State Revenue Shortfall Declared; All Appropriations Face Reductions

State revenue collections failed to meet estimates for a fifth consecutive month in May, forcing state officials to declare a revenue shortfall as annual collections fell below the amount needed to meet appropriated funding levels, State Treasurer Scott Meacham announced today.

The state constitution requires the legislature to appropriate no more than 95 percent of the state’s estimated revenues. If actual revenue collections are less than the amount appropriated, there is a “shortfall”and the constitution requires that all appropriation allocations be reduced across-the-board by the amount of the shortfall.

The last such shortfall occurred six years ago during Fiscal Year 2003.

Current revenue collections have fallen below 95 percent of the estimate by $6.8 million or 1.42 percent of June spending allocations.

“Unfortunately, revenue collections have dropped well below the official estimate and even lower than Tax Commission projections made in February,” Meacham said. “Fortunately, the shortfall is relatively small –only 0.1 percent on an annual basis. I am hopeful most agencies will be able to minimize the impact by using unspent funds from earlier in the fiscal year.”

Agencies will receive their monthly allocations from the Office of State Finance next Tuesday, June 9, but Meacham said he is making the announcement today to give advance warning.

“Since January, we have been cautioning that this scenario could occur as Oklahoma experiences the effects of the recession,” he said. “Unfortunately, a revenue shortfall has now occurred and we are forced to make small, across-the-board cuts.”

May collections were below the prior year and the estimate in every major category – income tax, sales tax, and gross production and motor vehicle taxes.

“It appears low oil and gas prices are driving the economic downturn throughout Oklahoma’s economy,” Meacham said.

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