- Associated Press - Saturday, May 2, 2015

OKLAHOMA CITY (AP) - For the second straight year, Oklahoma’s budget writers are scrambling to fill a significant shortfall in the state budget for the upcoming year as lawmakers enter the final month of the 2015 legislative session.

Facing a $611 million budget hole, negotiators from the House, Senate and Gov. Mary Fallin’s office expect to rely on a combination of one-time revenue sources, an appropriation from the state’s constitutional Rainy Day Reserve Fund and targeted budget cuts to state agencies to forge a balanced budget for the fiscal year that begins July 1.

“Since literally the second day of the session, we’ve been talking about the budget,” said Rep. Earl Sears, R-Bartlesville, chairman of the House Appropriations and Budget Committee. The Legislature convened its four-monthlong regular session on Feb. 2 and must adjourn by May 29.

Last year, lawmakers faced a $188 million shortfall that was filled with money from state agency cash reserve accounts and budget cuts to craft a $7.1 billion budget for the fiscal year that ends June 30.

Like last year, budget writers want to avoid harsh budget cuts to agencies that provide fundamental services to Oklahomans including education, health and human services, public safety and transportation, said Preston Doerflinger, Fallin’s secretary of finance and top budget negotiator.

“All three parties have dedicated more time and people to the budget than usual this year and we’re getting closer to agreeing on what will be a tight, manageable budget that adequately funds core services,” Doerflinger said.

But budget cuts of up to 7 percent are likely for many state agencies as negotiators work to close the budget hole.

“Cuts are absolutely inevitable,” said Sen. Clark Jolly, R-Edmond, chairman of the Senate Appropriations Committee. “We are going to absolutely have budget cuts. The question is how much cuts can agencies tolerate.”

To help ease the level of budget cuts, lawmakers plan to tap into the Rainy Day Reserve Fund, which currently contains $535.2 million. The appropriation would mark the first time the emergency fund has been tapped to help balance the state budget since Fallin took office in 2011, said John Estus, a spokesman for Doerflinger’s office.

The fund has not been tapped for any reason since 2013, when lawmakers approved an emergency appropriation to help pay for recovery efforts following deadly tornadoes raked central Oklahoma.

Sears said lawmakers can appropriate up to $192 million from the fund for budget stabilization. The amount of the Rainy Day appropriation will likely exceed $100 million but will not rise to the maximum amount, he said.

Negotiators have already reached consensus on funding levels for 10 state agencies, Sears said. He declined to identify them but said the Department of Education, which provides state funding for public schools and receives the largest appropriation of state tax dollars, was not among them.

Sears said there is also consensus among budget negotiators to not disrupt the flow of tax dollars for the Department of Transportation’s eight-year plan for building and maintaining the state’s network of roads and bridges and replacing structurally deficient and obsolete bridges.

“We are so supportive of it and see the good that it does,” Sears said.

The agency is among several that receive tax revenue automatically diverted from the state’s primary revenue fund in so-called off-the-top appropriations. Fallin and others have blamed those appropriations as well as a system of tax credits for helping create periodic budget holes and hampering lawmakers’ ability to spend money more effectively.

The Department of Transportation received $352 million through the ROADS Fund in 2014 and while its revenue may be safe, Sears said revenue caps may be placed on funds diverted to other programs to free up the money for other purposes.

Among them, he said, is the County Improvement for Roads & Bridges Fund, which received about $130 million in automatic payments in 2014.

“At least we’re looking at some options there,” Sears said. “What I can’t tell you today is what degree it will be affected.”

Sears said negotiators hope to reach agreement on the budget for 2016 in a week or two and lawmakers will likely adjourn for the year as much as a week before the constitutionally mandated adjournment on the last Friday in May.

“Quite frankly, we all want to wrap this up,” he said.

And the lessons learned in crafting the budget may have to be repeated in the next legislative session, when Sears said he believes lawmakers will be faced with yet another budget hole for the 2017 fiscal year.

“I am convinced we will have a hole,” Sears said. “I just don’t think it will be as significant as this year.”


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