Oklahoma’s Declining Budgets
Legislatures look displeased as a house budget bill was denied during a special session at the Oklahoma State Capitol in Oklahoma City on Wednesday Nov. 8, 2017. A plan to hike taxes on tobacco, alcohol, fuel and energy production in order to plug a hole in Oklahoma’s budget and to stabilize state spending has fallen five votes short in the House amid bipartisan opposition. The full House voted 71-27 on Wednesday. (Jessie Wardarski/Tulsa World via AP)
State agencies continue to struggle to maintain critical social services programs across Oklahoma in the face of declining budgets.
The latest budget proposal to emerge from the ongoing special session failed to gain enough support within the House to advance.
A measure that would have brought in an estimated $132.9 million over the next eight months, House Bill 1054X narrowly failed to gain the 76 votes on the House floor required by the state constitution to approve tax hikes. The state legislature is once again left without a clear plan to address the state’s current $215 million shortfall and the more than $400 million deficit projected for next year.
The failure for legislators to pass the measure was condemned by Oklahoma Gov. Mary Fallin, who has been calling for both parties to set aside their differences throughout the ongoing special session she invoked in September to address the crippling budget crisis.
“It is discouraging that some members have chosen politics over taking care of people by refusing to vote for this budget package and have shown they are not willing to move our state forward,” Fallin said. “As a result of their no votes, our state will not have enough funds for agencies to deliver services that work for people, especially with our state facing a $400 million shortfall next session.”
If approved, the measure would have included a 4 percent increase on the gross production tax on new oil and gas wells, a $0.06 per gallon tax on gas, a $1.50 tobacco fee and an increase in the tax on beer. Revenue raised would also have provided for teach and state employee pay raises.
The final vote for the measure ended at 71-27, with five Democrats and 22 Republicans voting against the bill. The results displayed a surprising reversal of the special session’s trends, with House Republicans failing to deliver the majority vote promised.
“As we have said throughout the session, the 75 percent super majority requirement [for tax hikes] is a high hurdle,” said Speaker of the House Charles McCall. “We heard from our constituents more on this bill than any other in a long time, and it was clear that the House listened and voted the way their constituents encouraged them to vote.”
While McCall had previously stated that he had at least three-quarters of House Republicans backing him in supporting budget measures, Republican opponents of the bill expressed a refusal to back the tax increases included in the bill.
“I cannot, in good conscious, vote to increase a tax burden on my fellow Oklahomans until all cost cutting measures in reducing the inefficiency have been taken and explored,” said Rep. Bobby Cleveland, R-Slaughterville. “Until then, my vote must be a no.”
For the first time during the special session, House Democrats provided majority support for the bill and expressed disappointment in the Republican’s inability to deliver on the majority promised.
“After more than 80 percent of our caucus held their nose and voted yes for this far from ideal revenue bill, we found out [that at least 75 percent of House Republicans backed McCall] isn’t true,” said Rep. Emily Virgin, D-Norman. “The House Republican Caucus delivered 48 votes or less than 67 percent of their caucus.”
The bill’s failure comes at a time when state agencies are at a risk of ending vital social services programs. Facing a $30 million shortfall as a result of financial mismanagement, the Oklahoma State Department of Health will officially end financial support for 25 community health centers across the state and cut contracts for nine statewide child abuse prevention programs.
The department has already implemented furlough days for more than 1,500 employees and has discussed the possibility of reducing more than 12 percent of its workforce by next year.
“We cannot allow this agency to fail. This agency is the health safety net for the state and its citizens,” said ODHS Interim Director Preston Doerflinger. “We must take the necessary steps to ensure that this vital work can continue in our state.”
The Oklahoma Department of Mental Health and Substance Abuse is also facing a budget crisis, with funding projected to be depleted by mid-December.
While legislators are also considering measures that would provide agencies with carryover cash from last year’s budget and have approved measures to provide funding from the state’s Rainy Day Fund, the use of such funding threatens to leave the state vulnerable to other financial crises.
“If we spend everything we have now, there won’t be any money left for other emergencies that could arise,” said Senate President Pro Tem Mike Schulz. “And spending even more one-time money now makes next year’s budget deficit, already forecast at $560 million, even larger.”
The state’s use of one-time revenue sources and inability to reduce its deficit has not only left the budget in a precarious position, it has also negatively impacted its credit score as well. Moody’s Investor Service, one of the nation’s top credit rating agencies, also issued the state a “credit negative” warning last week for its inability to balance the budget.
The rating not only threatens to negatively impact potential investments by businesses in Oklahoma, it also could impact interest rates for bond loans used by school districts and local governments.
“I have warned lawmakers for the past three years that we need to address our budget’s structural deficits instead of continuing to kick the can down the road by depleting available cash and using one-time funds,” Fallin said. “Proposals to do just that will not provide enough funds for agencies to deliver essential core services for the remainder of this fiscal year.”
Following the bill’s failure, state legislators announced that they will continue their work to create a proposal that will receive backing from all parties. Instead of starting over, Fallin has called on legislators to consider putting the failed bill back up for a vote.
“The House leadership captured the bill, which with 71 votes was within a razor-thin margin of passing,” Fallin said. “The speaker should put it back up for a vote, and I call upon Oklahomans to continue to contact their representative. We can’t set Oklahoma up for failure by not facing our budget problems.”