- Associated Press - Wednesday, December 14, 2016

OKLAHOMA CITY (AP) - Early projections are that the Oklahoma Legislature will have to grapple with a deficit of as much as $600 million in next year’s budget, Republican Gov. Mary Fallin said Wednesday.

Fallin said she expects a shortfall of between $500 million to $600 million - or nearly 10 percent of state spending - when the State Board of Equalization meets next week to certify available revenues. That figure includes about $245 million in one-time sources of money that were spent on this year’s $6.8 billion budget, Fallin said.

The Board of Equalization will meet Dec. 21 to certify a revenue projection that Fallin will use to prepare her executive budget, which includes the governor’s spending priorities and is typically used as a starting point for negotiations with the Republican-controlled Legislature on state appropriations. The same panel will meet again in February for a final certification of available revenues.

Fallin says she’s optimistic that an increase in the price of oil and natural gas could reduce the shortfall before February’s board meeting. If prices were to increase, the state could see an increase in oil and natural gas production tax collections.

The governor added that she met Tuesday with incoming House Speaker Charles McCall and Senate President Pro Tempore Mike Schulz and that finding a way to fund a pay raise for public school teachers will be a priority next session.

“I think the Legislature understands it’s an issue the public is very concerned about and one that I am certainly going to push forward on, but it’s going to be a challenging year,” Fallin said. “There’s a lot of competing interests out there for money.”

Fallin says she expects she will continue to propose ideas to generate revenue, including a tax on cigarettes and the elimination of some of the dozens of sales tax exemptions that total more than $8 billion annually.

“There are 150 different items and services that we exempt from sales tax, much more than Texas, New Mexico and surrounding states,” Fallin said. “We’ve exempted a lot of things over the decades.”

Oklahoma’s legislative session begins on Feb. 6.

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Follow Sean Murphy at www.twitter.com/apseanmurphy

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