Oklahoma Budget Overview
This document was uploaded by user and they confirmed that they have the permission to share it. If you are author or own the copyright of this book, please report to us by using this DMCA report form. Report DMCA
Overview
Download & View Oklahoma Budget Overview as PDF for free.
More details
- Words: 1,715
- Pages: 31
OKLAHOMA BUDGET OVERVIEW
David Blatt Oklahoma Policy Institute
Oklahoma’s Path to Prosperity
OUR STARTING POINT We invest our tax dollars in our public structures to support our common goals as a state
Budget Trends: FY ‘02 – FY ‘08 FY ‘02 – FY ‘08: Bust and Boom ¤State budget suffered steep downturn, deep cuts, ’02 - ’04 ¤Strong economy led to robust revenue growth and increased state appropriations between FY ‘06 and FY ‘08 Annual Appropriations Totals, FY ‘00—FY ‘08 (Includes Supplementals thru FY ‘08 and Rainy Day spillover Funds for Recurring Agency Expenditures) - in $millions
Budget Trends: FY ‘02 – FY ‘08 Where did the money go? ¤ Revenue growth was dedicated to covering
Budget Trends: FY ‘02 – FY ‘08 Continuing Impact of Tax Cuts
¤ Deep and permanent tax enacted between 2004 and 2006 ¤ Most of the cuts were to the personal income tax ¤ Tax cuts were stretched out over several years; full impact will not be felt until FY ‘11
Budget Trends: FY ’02 - FY ’08 FY‘07 – FY’08: Revenue Slowdown ¤ General Revenue collections began to slow in FY ‘07 and were almost flat in FY ’08 (+%0.9, $54 million) ¤ Increased gross production tax (+$205.7 million) and sales tax (+$80.6 million) revenues helped make up for falling personal and corporate income tax collections (-
Budget Trends: FY ‘09 – FY ‘10
Budget Trends: FY ‘09 – FY ‘10 Things Are Tough All Over Combined state budget gaps for FY ‘09, FY ‘10 and FY ‘11 estimated to total more than $350 billion
Source: CBPP, “State Budget Troubles Worsen”, updated May 18, 2009 at: http://www.cbpp.org/98-08sfp.htm
Budget Trends: FY ‘09 – FY ‘10 FY ’09 Budget: Tightening the Screws ¤ FY ’09 initial appropriations of $7.089 billion – increase of $47 million (0.7%) ¤ Most agencies appropriations frozen from FY ’08 ¤ No funding for teacher salary increases, state employee raises
FY ‘09 excludes supplementals and mid-year budget cut
Budget Trends: FY ‘09 – FY ‘10 Revenues on the Skids ¤ FY ‘09 revenue: from $224.8 million above estimate (Dec.) to $271 million below estimate (May) ¤ Every major tax below estimate and prior year in recent months ¤ When revenues dipped below 95 percent of estimates in May, a revenue shortfall was declared, leading to cuts in June allocations ($6.8 million)
Budget Trends: FY ‘09 – FY ‘10 Revenues on the Skids ¤ By mid-year, FY ‘09 projections dropped $236 million compared to the June certified estimate (red bars, below) ¤ FY ‘10 revenues estimated to come in >$600 million below FY ’08
Budget Trends: FY ‘09 – FY ‘10 Revenues on the Skids ¤ The FY ‘10 forecast is bad - - but far from a worst-case scenario ¤ Still assumes growth of sales tax and corporate income tax collections
Budget Trends: FY ‘09 – FY ‘10 Building the FY ‘10 Budget $612.5 million (8.7 percent) less available in FY ‘10 than FY ‘09
-$309.6
Budget Trends: FY ‘09 – FY ‘10 Stimulus Dollars to the Rescue ¤Budget agreement reached on using $641 million from the American Recovery and Reinvestment Act (ARRA, or the stimulus) in FY ‘10 ¤ $236.3 million from the State Fiscal Stabilization Fund for common education and higher education; ¤ $10 million from the State Fiscal Stabilization Fund for Oklahoma Health Care Authority ¤ $394 of enhanced federal Medicaid matching funds for 8 agencies ¤ $306.5 million to OHCA ¤ $71.4 million to DHS ¤ Stimulus dollars allocated for FY ‘10 represent roughly half of total available stimulus amount
See: OK Policy FY ’10 Budget Review at: http://okpolicy.org/fy-10-budget-information
Budget Trends: FY ‘09 – FY ‘10 FY ‘10 Budget ¤$7,231.2 million total, including $641 million ARRA ¤Increase in total appropriations of $106 million (1.5 percent) compared to FY ‘09 ¤State dollars only: 7.1 percent less than FY ’09
NOTE: FY ‘09 totals do not include June budget cuts
Funding Public Services FY ’10 Appropriations by Subcommittee Natural Other Total Appropriations: $7,231.2 million (includes ARRA) Resources 0.2% 2.1%
Public Safety 10.9% Health and Social Services 18.6%
Human Services 9.6%
