Special Session For Oklahoma Legislature?

The OKPolicy Blog, which is part of the Oklahoma Policy Institute, is recommending the state be ready to call a special session of the legislature this fall as revenues continue to decline steeply.

The rationale beyond this argument is convincing. If the state budget will need large cuts, then the legislature could meet and mandate specific cuts. As it stands now, the governor and state treasurer can only make across-the-board cuts. Drastic cuts in education, health and social services could lead to more problems down the road.

State Treasurer Scott Meacham recently issued a report that show Oklahoma’s revenues continue to decline, opening up the likelihood for a revenue shortfall, which automatically forces across-the-board cuts. According to Meacham:

It appears very likely at this point that Fiscal Year 2010 revenues will be less than originally estimated by the tax commission. That means a revenue shortfall is probable. I will be meeting with state finance officials and Governor Henry to determine if it will be necessary to begin reducing allocations to state agencies to meet the anticipated revenue shortfall.

Oklahoma has fared better that many states during the recent national recession, but in the past few months revenues have taken a steep drop. One of the reasons is a decline of gross production tax collections on natural gas. Meanwhile, the federal stimulus plan helped stabilized this year’s budget, but collection projections appear to have been too optimistic.

The OKPolicy Blog also suggests using the Rainy Day Fund to prevent more drastic cuts, improving the Rainy Day Fund rules so the fund can be used “when we need it most” and adopting a five-year professional forecast of the state budget.

Oklahoma has been relatively fortunate during the national recession, but that could quickly change. Anyone who has endured some of the state’s financial slumps—for example, the oil bust in the early 1980s—knows that rational, long-term decisions are needed now to steer the state through a difficult time. The recommendations of the Oklahoma Policy Institute, which generates the most thorough statistical information about the state budget and other issues, deserve careful consideration.