Oklahoma's revenue collections plunged nearly 20 percent during the fiscal year that ended June 30, prompting deep cuts across state agencies, but state Treasurer Scott Meacham said Tuesday he believes "the worst is definitely behind us."
Revenue figures released by Meacham's office show collections to the state's General Revenue Fund totaled $4.6 billion during fiscal year 2010, which ended June 30. That amount is $945 million, or 17 percent, below collections for the prior year. The sluggish collections, which included declines across all tax sectors, required agency budgets to be slashed by an average of 7.5 percent last year.
"When you say that from one year to the next your state is going to have $945 million less to spend, which is about a 17 percent reduction in your budget, that is a significant revenue event, and nothing like we've seen in this state since the Great Depression," Meacham said.
With slumping revenues, lawmakers used a combination of fee hikes, deferred tax credits and further cuts to state agencies to help balance the budget for the current fiscal year that began July 1. State leaders also spent about $500 million in federal stimulus money and $277 million in cash reserves to help close the gap.
Although the federal stimulus funds have been exhausted, Meacham said lawmakers should have about $427 million in reserves next year to help balance the budget. He said those reserves, combined with improving revenue collections, should result in minimal cuts to agency budgets next year.
"We're in much better shape than if we didn't have anything in the cash-flow reserve fund, and we've ratcheted down our spending quite a bit," he said. "I think we're in pretty good shape for what's coming ahead."
Still, Meacham predicted the state's economic recovery likely will be slow, and the recent cuts to agency budgets likely will remain in place.
"Right now it's more of state agencies learning to adjust to the cuts they've already had to take," Meacham said. "I don't see a lot of hope for the future for them to be getting a lot of that money back."
But Meacham's optimism about next year's budget is not shared by David Blatt, director of Oklahoma Policy Institute, a nonpartisan think tank.
While Blatt does not expect another round of midyear budget cuts like agencies were forced to undergo last year, he says state leaders will again be faced with either deeper budget cuts or finding new sources of revenue when they return to the state Capitol next year.
"It's going to be very tough coming up with a budget for (fiscal year 2012) that will balance without putting revenues back on the table, without doing additional budget cuts," Blatt said.
Meanwhile, revenue figures released Tuesday show June collections exceeded prior year collections by $10 million, or 2.1 percent. Net income taxes were down, but the state sales tax, gross production tax on oil and natural gas, and motor vehicle taxes all exceeded prior year collections.