06 FY 08
Dept. of Education: $453M
Health Care Authority: $289M
Higher Education: $271M
Human Services: $129M
Corrections: $80M
Transportation: $72.5M*
Budget Trends: FY 02 FY 09
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
7/48
Lost Revenues from Select Tax Cuts Enacted 2004 - 2006FY'05 through FY'10 (in $ millions)
$18.7$144.8
$333.3
$561.8$651.1
$776.9
$0.0
$200.0
$400.0
$600.0
$800.0
FY'05 FY'06 FY'07 FY'08 FY'09 FY'10source : Oklahoma Tax Commission
Tax Cuts had a long-term impact Most of the cuts were to the personal income tax
Tax cuts were stretched out over several years; full impactwill not be felt until FY 11
Budget Trends: FY 02 FY 09
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
8/48
Budget Trends: FY 02 - FY 09
FY07 FY08: Revenue Slowdown
As tax cuts kicked in and tax breaks multiplied, GeneralRevenue collections were almost flat in FY 08 comparedto FY 07 (+%0.9, $54 million)
-6.6%-5.3%
10.6%
7.6%
14.8%
4.0%
0.9%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
FY '02 FY '03 FY '04 FY '05 FY '06 FY '07 FY '08
Annual % Change in General Revenue Collections, FY '03 - FY '08
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
9/48
Budget Trends: FY 02 - FY 09
FY 09 Budget: Tightening the Screws Most agencies appropriations frozen for FY 09
No funding for benefit cost increases teacher salary increases, stateemployee raises
FY 09 excludes supplementals and mid-year budget cut
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
10/48
Budget Trends: FY 10 FY 11
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
11/48
Source: Center on Budget and Policy Priorities
Budget Trends: FY 10 FY 11
Things Are Tough All Over
All but two states are experiencing the state fiscal crisis
Combined state budget gaps for FY 09 FY 12 estimated toreach $600 billion
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
12/48
Budget Trends: FY 10 FY 11
The Recession Hit Oklahoma Late 2008
Monthly Oil and Gas Prices, 1986 - 2010
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$-
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
Jan-1986
Jan-1987
Jan-1988
Jan-1989
Jan-1990
Jan-1991
Jan-1992
Jan-1993
Jan-1994
Jan-1995
Jan-1996
Jan-1997
Jan-1998
Jan-1999
Jan-2000
Jan-2001
Jan-2002
Jan-2003
Jan-2004
Jan-2005
Jan-2006
Jan-2007
Jan-2008
Jan-2009
Jan-2010
U.S. Natural Gas Wellhead Price (Dollars per Thousand Cubic Feet)
Cushing, OK WTI Spot Price FOB (Dollars per Barrel)
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
13/48
Budget Trends: FY 10 FY 11
The Recession Hit Oklahoma Late 2008
See OK Policy, Numbers You Need, at:
http://okpolicy.org/numbers-you-need-key-oklahoma-economic-and-budget-trends
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.08.0
9.0
10.0
Jan-80
Mar-81
May-82
Jul-83
Sep-84
Nov-85
Jan-87
Mar-88
May-89
Jul-90
Sep-91
Nov-92
Jan-94
Mar-95
May-96
Jul-97
Sep-98
Nov-99
Jan-01
Mar-02
May-03
Jul-04
Sep-05
Nov-06
Jan-08
Mar-09
%Umpo
Oklahoma Monthly Unemployment Rate(Seasonally-Adjusted), 1980-2010
Apr 2010:
6.6%
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
14/48
Budget Trends: FY 10 FY 11
The Recession Hit Oklahoma Late 2008
-5.0%
-3.0%
-1.0%
1.0%
3.0%
5.0%
2007.4 2008.1 2008.2 2008.3 2008.4 2009.1 2009.2 2009.3 2009.4
% Change from PriorQuarter
Quarterly Change in Personal Income,Oklahoma and National,
4th Quarter 2007 to 4th Quarter 2009
U.S. Oklahoma
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
15/48
Budget Trends: FY 10 FY 11
Its A Revenue Problem Jan 2009 Feb 2010: Revenues fell by a monthlyaverage of 23.1 percent compared to the same month forthe prior year
Finally seeing clear signs that the downturn has hitbottom and revenues are starting to climb back
11.1% 10.8%
1.3%
10.4%12.8%
7.1%
-8.5%
-21.5%-19.1%
-21.1%
-27.7%-30.1%
-26.3%
-31.6%-30.1%
-23.7%
-30.5%-29.1%
-16.7%
-7.3%
1.6%
-0.2%
6.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept. Oct Nov Dec Jan Feb Mar Apr May
Change in Monthly General Revenue Collections, Compared to Same Month Prior Year,
July '08 - May '10
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
16/48
Budget Trends: FY 10 FY 11
Its a Revenue Problem For most of FY 10, monthly revenue collections have been 15to 25 percent their 5-year historical average for the same month