Government Operations 5.2%
Education 53.4%
FY ’10 State Appropriations 10 Largest Agencies: $6.3 billion (88%) Agencies (75 agencies): $829 million (12%)
Budget Trends: FY ‘09 – FY ‘10 FY ‘10 Budget ¤Stimulus funds made it possible to minimize cuts or provide small increases to ten largest state agencies and some smaller ones ¤ Funding for 10 largest agencies up $161 million, 2.6 percent ¤ OHCA, +$107.7 million (+12.3%) ¤ Common Education, +$40.3 million (+1.6%) ¤ Higher Education, +$30.9 million (+3.0%) ¤ DHS, -$8.4 million (-1.5%) ¤ Most smaller agencies took cuts of 5 to 7 percent ¤ Funding for 68 smaller agencies down $54 million, 6.5 percent
See: OK Policy FY ’10 Budget Review at: http://okpolicy.org/fy-10-budget-information
Budget Trends: FY ‘09 – FY ‘10 FY ‘10 Budget: The Impact ¤For most agencies, FY ‘10 appropriations will lead to funding gaps and possible cuts in staffing, programs and services ¤No funding to address rising employee benefit costs or inflation (e.g. utilities, transportation, food) ¤Demands for some state services increase due to the downturn
Budget Trends: FY ‘09 – FY ‘10 FY ‘10 Budget: The Impact ¤At this point, little is known about how agencies will respond to budget cuts and funding gaps. ¤Most agencies will be forced to try to perform their core work with fewer staff (unfilled vacancies). This could lead to: ¤ Closing offices , reducing hours, and limiting staff serving the public; ¤ Reducing the frequency of inspections of facilities and businesses; ¤ Increasing staff caseloads; ¤Some agencies may be required to fill budget gaps by: ¤ Cutting reimbursement rates to private providers; ¤ Waiting lists and freezes on programs. ¤ Fee increases; ¤ Furloughs and involuntary lay-offs
Budget Outlook: Beyond FY ‘10 A Slow Rebound ¤Assuming the economy begins to recover in late 2009, we project that revenues will rebound slightly in FY ‘11 ¤ Revenue growth could be hindered by automatic cut in top income tax rate if GR is projected to increase >4 percent ¤It may take until FY ’13 for revenues to return to FY ‘08 levels
Budget Outlook : Beyond FY ‘10 Rainy Day Fund ¤Rainy Day Fund is filled to maximum amount of $597 million ¤Left untouched for initial FY ‘10 budget
Budget Outlook : Beyond FY ‘10 Rainy Day Fund: Off- Limits? ¤Rainy Day Fund can be accessed as follows: ¤ 3/8th for a mid-year shortfall in GR collections; ¤ 3/8th for a projected decline in GR collections for the coming year compared to the current year; ¤ 1/4th upon declaration of an emergency and legislative approval
¤RDF designed for use at the onset of a downturn ¤If revenues do begin to recover, most of the RDF will be unavailable for appropriations in FY ‘11 and FY ‘12. ¤However, if FY ’10 or FY ‘11 revenue collections fall short of the estimate, RDF could be used
See: OK Policy, “Now’s the Time: Using Stimulus and Rainy Day Funds Can reduce the Impact of State Budget Cuts”, at:http://okpolicy.org/nows-time-use-rainy-day-funds
Budget Outlook : Beyond FY ‘10 Filling the Revenue Gap ¤Stimulus Round II ¤ About half of the State Fiscal Stabilization Fund and enhanced Medicaid funds will be available for use in FY ‘11 ¤ $236.5 million of SFSF education dollars; ¤ Up to $95 million of SFSF general purpose dollars; ¤ $365 to $500 million of enhanced Medicaid ¤ Other Revenues? ¤ SQ 640 requires a 3/4th vote of both legislative chambers or vote of the people at time of next general election to raise taxes; ¤ Continuing search for one-time revenues; ¤ Other proposals could include selling off public assets, securitizing the tobacco settlement or state lottery
Budget Outlook : Beyond FY ‘10 The Post-Stimulus Budget Gap? ¤The FY ‘12 dilemma ¤ State Fiscal Stabilization Fund and enhanced FMAP are intended for states to avoid cuts, layoffs, and tax increases – but what happens when the money runs out? ¤ >$600 million of “one-time” federal stimulus dollars being used to support the ongoing expenditures of state agencies and schools in the FY ’10 budget (and FY ‘11?). ¤ Other stimulus funding streams may also end up being used in part to fund ongoing expenditures (e.g. Dept of Rehabilitation Services clearing off its waiting list). ¤ Hole will be especially huge for Medicaid agencies, which could see their federal share plunge by over 15 percentage points. ¤ Will Congress help out?
