Meacham: Numbers Down, But Better

Preliminary reports show October revenue collections in Oklahoma failed to meet the estimate for a tenth consecutive month, requiring a continued reduction of five percent from monthly allocations to state agencies, State Treasurer Scott Meacham announced today.

In spite of the continued negative numbers, Meacham said we might be seeing a silver lining in the storm clouds.

“I am cautiously optimistic that October collections could show our economy has finally bottomed and we may start seeing some recovery in actual revenue collections,” he said. “While the shortfall for the fiscal year prior to October was 26 percent below the estimate, October’s shortfall was 7.8 points lower at 18.2 percent.

“Coupled with other positive national economic indicators, I am hopeful that with today’s revenue report we have seen the bottom of the recession in Oklahoma and that recovery will begin in the next few months. However, we will need to watch collections for a few more months to know whether the tide has truly turned.”

The preliminary reports show General Revenue Fund collections in October were $374.4 million. That amount is $116.1 million or 23.7 percent below the prior year; and, $83.3 million or 18.2 percent below the estimate.

For the first four months of the fiscal year, collections total $1.4 billion. That is $578.1 million or 28.1 percent below the prior year and $471.7 million or 24.2 percent below the estimate.

In order to fund the reduced allocations in October, transfer of an additional $24.1 million from cash funds was required. A total of $155.4 million has been utilized from cash funds since the start of the fiscal year in July to make monthly allocations at the five-percent reduced level. Those transferred funds will have to be repaid, most likely from Rainy Day funds, by the end of the fiscal year.

The five-percent reduction, in place since the start of the fiscal year and made permanent two weeks ago, amounts to a monthly cut of $21 million in budgetary allocations to state agencies.

“Our budget leaders are currently trying to determine the likely size of our state’s revenue shortfall for the current fiscal year, which is complicated by not yet knowing the revenue estimate for fiscal year 2011. We are working together in good faith to address the revenue hole as soon as possible in a fiscally prudent way,” said House Speaker Chris Benge, R-Tulsa.

“While there are no good options available, the current practice of transferring dollars from other funds will inevitably make for more difficult decisions in the months ahead. For now, I strongly urge all state agencies to look at ways to save every dollar possible while also looking for additional areas to cut so any further reductions are less painful down the road.

“There is nothing to indicate a reversal in our state’s economic trend anytime soon, which means we must be realistic as we work to ensure a balanced budget for this fiscal year. If the current trend continues, our state could be looking at as much as a billion dollar shortfall to overcome, which means further cuts must be considered now, coupled with usage of funds from the state’s Rainy Day account. Being proactive now will give us the flexibility to adjust funding levels with supplemental dollars if our economy recovers quicker than expected. But, in the meantime, I think we need to prepare for the worst, button down the hatches and ride out this economic storm together,” Benge concluded.

“The State revenue report is significantly below projections. There is no rational basis to see things changing in the foreseeable future. I remain committed to staying at the table with the Governor and working with him to see us through this crisis, but we are running out of options,” said Senate President Pro Tem Glenn Coffee. “Clearly, hard decisions will be made, and serious steps will have to be taken in order to see this state and our people through this challenge.

“At this point, it is fantasy to think we can proceed forward without a serious look at each agency, and making real cuts in spending,” he continued. “It would be irresponsible not to look at making additional reductions in expenditures at this point.”

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