Collections are recovering but remain below their pre-downturn levels
92.0%
60%
70%
80%
90%
100%
110%
120%
130%
Jul'08
Aug'08
Sep'08
Oct'08
Nov'08
Dec'08
Jan'09
Feb'09
Mar'09
Apr'09
May'09
Jun'09
Jul'09
Aug'09
Sep'09
Oct'09
Nov'09
Dec'09
Jan'10
Feb'10
Mar'10
Apr'10
May-10
Monthly Total General Revenue Collections as % of Prior Five-Year Same-MonthAverage, July 2008 - May 2010
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
17/48
Budget Trends: FY 10 FY 11
Its a Revenue Problem Four consecutive quarters of worsening collections
Revenue drops more than twice as steep as during thelast downturn
-12.1%
9.9%
-29.5%
-8.3%
-40.0%
-20.0%
0.0%
20.0%
40.0%
Q1
FY
'02
Q3
FY
'02
Q1
FY
'03
Q3
FY
'03
Q1
FY
'04
Q3
FY
'04
Q1
FY
'05
Q3
FY
'05
Q1
FY
'06
Q3
FY
'06
Q1
FY
'07
Q3
FY
'07
Q1
FY
'08
Q3
FY
'08
Q1
FY
'09
Q3
FY
'09
Q1
FY
'10
Q3
FY
'10
Quarterly Year-over-Year Change in GR Collections,Oklahoma, FY '02 - FY'10 (Q3)
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
18/48
Budget Trends: FY 10 FY 11
Its a Revenue Problem FY 10 General Revenue projected to be 25 percent below pre-
downturn (FY 08) levels;
FY 10 GR collections less than FY 01 without adjusting forinflation or population growth
$4,717
$4,408
$4,174
$4,616
$4,966
$5,701
$5,935 $5,953
$5,518
$4,475
$4,000
$4,500
$5,000
$5,500
$6,000
FY '01 FY '02 FY '03 FY '04 FY '05 FY '06 FY '07 FY '08 FY '09 FY '10
(proj.)
General Revenue Collections,FY '01 - FY '10 (in $millions)
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
19/48
Budget Trends: FY 10 FY 11
Its a Revenue Problem
Between FY 08 and FY 10, GR Collections expected to fall by:
Gross production tax : -53 percent
Corporate income tax : -45 percent
Personal income tax : -26 percent
Sales tax : -8 percent
$-
$500
$1,000
$1,500
$2,000
$2,500
FY'06 FY'07 FY'08 FY'09 FY'10(Proj.) FY'11(Est.)
Oklahoma General Revenue Collections by Major Tax,FY '06 - FY '11 (in $ millions)
Personal Income Tax Corporate Income Tax Gross Production
Sales Tax Motor Vehicle
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
20/48
Budget Trends: FY 10 FY 11
This is As Bad as Its Ever Been
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Annual General Revenue Collections, in $ millions,
FY '82 - FY '11 (FY '10 & FY'11 based on Feb. 2010 certification)
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
21/48
Budget Trends: FY 10 FY 11
FY 10 Budget: Revenues on the Skids
5,407.2
5,649.2
5,981.1 5,946.45,902.7
5,710.0
5,356.6
5,000
5,500
6,000
6,500
FY '06 Actual Fy '07 Actual FY '08 Actual FY '09 June FY '09
December
FY '09
February
FY '10
Feburary
General Revenue Collections,FY '06 Actual - FY '10 Estimated (in $million)
In February, FY 10 revenues estimated to come in >$600million below FY09 ;
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
22/48
Budget Trends: FY 10 FY 11
FY 10 Initial Budget
NOTE: FY 09 totals do not include June budget cuts
$7,231.2 million total, including $641 million ARRA (stimulus)
Increase in total appropriations of $106 million (1.5 percent)compared to FY 09
State dollars only: $500 million less than in FY 09
$4,981
$5,389 $5,491
$5,191 $5,145
$5,459
$6,217
$6,760
$7,043
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
FY'00 FY'01 FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08 FY'09 FY'10State Appropriations ARRA
$30ARRA
$7,125 $7,231
$641ARRA
$7,095State
$6,590State
State Appropriations History, FY '00 - FY '10 in $millions)(includes supplementals, excludes one-times from Rainy Day Spillover funds)
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
23/48
Budget Trends: FY 10 FY 11
FY 10 Initial Budget Stimulus funds made it possible to minimize cuts orprovide small increases to ten largest state agencies andsome smaller ones
Funding for 10 largest agencies up $161 million, 2.6
percent Most smaller agencies took cuts of 5 to 7 percent
No funding to address rising employee benefit costs orinflation (e.g. utilities, transportation, food)
Demands for some state services increase due to thedownturn
See: OK Policy FY 10 Budget Review at:
http://okpolicy.org/fy-10-budget-information
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
24/48
Budget Trends: FY 10 FY 11
FY 10 : Off to a Very Rough Start Collections through January were $864 million 24.9 percent -below the estimate.
