Economy

State revenues are on the upswing, but it’s not enough money to prevent the gutting of state government and public education this coming fiscal year.

According to State Treasurer Scott Meacham, May revenues were higher than last year and beat the official estimate. The revenues have allowed the state to pay back cash funds that were used to allocate money this fiscal year, Meacham said, and left $6.7 million for next fiscal year.

“As we look back at collections throughout the fiscal year, it is becoming more apparent that our recovery started in February and that trend continues this month,” Meacham said in a press release.

Meacham pointed out that May revenues were $387.7 million, which is $21.6 million or 6 percent above the prior year and $27.5 million or 7.8 percent above the official estimate.

Oil and natural gross productions were, according to Meacham, significantly higher at $56.2, a 106.5 percent yearly increase and a staggering 377.6 percent above the estimate. State tax revenues were up around 7 percent over last year but only 0.5 percent above the estimate.

There was a decline in personal income tax. Also, Meacham pointed out that corporate income tax was zero for the month after tax refunds were paid. Motor vehicle taxes were also down.

So the revenue news remains mixed, though there are reasons for optimism. It remains to be seen if the good news will continue, and, if so, at a fast enough pace to make any real impact.

The state’s two largest school districts have announced the elimination of teaching positions for the fall, state employees face furloughs and programs for the mentally ill have been cut because of budget cuts.

One-time federal stimulus money has helped the state budget this coming fiscal year, leaving many financial analysts to wonder what will happen in fiscal years 2012 and 2013 when the funds are no longer available. Will state government and education continue to face steep and damaging cuts in the years ahead despite increased revenues? If so, is that really a recovery?

The recent state budget deal still calls for significant cuts, but one-time money—federal stimulus funds and Rainy Day Fund money—helped avert a devastating catastrophe.

The $6.6 billion budget will mean 5 to 7 percent cuts for many state agencies in fiscal year 2011. This comes after huge cuts this fiscal year. Some agencies, such as Common Education, Higher Education, Public Safety, Corrections and Mental Health Services will receive smaller cuts, ranging from 0.5 to 3.3 percent.

David Blatt, director of the Oklahoma Policy Institute, recently wrote about the reality facing state agencies:

Many agencies will be facing additional cuts of 5 to 7 percent in FY ‘11 on top of the 10 to 14 percent cuts already enacted in FY ‘10. Even agencies that have been cut less than the full 15 to 20 percent will face severe challenges in fulfilling their fundamental missions with reduced resources, particularly given mandatory increases for employee health care and retirement costs, general inflation, and in some cases, new mandates and growing caseloads.

Blatt also pointed out that the use of one-time money pushes the budget problem “further down the road,” although continued revenue growth could help. What does this mean for the 2012 and 2013 budgets?

According to a press release, Gov. Brad Henry, who has spent his last year in office dealing with the state’s financial crisis, had this to say about the budget agreement:

In the face of a historic revenue shortfall, this was a very difficult and painful budget to craft, but I am proud that we were able to strike an agreement that largely protects the core services that are so important to Oklahomans and the state’s economic recovery. All levels of public education and our classroom teachers in particular play such an important role in this state’s economic future that it was critical to shield them from the deepest cuts, and we did that.

Most everyone would agree the Oklahoma budget shortfall and what to do about it should be the top priority of state legislators, but this won’t stop unrelated and unneeded right-wing initiatives at the Capitol for the remainder of the session.

Faced with an estimated $600 to $850 shortfall, the legislature should get serious about looking for more revenue. By some estimates, agencies could be cut 10 to 12 percent, which would decimate health and social services programs and the education budget.

Some mental health experts predict such cuts will lead to a higher suicide rate and more criminal activity here, which will only add to the state’s ridiculously high incarceration rates. Oklahoma school children will be packed in classrooms like chickens in a corporate poultry factory once teacher layoffs begin in earnest.

Eliminating some tax credits is one way to raise money, but the Republican leadership and the corporate media are already trying to qualify the issue. Apparently House Speaker Chris Benge (R-Tulsa) recently made an argument in favor of some important tax credits. His argument was later endorsed by The Oklahoman editorial page.

Whether Benge’s specific arguments are valid or not might not be as important at this point as the overall signal he sent about tax credits and the accompanying cheerleading at The Oklahoman, which serves as the public relations office of the GOP. Does the GOP plan a fight against proposals by House Democrats to eliminate certain tax credits? Probably.

Meanwhile, against a backdrop of political posturing, it’s safe to say furloughs and layoffs have demoralized many state employees, who are uncertain about their future. Many teachers are also worried about losing their jobs or teaching in extremely overcrowded classrooms next year. Many new teachers, who are graduating this May, are obviously worried about finding jobs.

But the human cost and real tragedy of the budget crisis won’t stop the right-wing legislative machine from extreme proposals. House Bill 3354, for example, would allow people with concealed-weapon permits to openly carry their guns in Oklahoma. Supposedly it’s one of those “Second Amendment” issues. Also, expect a veto override attempt by the Republican leadership on a bill exempting the state from federal gun regulations.

Republicans have also discussed passing an anti-illegal immigration bill that would be tougher than the one passed recently in Arizona.

If progressive and centrist Democrats think things are bad this year, and they should, just wait until 2011. If U.S. Rep Mary Fallin, the leading Republican candidate for governor, is elected and the GOP retains and widens majorities in the House and Senate, a new type of dark ages will truly commence here. Get ready.