Budget Outlook : Beyond FY ‘10 The Sky is Slowly Descending!
¤Oklahoma already underfunds most of our public structures and falls short of our common goals as a state ¤The relentless underfunding of public structures leads to : ¤ threats to public safety and well-being; ¤ decline in performance; ¤ decline in public confidence and growing cynicism; ¤ “your on your own” attitude
Budget Outlook : Beyond FY ‘10 Short-Term Recommendations 2.Change the rules for the Rainy Day Fund ¤ Introduce legislation next year for a 2010 ballot proposal to allow RDF money to be used any time revenues remain below their pre-downturn peak. 3.Defer additional tax cuts until revenues recover 4.Consider new revenue streams for the Medicaid program
4.Develop meaningful multi-year forecasting
Long-Term Fiscal Outlook Oklahoma – like most states and the federal government – faces a looming structural budget deficit
•
Structural deficit: A situation that occurs when a state’s “normal growth of revenues is insufficient to finance the normal growth of expenditures year after year”
•
•
•
(CBPP, “Faulty Foundations: State Structural Budget Problems”)
Oklahoma’s Structural Deficit ¤Demographic changes, rising health care and retirement costs, an outdated tax system and tax cuts all lead to revenues failing to keep pace with costs in the years ahead
Long-Term Fiscal Outlook •
•
Long-Term Recommendations •
4.
Modernize the Tax System
6.
Preserve a Balanced Tax Structure
8.
Make the tax system fairer
•
•
• •
People want just taxes more than they want lower taxes. They want to know that every man is paying his proportionate share according to his wealth. -Will Rogers
Contact Information David Blatt, Director of Policy Oklahoma Policy Institute 4606 South Garnett, Suite 100 | Tulsa, Oklahoma 74146 ph: (918) 859-8747 [email protected]
Better Information, Better Policy Oklahoma Policy Institute provides timely and credible analysis of state policy issues
www.okpolicy.org
David Blatt Oklahoma Policy Institute
Oklahoma’s Path to Prosperity
OUR STARTING POINT We invest our tax dollars in our public structures to support our common goals as a state
Budget Trends: FY ‘02 – FY ‘08 FY ‘02 – FY ‘08: Bust and Boom ¤State budget suffered steep downturn, deep cuts, ’02 - ’04 ¤Strong economy led to robust revenue growth and increased state appropriations between FY ‘06 and FY ‘08 Annual Appropriations Totals, FY ‘00—FY ‘08 (Includes Supplementals thru FY ‘08 and Rainy Day spillover Funds for Recurring Agency Expenditures) - in $millions
Budget Trends: FY ‘02 – FY ‘08 Where did the money go? ¤ Revenue growth was dedicated to covering
Budget Trends: FY ‘02 – FY ‘08 Continuing Impact of Tax Cuts
¤ Deep and permanent tax enacted between 2004 and 2006 ¤ Most of the cuts were to the personal income tax ¤ Tax cuts were stretched out over several years; full impact will not be felt until FY ‘11
Budget Trends: FY ’02 - FY ’08 FY‘07 – FY’08: Revenue Slowdown ¤ General Revenue collections began to slow in FY ‘07 and were almost flat in FY ’08 (+%0.9, $54 million) ¤ Increased gross production tax (+$205.7 million) and sales tax (+$80.6 million) revenues helped make up for falling personal and corporate income tax collections (-
Budget Trends: FY ‘09 – FY ‘10
Budget Trends: FY ‘09 – FY ‘10 Things Are Tough All Over Combined state budget gaps for FY ‘09, FY ‘10 and FY ‘11 estimated to total more than $350 billion
Source: CBPP, “State Budget Troubles Worsen”, updated May 18, 2009 at: http://www.cbpp.org/98-08sfp.htm
Budget Trends: FY ‘09 – FY ‘10 FY ’09 Budget: Tightening the Screws ¤ FY ’09 initial appropriations of $7.089 billion – increase of $47 million (0.7%) ¤ Most agencies appropriations frozen from FY ’08 ¤ No funding for teacher salary increases, state employee raises
FY ‘09 excludes supplementals and mid-year budget cut
Budget Trends: FY ‘09 – FY ‘10 Revenues on the Skids ¤ FY ‘09 revenue: from $224.8 million above estimate (Dec.) to $271 million below estimate (May) ¤ Every major tax below estimate and prior year in recent months ¤ When revenues dipped below 95 percent of estimates in May, a revenue shortfall was declared, leading to cuts in June allocations ($6.8 million)