After seven months of significant shortfalls, collections startingin February have come close to or exceeded the estimate.
-$401
-$180 -$200
-$11-$72
-$864-$1,000
-$800
-$600
-$400
-$200
$0
Net Income
Tax
Gross
Production
Sales Tax Motor
Vehicle
Other
Sources
Total Gen.
Revenue
General Revenue Collections compared toEstimate, by Tax, FY '10 thru Jan (in $millions)
-$420
-$26
-$236
-$2-$98
-$781
-$1,000
-$800
-$600
-$400
-$200
$0
Net Income
Tax
Gross
Production
Sales Tax Motor
Vehicle
Other
Sources
Total Gen.
Revenue
General Revenue Collections compared to
Estimate, by Tax, FY '10 thru May (in $millions)
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
25/48
Budget Trends: FY 10 FY 11
FY 10 : How Large a Shortfall? February certification projected a $669 million (13.0percent) shortfall in FY 10 GR collections.
$109 million projected shortfall in HB 1017 Fund as well
Total mid-year shortfall of $778 million
$5,415
$5,145
$4,476
$4,000
$4,500
$5,000
$5,500
100% Estimate - June Appropriation (95%) February Projection
FY '10 General Revenues - Original vs.Revised Projections
$669million
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
26/48
Budget Trends: FY 10 FY 11
FY 10 : What Response? OSF cut agenciesGR allocations by 5 percent beginning inAugust and by 10 percent beginning in December
Cuts were across-the-board based on GR allocations
Since some agencies are partly or fully appropriated fromother funds (i.e. 1017 Fund, State Transportation Fund,ARRA), agencies are not all affected equally
Cuts limited to less than shortfall through by borrowing fromcash reserves of various funds that must be repaid
$320.9 million borrowed in first 7 months of the year
Fully repaid by May
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
27/48
Budget Trends: FY 10 FY 11
FY 10 : What Response? Rainy Day Fund was filled to maximum amount of $597million
Left untouched for initial FY 10 budget
$157.5
$340.9
$72.3
$0.1
$217.5
$461.3$496.7
$571.6$596.6
$0
$100
$200
$300
$400
$500
$600$700
2001 2002 2003 2004 2005 2006 2007 2008 2009
Rainy Day Fund Balances, FY '01 - FY '09(opening balance in $ millions)
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
28/48
Budget Trends: FY 10 FY 11
FY 10 : What Response? Rainy Day Fund can be accessed as follows:
3/8th for a mid-year shortfall in GR collections; ($224M)
3/8th for a projected decline in GR collections for the comingyear compared to the current year ($224M);
1/4th upon declaration of an emergency and legislative approval($149M)
Current Year
RevenueFailure, 37.5% -
$224M
Forthcoming
Year Shortfall,
37.5% - $224M
Emergency,
25.0% - $149M
Uses of Constitutional
Reserve Fund
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
29/48
Budget Trends: FY 10 FY 11
FY 10 Mid-Year Budget AgreementAgreements announced by Governor, Speaker andPresident Pro Tem in January and February
Continued 10 percent monthly cuts to GR for rest of year
Averages out to 7.5 percent of GR for full year
Supplemental funding to various agencies to offset part of GRand HB 1017 shortfalls (Common Ed, Higher Ed, OHCA,Corrections, others)
After supplementals, mid-year cuts equaled $272 million (3.8percent)
Additional revenues needed to balance: $223.7 million of Rainy Day Fund (3/8th), $151 million more
stimulus money, plus additional gross production taxrevenues and other sources
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
30/48
Budget Trends: FY 10 FY 11
FY 10 Mid-Year Budget Agreement Total revised budget was $272 million (3.8%) less thaninitial; $165 million (2.4%) less than FY 09;
Almost $1.5billion (21%) of revised FY 10 budget madeup of non-recurring money
$6,793
