Oklahoma Lawmakers to See Small, $32M Increase for Fiscal '09 Budget
BYLINE: Jim Watts
DATELINE: DALLAS
The latest official estimate of total state revenues show that Oklahoma legislators will have only an additional $32.1 million to distribute in the fiscal 2009 state budget when they convene in February.
The estimate adopted by the State Board of Equalization on Thursday is a 0.5% increase from the fiscal 2008 budget of $7.03 billion adopted by the Legislature earlier this year. The estimate is based on tax collections through November.
Last year the Legislature had some $100 million in additional collections when preparing the fiscal 2008 budget. Total state revenues are expected to total $7.06 billion in fiscal 2009, including $6 billion of general fund revenues.
The board will release its official estimate for fiscal 2009 revenues in late February, after the Legislature convenes. Lawmakers will use that estimate to develop the fiscal 2009 budget. Gov. Brad Henry will present his proposed budget to the Legislature when it convenes Feb. 24.
State Treasurer Scott Meacham said the slow growth in revenues indicates state's economy is cooling off, and that the severe winter weather the state has experienced over the past three weeks will further weaken tax collections. The Board of Equalization consists of Meacham, Henry, and several other state officials.
"It would appear the growth of Oklahoma's economy has slowed," Meacham said. "Compared to the previous month, November's collections have improved, but only slightly. We hope the ice storms won't significantly curtail retail spending in the coming days and weeks, and our economy will pick up strength."
Rep. Chris Benge, R-Tulsa, chairman of the House Appropriations & Budget Committee, said the low growth estimate means the Legislature must be careful in preparing its fiscal 2009 budget.
"The release of revenue projections for fiscal 2009 confirms the House's expectations of slower growth for the next 18 months," he said. "With the national economy showing signs of slowing due to depressed housing and credit markets and lower consumer confidence, we would expect some effect on the Oklahoma economy.
"The Oklahoma economy is fortunate compared to many other states across the nation that are already facing budget shortfalls," Benge said. "It is important that we approach the upcoming session with caution and continue to make our budgeting decisions in a prudent manner."
The general fund revenue estimate is up $198 million from fiscal 2008, an increase of 3.4%, which is not enough to drop the top state income tax rate from the current 5.5% to 5.25% as scheduled on Jan. 1, 2009.
The 2006 Legislature cut the top income rate from 6.25% to 5.65% in 2007 and 5.5% in 2008. The rate would have dropped to 5.25% in 2009 if the state's economic growth had been at least 4%.
State finance director Tony Hutchison said revenues are off $179 million due to tax cuts in fiscal 2008, with another $302 million of tax cuts scheduled to take effect in fiscal 2009.
The slow growth also means the Oklahoma Department of Transportation may not receive extra money for road and bridge maintenance projects next year. The 2006 Legislature adopted a five-year plan that allots $32.5 million for road projects in fiscal 2009, but the appropriation would automatically increase to $50 million if growth is at least 3%.
Meacham said he expects the February report to show an annual growth rate of less than 3%.
The treasurer said general revenue fund collections totaled $403.6 million in November. That is $27.4 million, or 6.4%, below November 2006 collections, and $11.4 million, or 2.7%, below the estimate.