Budget Trends: FY ‘09 – FY ‘10 Revenues on the Skids ¤ By mid-year, FY ‘09 projections dropped $236 million compared to the June certified estimate (red bars, below) ¤ FY ‘10 revenues estimated to come in >$600 million below FY ’08
Budget Trends: FY ‘09 – FY ‘10 Revenues on the Skids ¤ The FY ‘10 forecast is bad - - but far from a worst-case scenario ¤ Still assumes growth of sales tax and corporate income tax collections
Budget Trends: FY ‘09 – FY ‘10 Building the FY ‘10 Budget $612.5 million (8.7 percent) less available in FY ‘10 than FY ‘09
-$309.6
Budget Trends: FY ‘09 – FY ‘10 Stimulus Dollars to the Rescue ¤Budget agreement reached on using $641 million from the American Recovery and Reinvestment Act (ARRA, or the stimulus) in FY ‘10 ¤ $236.3 million from the State Fiscal Stabilization Fund for common education and higher education; ¤ $10 million from the State Fiscal Stabilization Fund for Oklahoma Health Care Authority ¤ $394 of enhanced federal Medicaid matching funds for 8 agencies ¤ $306.5 million to OHCA ¤ $71.4 million to DHS ¤ Stimulus dollars allocated for FY ‘10 represent roughly half of total available stimulus amount
See: OK Policy FY ’10 Budget Review at: http://okpolicy.org/fy-10-budget-information
Budget Trends: FY ‘09 – FY ‘10 FY ‘10 Budget ¤$7,231.2 million total, including $641 million ARRA ¤Increase in total appropriations of $106 million (1.5 percent) compared to FY ‘09 ¤State dollars only: 7.1 percent less than FY ’09
NOTE: FY ‘09 totals do not include June budget cuts
Funding Public Services FY ’10 Appropriations by Subcommittee Natural Other Total Appropriations: $7,231.2 million (includes ARRA) Resources 0.2% 2.1%
Public Safety 10.9% Health and Social Services 18.6%
Human Services 9.6%
Government Operations 5.2%
Education 53.4%
FY ’10 State Appropriations 10 Largest Agencies: $6.3 billion (88%) Agencies (75 agencies): $829 million (12%)
Budget Trends: FY ‘09 – FY ‘10 FY ‘10 Budget ¤Stimulus funds made it possible to minimize cuts or provide small increases to ten largest state agencies and some smaller ones ¤ Funding for 10 largest agencies up $161 million, 2.6 percent ¤ OHCA, +$107.7 million (+12.3%) ¤ Common Education, +$40.3 million (+1.6%) ¤ Higher Education, +$30.9 million (+3.0%) ¤ DHS, -$8.4 million (-1.5%) ¤ Most smaller agencies took cuts of 5 to 7 percent ¤ Funding for 68 smaller agencies down $54 million, 6.5 percent
See: OK Policy FY ’10 Budget Review at: http://okpolicy.org/fy-10-budget-information
Budget Trends: FY ‘09 – FY ‘10 FY ‘10 Budget: The Impact ¤For most agencies, FY ‘10 appropriations will lead to funding gaps and possible cuts in staffing, programs and services ¤No funding to address rising employee benefit costs or inflation (e.g. utilities, transportation, food) ¤Demands for some state services increase due to the downturn
Budget Trends: FY ‘09 – FY ‘10 FY ‘10 Budget: The Impact ¤At this point, little is known about how agencies will respond to budget cuts and funding gaps. ¤Most agencies will be forced to try to perform their core work with fewer staff (unfilled vacancies). This could lead to: ¤ Closing offices , reducing hours, and limiting staff serving the public; ¤ Reducing the frequency of inspections of facilities and businesses; ¤ Increasing staff caseloads; ¤Some agencies may be required to fill budget gaps by: ¤ Cutting reimbursement rates to private providers; ¤ Waiting lists and freezes on programs. ¤ Fee increases; ¤ Furloughs and involuntary lay-offs
Budget Outlook: Beyond FY ‘10 A Slow Rebound ¤Assuming the economy begins to recover in late 2009, we project that revenues will rebound slightly in FY ‘11 ¤ Revenue growth could be hindered by automatic cut in top income tax rate if GR is projected to increase >4 percent ¤It may take until FY ’13 for revenues to return to FY ‘08 levels
Budget Outlook : Beyond FY ‘10 Rainy Day Fund ¤Rainy Day Fund is filled to maximum amount of $597 million ¤Left untouched for initial FY ‘10 budget
Budget Outlook : Beyond FY ‘10 Rainy Day Fund: Off- Limits? ¤Rainy Day Fund can be accessed as follows: ¤ 3/8th for a mid-year shortfall in GR collections; ¤ 3/8th for a projected decline in GR collections for the coming year compared to the current year; ¤ 1/4th upon declaration of an emergency and legislative approval