$6,220$5,462
$301
$371
$435
$30$641
$838
$224
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
FY '09 FY '10 - Initial FY '10 - Revised
State Recurring Cash Stimulus (ARRA) Rainy Day Fund
State Appropriations, FY '09 - FY '10,
Total and by Funding Source (in $millions)
Total= $7,124 million Total= $7,231 millionTotal= $6,959 million
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
31/48
Budget Trends: FY 10 FY 11
FY 10 Mid-Year Budget Agreement Agencies funded in whole or in part with non-GR fundsand those receiving supplementals absorbed less than full 7.5percent cut
FY '10 Budget Cuts: 12 Largest Agencies, Total Budget
Agency
FY '09 (Final) -
FY '10 (Final)
FY '10 (Initial) -
FY '10 (Final)Mental Health -10.0% -7.2%
District Courts -9.6% -2.8%
Health Department -8.2% -7.4%
Public Safety -8.1% -4.3%
Career Tech -7.6% -7.3%
Juvenile Affairs -7.2% -7.3%
Transportation -7.0% -7.5%
Human Services -6.6% -5.7%
Corrections -5.3% -5.3%
Common Education -3.4% -4.9%
ALL AGENCIES -2.8% -4.2%
Higher Education -0.2% -3.1%
Health Care Authority 12.4% 0.1%
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
32/48
Budget Trends: FY 10 FY 11
FY 10: Impact of Cuts Even with all the additional revenue to reduce the size ofcuts , the toll on services and programs has been significant:
Department of Mental Health and Substance Abuse Services reducedbeds and closed centers for childrens mental health and adultsubstance abuse, cut contracts to all providers;
OJA cancelled youth detention and gang prevention programs, cutproviders 5 percent, authorized 22 furlough days;
OHCA cut some Medicaid benefits and reduced all provider rates by3.5 percent;
Health Department eliminated 17 child guidance centers serving pre-school children with developmental delays
Department of Corrections cut contracts, eliminated programs,reduced staffing to under 75 percent of authorized levels;
School districts eliminating programs, some going to 4-day weeks;
DA offices prosecuting fewer criminals;
Most agencies leaving positions unfilled, offering buy-outs; manyimposing furloughs.
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
33/48
Budget Trends: FY 10 FY 11
FY 11 Budget: The Challenge Escalates FY 11 revenue collections projected to grow onlyslightly from FY 10 and to remain almost 25 percentbelow pre-downturn (FY 08) levels
$5,714
$5,928 $5,981
$5,519$5,415
$ 4,475
$4,579
$4,000
$4,500
$5,000
$5,500
$6,000
FY '06 Actual FY '07 Actual FY '08 Actual FY '09 Actual FY '10 (June
estimated)
FY '10 (Feb
projected)
FY '11 (Feb
estimated)
General Revenue Collections,FY '06 Actual - FY '11 Estimated (in $ millions)
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
34/48
Budget Trends: FY 10 FY 11
FY 11 Budget: The Challenge Escalates Final FY 11 certification provided $1.8 billion lessrevenue for next year than FY 10 initial budget , $1.5billion less than final FY 10 budget
$7,043 $7,124$7,231
$6,452
$6,959
$5,294 $5,415
$6,797
$4,000
$5,000
$6,000
$7,000
$8,000
FY'08 FY'09 FY'10 -
initial
budget
FY '10 -
projected
revenues
(Feb)
FY '10 -
Revised
FY '11 -
Certified
State $
(Dec)
FY '11 -
Certified
State $
(Feb)
FY '11 -
Gov
Budget
State Appropriations, FY'08-FY '11(includes all revenues and supplementals;
in $ millions)
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
35/48
Budget Trends: FY 10 FY 11
FY 11 Budget: The Challenge Escalates To budget the balance, Gov. Henry proposed:
Annualizing and increasing FY10 cuts by an additional 0.5percent to 3 percent for all agencies.
Using remaining stimulus funds and a portion of remaining
Rainy Day Funds. Savings from consolidating agencies and IT services.
New bond issues.
