In another sign the Oklahoma economy is slipping, State Treasurer Scott Meacham reported today that revenue collections have slid below projected estimates.
In a press release, Meacham said third-quarter revenue collections for 2009 were down $34.5 from the projected estimate. This is the first time in nearly six years revenue collections fell below the estimate, according to the release, but it’s still a $33.4 million increase over last year’s collections. This was led by $93.1 million revenue decline in March compared to last year.
What does this portend for Oklahoma?
Meacham points out that current collections apply to this fiscal year budget and he remains hopeful the state can finish out the year without budget cuts. Next year, however, is a different story.
According to Meacham:
The next state budget year that begins July 1 of this year will definitely require cuts. While federal stimulus money will help offset some of those reductions, we will most certainly have to cut spending. We anticipate making targeted reductions in funding for the coming year. If we were to experience a revenue shortfall in the current year, we would be required to make across-the-board cuts.
The overall Oklahoma economy has so far escaped the brunt of the national recession, but unemployment is on the rise and revenue collections continue to slide. Some of the larger questions are how far will the slide go, and how will it impact educational funding and social/health services.
Tax cuts that primarily benefited the wealthy in recent years have added to the current budget problems.
Earlier in the year, the Oklahoma Policy Institute outlined some ways the state could handle a budget shortfall.
According to an OK Policy brief:
The deteriorating budget situation obviously presents tough choices for Oklahoma policymakers. Since Oklahoma is constitutionally prohibited from running a deficit, its options for keeping expenditures aligned with revenues consist primarily of three choices: it can tap reserve funds; it can raise new revenues; and/or it can cut expenditures.
Gov. Brad Henry has so far ruled out tapping into Oklahoma’s $600 million Rainy Day Fund. It’s highly unlikely legislators and policymakers can raise significant revenues without tax increases, which have not even been proposed or debated. That leaves budget cuts. How deep will they go?
Update: This post has been updated to correct an error. The decrease in collections were for the third-quarter, not just March. The OK Policy Blog has a thorough breakdown of the numbers.