- Associated Press - Saturday, April 19, 2014

OKLAHOMA CITY (AP) - With six weeks left in the 2014 session, behind-the-scenes negotiations among the House, Senate and governor’s office are ramping up on how to plug a $188 million hole in the budget and fund education, public safety and child welfare.

The chairmen of the Republican-controlled House and Senate budget committees have been meeting with Gov. Mary Fallin’s Secretary of Finance Preston Doerflinger, along with the fiscal staffs for the three sides, as work begins in earnest on how to spend money in a nearly $7 billion budget. Talks are centering around a combination of proposed cuts to some state agencies, along with how much revenue might be available from agency revolving accounts and cash reserves.

The problem is a lack of revenue to appropriate on a growing list of priorities for all three sides that includes increased funding for common education, pay raises for some state workers and more money to fund the Pinnacle Plan, a series of sweeping child-welfare reforms within the Department of Human Services.

“We have obligations to education and covering their benefits. We’d like to find some extra money to increase their funding, like we did last year. We’ve also got a priority on the Pinnacle Plan,” said Senate President Pro Tem Brian Bingman, R-Sapulpa. “More than anything, we’ve got to make some cuts, and that’s what we’re trying to wade through to see where to make some cuts to make up the difference we’ve got.”

Although the state’s overall economy is performing well, the Legislature is wrestling with a shortage of available revenue largely because of dozens of tax credits and the diversion of funds for special projects like road and bridge repair and college scholarships. As a result, legislators are starting with $188 million less to spend on state programs for the fiscal year that begins July 1.

The estimated increase in the cost of benefits for public school teachers and support personnel is about $60 million, while pay hikes for some of the lowest-paid state workers comes with an annual price tag of about $35 million or more.

Rep. Scott Martin, chairman of the powerful House Appropriations and Budget Committee, said legislators are considering the use of about $80 million from state agency revolving accounts and potentially more than $70 million in cash-flow reserves at the end of the fiscal year.

“There’s a combination of cuts, new revenue sources that we can bring into the budget,” said Martin, R-Norman. “In a year like this year, we have to be extremely creative if we’re going to try to meet the demands that are out there.”

Also at play is an estimated $40 million that’s available from the state’s Unclaimed Property Fund, a frequent target of legislators looking to plug holes in the state budget. The Senate already has approved a bill that would tap that $40 million to fund the completion of the American Indian Cultural Center & Museum in Oklahoma City, but House Speaker Jeff Hickman, R-Fairview, has yet to commit to that proposal amid division within the House GOP caucus.

Sen. Clark Jolley, chairman of the Senate Appropriations Committee, said although the House and Senate agree on many of the budget priorities, there are some differences over just how much money to tap from things like agency revolving accounts and cash-flow reserves, which includes revenue collected in the last month of the fiscal year.

“We are very committed to some of the same areas that the House has publicly been saying they’re supportive of,” said Jolley, R-Edmond. “But we also want to make sure we’re responsible in our budgeting and that we’re not doing something risky.”

Doerflinger, Fallin’s top budget negotiator, also has cautioned the Legislature about the ongoing use of cash-flow reserves, preferring instead that revenue be set aside to handle unexpected dips in collections throughout the fiscal year, but he also recognizes some of the serious needs facing some areas of state government, said his spokesman, John Estus.

“Secretary Doerflinger believes that it’s a very unwise practice to keep using (cash-flow reserves) going forward,” Estus said, “but due to the revenue situation this year, the Legislature might determine one more year of that might be necessary.”

Meanwhile, negotiations also are ongoing on several other big-ticket items this session, including a potential $160 million bond issue to fund Capitol repairs, adjusting a generous tax incentive for horizontal oil and gas drilling, and whether to reduce the state’s personal income tax by 0.25 percent.

But Jolley said those discussions are taking place outside of negotiations on the budget.

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