We’re in the final weeks of the legislative session, and although there are a few policy bills still awaiting final action, for the most part, the focus from now until the end of session will be on completing work on the budget for fiscal year 2017, which begins this July 1.
Oklahoma’s constitution requires us to write and pass a balanced budget—we cannot deficit spend like the federal government. But we do have two fiscally responsible options—reducing appropriations to state entities is one, and the other is to identify additional revenue streams. When all is said and done, it will likely be a combination of the two that are utilized to balance the FY 2017 budget.
Senate Republicans have recognized the need to shield our most important government functions, like education, public safety, transportation, health and mental health, from the deepest cuts. With that in mind, we have worked throughout the session to identify tax credits, preferences and exemptions that we can limit or reform in order to close the budget gap. We passed several measures last week through the Joint Appropriations and Budget Committee which will generate approximately $190 million to help address the budget shortfall. We will soon be voting on additional bills along these lines.
We’ve also looked at ways to reform the budget process to give legislators more discretion over some streams of revenue that are currently not subject to the appropriations process so that those funds can be prioritized as needed during difficult economic periods. It’s important to remember that this current crisis is temporary as will be the cuts that are happening as a result of these difficult economic times. But implementing tax credit and budgetary reforms now will put us on more solid financial ground in the future when our economy and revenues rebound.
What we don’t want to do is continue to rely too much on one-time money to pay for recurring expenses. Bonds are an appropriate way to pay for infrastructure, such as transportation needs or repairing the Capitol. But bonding $500 to $700 million, as some have advocated, would be the equivalent of taking a cash advance on a high-interest credit card to pay your monthly mortgage. It’s fiscally unsound and could lead to a credit rating downgrade for Oklahoma.
We only need to look north to Kansas to see what could happen. The day after their state Legislature approved its latest budget bill. Moody’s, the international bond rating agency, downgraded the credit outlook for Kansas from stable to negative. The reasons included the Kansas Legislature’s use of one-time money and a bill delaying millions of dollars in payments to their state employee pension system so that their state could pay the bills through June.
We don’t want that scenario repeated in Oklahoma. A downgrade in our credit rating could dramatically increase the cost of paying off bonds, and make them more difficult to sell. We remain dedicated to prioritizing core services, and finding solutions that will leave us financially stronger, not worse off, when our economy recovers.
As always, please feel free to contact my Capitol office with any questions or concerns you may have about legislation or other issues impacting our state at 405.521.5628 or at email@example.com.