Enhanced tax collection proposals, particularly increased salestax collections on Internet sales and automated enforcement of
vehicle insurance;
Eliminating and suspending various tax credits;
Increases in fees and permits.
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
36/48
Budget Trends: FY 10 FY 11
FY 11 Budget: The Challenge Escalates 2010 Session focused on which, if any, revenue measures wouldbe adopted to bridge the budget gap.
Assuming maintenance of FY 10 budget cuts, the use of allremaining stimulus funds and 3/8ths of Rainy Day Fund, FY 11budget gap exceeded $800 million.
Equivalent to an additional 12 percent cuts to all agencies ofstate government beyond the cuts already enacted.
Agency scenarios of how to absorb cuts of an additional 7.5percent to 15 percent in FY 11 left no doubt of the grave threatsthat would be posed to the state economy and to the health and
security of Oklahomans. Many cuts would be multiplied by loss of federal matching
funds.
See OK Policy, Bridging the Budget Gap,:http://okpolicy.org/files/bridgingthegap_1pg.pdf
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
37/48
Budget Trends: FY 10 FY 11
FY 11 Budget Agreement Total appropriations for FY 11 = $6.714 billion. 7.2 percent decrease (-$517.5 million) from the initial FY 10
budget and 3.5 percent decrease (-$245.4 million) from thefinal FY 10 budget after mid-year cuts
$4,906
$5,389$5,412
$4,922$5,073
$5,240
$6,217
$6,760$7,043
$7,095
$6,590
$5,897 $5,802
$219
$30
$641
$838
$539
$75
$79
$269 $72
$224
$373
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
$7,000
$7,500
FY'00 FY'01 FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08 FY'09 FY'10 -
Initial
FY '10
- Final
FY '11
FIG. 1: State Appropriations History, FY '00 - FY 11(in $millions; FY '00-FY'10 includes supplementals, excludes one-times from
Rainy Day Spillover Funds )
State Revenues Federal Relief Rainy Day Fund
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
38/48
Budget Trends: FY 10 FY 11
FY 11 Budget AgreementAppropriated over $1.35 billion in additional revenues ontop of those certified in February. These included:
$539 million from the 2009 stimulus bill
Remaining $373 from the Rainy Day Fund
$450 million from assorted revenue enhancements
Suspending and deferring payment of tax credits
Issuing and refinancing bonds
Fee and permit increases
Transfers of cash balances
About $225 million of the total $1.35 billion in additionalrevenue is recurring; the rest is one-time
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
39/48
Budget Trends: FY 10 FY 11
FY 11 Budget Agreement
Common Ed.,$2,375.6 , 35%
Higher Ed.,$1,003.5 , 15%
OHCA (Medicaid),$993.0 , 15%
DHS, $543.1 , 8%
Corrections, $462.1, 7%
Transportation,$114.8 , 2%
Mental Health,$187.7 , 3%
Career Tech, $142.0, 2%
Juv. Affairs, $99.2 ,1%
Public Safety, $88.4, 1%
All Other Agencies,$704.3 , 11%
TotalAppropriations:$6,713.7 millionIncludes stimulus,Rainy Day Fund
Total TenLargest:$6,009.4,89.5%
Notes:Transportation also received$65 from bond issue;OHCA includes $30m transferfrom Insure Oklahoma Fund;excludes Health Carrier Access
Agency Appropriations 10 Largest, Others, Total
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
40/48
Budget Trends: FY 10 FY 11
FY 11 Budget Agreement Funding cuts limited to under 10 percent for most of the largeststate agencies;
However, over half of all appropriated agencies will absorb cutsof at least 15 percent for FY 11 compared to FY 09.
In some cases, appropriations cuts have been partly offset byfee increases. In addition, the Legislature has approved measuresto promote savings and efficiencies and give agencies and schooldistricts greater flexibility
For most agencies and school districts, no additional funding tocover increased employee health care costs, general inflation or
rising caseloads.
Cuts, furloughs, hiring freezes, layoffs will continue in FY 11
See OK Policys FY 11 Budget Highlights at:
http://okpolicy.org/fy-10-fy-11budget-
information
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
41/48
Budget Outlook: Looking Ahead
Budget Outlook: No Quick Recovery Revenues unlikely to recover to pre-downturn nominallevels prior to FY 13
$5,928 $5,981
$5,544
$4,439
$4,735
$5,275
$5,945
$4,000
$4,500
$5,000
$5,500
$6,000
$6,500
FY 07 (act.)FY 08 (act.)FY 09 (act.)FY 10 (est.)FY 11 (est.)FY 12 (est.)FY 13 (est.)
