OKLAHOMA CITY — Lawmakers could have nearly $600 million less to craft a fiscal year 2016 budget, Gov. Mary Fallin said Thursday.
The Board of Equalization met in December to certify how much Fallin would have to build her executive budget, which serves as a recommendation for lawmakers. At that meeting, officials said the state will have about $300 million less to build the fiscal year 2016 budget than was available in the current fiscal year.
The panel, which Fallin leads, will reconvene on Tuesday to certify how much lawmakers have to spend.
People are also reading…
“It is going to be significant,” Fallin said of the amount less than expected. “It could be close to double.”
House Appropriations and Budget Committee Chairman Earl Sears, R-Bartlesville, said the budget hole will be “significantly larger” than what was originally believed.
Sears said the state will have less revenue in part due to layoffs in the energy industry due to declining oil and gas prices. Those layoffs affect the revenue the state gets from income, gross production and sales taxes.
In addition, the state has a large number of income tax credits and incentives that reduce funds available for appropriation, Sears said.
State lawmakers have also taken gross revenue and dedicated it to other sources, such as roads and education, reducing the amount of money available for appropriations from the “rainy-day” fund, Sears said.
House Speaker Jeff Hickman, R-Fairview, said the drop in natural gas prices is also a factor.
Hickman said a Jan. 1, 2016, reduction in the state income tax rate to 5 percent from 5.25 percent is not hurting the budget at this time because it has yet to take effect. He said he is not aware of any discussions to delay the income tax cut.
Earlier this week, Fallin issued an executive order that said state employee hires, pay increases and bonuses are subject to direct approval of a Cabinet secretary or statewide elected official. The order does not apply to people working in common and higher education or to certain positions, such as corrections officers and child-welfare workers, that are exempted by state law from any hiring freeze.
The state has about $535 million in its rainy-day account. Of that, $150 million to $200 million is available to tap for a budget shortfall, said Michael McNutt, a Fallin spokesman.
Fallin said the fund is “certainly a resource” that could be used to close the budget gap. But the state needs to look at tax credits, incentives and agency revolving funds, she said.
“I would say short of emergency, one-time needs, I think at this point the discussion is quickly turning to: ‘What will the amount of budget cuts be for a state agency?’ ” Hickman said.
“If I am a state agency director, I would not be worrying about what I am going to do with additional money next year. That is a financial reality,” he said. “I would start planning on where I am going to be able to make cuts to make this work.”