OKLAHOMA CITY – Though lawmakers learned they might have an additional $631.2 million to spend when they convene next year, existing debts will likely eat through much of that windfall.
State Rep. Kevin Wallace, R-Wellston, who chairs the House’s appropriations committee, said while the early budget outlook appears better than expected with about 8 percent more to spend, “we’re going to have additional obligations above and beyond what we appropriated last year.”
The Legislature won’t officially know how much it has to spend until the board reconvenes in February to finalize the numbers, he said.
He said legislators have to make up one-time funds they used to fill the current budget, which was buffeted by pandemic uncertainty. They’ll also have to pay $164 million to cover the cost of Medicaid expansion, cover property tax reimbursements, and face increased benefit costs for school teachers.
“Literally, we’re going to have an additional $400 to $500 million of obligations above what we budgeted for the last year, right off the bat,” Wallace said.
Still the budget outlook unveiled Friday at the Board of Equalization meeting represented a much better financial picture than previously expected. Just days ago, some lawmakers were braced to have fewer dollars to spend when the Legislature convenes in February.
Budget officials said state coffers have benefited from federal stimulus dollars that enhanced sales and use tax collections and generated additional income tax from unemployment remittances. The state also experienced a faster-than-expected initial employment recovery with the state’s 14.7 percent April unemployment rate dropping to 6.1 percent in October.
State budget officials said while budget year 2021 general revenue collections of $6.1 billion were below February’s estimate, the state seems poised to avoid a revenue failure. Collections were actually higher than April’s estimates and about $500 million more than what lawmakers appropriated for the current budget.
“What the Legislature did last year by appropriating much less than our authority has created this opportunity,” Wallace said. “With some planned strategic cuts last year, preparing for what might be a tougher year this year, it’s put us in a better position than we would have been if we hadn’t had any cuts.”
However, state Superintendent Joy Hofmeister questioned whether the Legislature’s underspending in the current budget year resulted deeper cuts to state agencies than necessary.
“If we had a crystal ball, we could have spent $500 million more,” said Gov. Kevin Stitt.
But he said if they had spent a billion more, the state budget would have been facing deep cuts.
In a statement after the meeting, Stitt said that over the course of the past fiscal year, Oklahoma’s state revenues have dropped due to the COVID-19 pandemic and a substantial loss of oil and gas drilling activity.
“However, Oklahoma was one of the first states to fully reopen its economy after the onset of the pandemic to allow Oklahomans to operate their businesses and safely return to work,” he said.
Thanks to that decision, coupled with federal stimulus relief, the 2021 budget year projections are coming in better than expected, he said.
“Moving forward, the Legislature will still have difficult decisions to make regarding the budget, but my team is committed to working alongside our legislators to ensure we remain fiscally responsible with Oklahomans’ hard-earned tax dollars,” he said.
State Sen. Roger Thompson, R-Okemah, chair of the Senate appropriations committee, said the extra “cash flow” will likely offset some of the one-time expenditures to balance the budget.
“What this does prove is Oklahoma came back a lot stronger than the Board of Equalization estimated they would back in April,” he said.
Janelle Stecklein covers the Oklahoma Statehouse for CNHI's newspapers and websites.