R
n$mio
Fiscal Year
Historical and Projected Revenue, FY'07-FY'13General Revenue Fund
Estimates by OKPolicy - not based onFeb 2010
certification
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
42/48
Budget Outlook: Looking Ahead
Budget Outlook: No Quick Recovery Substantial reliance in FY10 11 on non-recurringrevenue creates significant problems for FY 12 and FY 13
Time-released tax cuts still kicking in
Top rate will fall from 5.5% to 5.25% as soon asrevenues are projected to grow 4%... even if revenuesremain below pre-downturn levels
Additional revenues automatically allocated for ROADSand OHLAP
Possible passage of SQ 744 (mandatory K-12 educationfunding increases) could throw everything into chaos
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
43/48
Budget Outlook: Looking Ahead
Short-Term Recommendations1. Defer additional tax cuts until revenues fully recover
2. Serious review of tax credits and exemptions to determinewhich are needed and effective
3. Consider new revenue streams for the Medicaid program
4. Consolidation of functions and agencies where duplicativeor unnecessary
5. Prioritize prevention, diversion and surveillance overdetention
6. Prepare for next downturn by strengthening our reservefunds and improving our forecasting capacities
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
44/48
Structural deficit: Asituation that occurswhen a states normal
growth of revenues isinsufficient to finance
the normal growth ofexpenditures year afteryear
(CBPP, Faulty Foundations: State Structural
Budget Problems)
Long-Term Fiscal Outlook
Oklahoma like most states and the federal government faces a looming structural budget deficit
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
45/48
Long-Term Fiscal Outlook
Projected Annual Budget Surpluses and Deficits
Before and After 2004-2006 Tax Cuts (2007 to 2035)
(2,500)
(2,000)
(1,500)
(1,000)
(500)
0
500
1,000
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035Y e a r
Mion$2005
B e f o r e T a x C u t s
A f t e r T a x C u t s
Oklahomas Structural Deficit
Source: Projections conducted in 2007 by Dr. Kent Olson, Professor ofEconomics, Oklahoma State University
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
46/48
Long-Term Recommendations1. Serious review of our tax system
2. Scrutinize our programs and spendingcommitments
3. Give control for making decisions about revenuesand spending back to our elected representatives
Long-Term Fiscal Outlook
-
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
47/48
For More Information
Updated Budget Information:okpolicy.org/fy-10-fy-
11budget-information
Oklahoma Policy Institutes OnlineBudget Guide
www.okpolicy.org/online-
budget-guide
http://okpolicy.org/fy-10-fy-11budget-informationhttp://okpolicy.org/fy-10-fy-11budget-informationhttp://www.okpolicy.org/online-budget-guidehttp://www.okpolicy.org/online-budget-guidehttp://www.okpolicy.org/online-budget-guidehttp://www.okpolicy.org/online-budget-guidehttp://www.okpolicy.org/online-budget-guidehttp://www.okpolicy.org/online-budget-guidehttp://www.okpolicy.org/online-budget-guidehttp://www.okpolicy.org/online-budget-guidehttp://okpolicy.org/fy-10-fy-11budget-informationhttp://okpolicy.org/fy-10-fy-11budget-informationhttp://okpolicy.org/fy-10-fy-11budget-informationhttp://okpolicy.org/fy-10-fy-11budget-informationhttp://okpolicy.org/fy-10-fy-11budget-informationhttp://okpolicy.org/fy-10-fy-11budget-informationhttp://okpolicy.org/fy-10-fy-11budget-informationhttp://okpolicy.org/fy-10-fy-11budget-informationhttp://okpolicy.org/fy-10-fy-11budget-information -
8/9/2019 Oklahoma Budget Overview: Trends and Outlook, June 2010
48/48
Contact Information
Oklahoma Policy InstituteP.O. Box 14347Tulsa, OK 74159-1437
(918) 794-3944
Better Information, Better Policywww.okpolicy.org
We are a 501(c)(3) funded by grants and contributions
from individuals, organizations and businesses. Pleaseconsider a tax-deductible contribution to support ourwork. You can donate from our website or send a checkto the above address. Thank you!
mailto:[email protected]://www.okpolicy.org/http://www.okpolicy.org/http://www.okpolicy.org/http://www.okpolicy.org/mailto:[email protected]