¤RDF designed for use at the onset of a downturn ¤If revenues do begin to recover, most of the RDF will be unavailable for appropriations in FY ‘11 and FY ‘12. ¤However, if FY ’10 or FY ‘11 revenue collections fall short of the estimate, RDF could be used
See: OK Policy, “Now’s the Time: Using Stimulus and Rainy Day Funds Can reduce the Impact of State Budget Cuts”, at:http://okpolicy.org/nows-time-use-rainy-day-funds
Budget Outlook : Beyond FY ‘10 Filling the Revenue Gap ¤Stimulus Round II ¤ About half of the State Fiscal Stabilization Fund and enhanced Medicaid funds will be available for use in FY ‘11 ¤ $236.5 million of SFSF education dollars; ¤ Up to $95 million of SFSF general purpose dollars; ¤ $365 to $500 million of enhanced Medicaid ¤ Other Revenues? ¤ SQ 640 requires a 3/4th vote of both legislative chambers or vote of the people at time of next general election to raise taxes; ¤ Continuing search for one-time revenues; ¤ Other proposals could include selling off public assets, securitizing the tobacco settlement or state lottery
Budget Outlook : Beyond FY ‘10 The Post-Stimulus Budget Gap? ¤The FY ‘12 dilemma ¤ State Fiscal Stabilization Fund and enhanced FMAP are intended for states to avoid cuts, layoffs, and tax increases – but what happens when the money runs out? ¤ >$600 million of “one-time” federal stimulus dollars being used to support the ongoing expenditures of state agencies and schools in the FY ’10 budget (and FY ‘11?). ¤ Other stimulus funding streams may also end up being used in part to fund ongoing expenditures (e.g. Dept of Rehabilitation Services clearing off its waiting list). ¤ Hole will be especially huge for Medicaid agencies, which could see their federal share plunge by over 15 percentage points. ¤ Will Congress help out?
Budget Outlook : Beyond FY ‘10 The Sky is Slowly Descending!
¤Oklahoma already underfunds most of our public structures and falls short of our common goals as a state ¤The relentless underfunding of public structures leads to : ¤ threats to public safety and well-being; ¤ decline in performance; ¤ decline in public confidence and growing cynicism; ¤ “your on your own” attitude
Budget Outlook : Beyond FY ‘10 Short-Term Recommendations 2.Change the rules for the Rainy Day Fund ¤ Introduce legislation next year for a 2010 ballot proposal to allow RDF money to be used any time revenues remain below their pre-downturn peak. 3.Defer additional tax cuts until revenues recover 4.Consider new revenue streams for the Medicaid program
4.Develop meaningful multi-year forecasting
Long-Term Fiscal Outlook Oklahoma – like most states and the federal government – faces a looming structural budget deficit
•
Structural deficit: A situation that occurs when a state’s “normal growth of revenues is insufficient to finance the normal growth of expenditures year after year”
•
•
•
(CBPP, “Faulty Foundations: State Structural Budget Problems”)
Oklahoma’s Structural Deficit ¤Demographic changes, rising health care and retirement costs, an outdated tax system and tax cuts all lead to revenues failing to keep pace with costs in the years ahead
Long-Term Fiscal Outlook •
•
Long-Term Recommendations •
4.
Modernize the Tax System
6.
Preserve a Balanced Tax Structure
8.
Make the tax system fairer
•
•
• •
People want just taxes more than they want lower taxes. They want to know that every man is paying his proportionate share according to his wealth. -Will Rogers
Contact Information David Blatt, Director of Policy Oklahoma Policy Institute 4606 South Garnett, Suite 100 | Tulsa, Oklahoma 74146 ph: (918) 859-8747 [email protected]
Better Information, Better Policy Oklahoma Policy Institute provides timely and credible analysis of state policy issues
www.okpolicy.org
Related Documents
Oklahoma Budget Overview
May 2020 3
Oklahoma Budget Overview
May 2020 3
Oklahoma Budget Outlook
April 2020 1
Oklahoma
December 2019 23
State Budget Overview
July 2020 4
Brief Budget Overview
June 2020 2More Documents from "Circuit Media"