Professional Documents
Culture Documents
David Blatt
Oklahoma Policy Institute
dblatt@okpolicy.org - (918) 859-8747
Oklahoma‟s Path to Prosperity
$7,500
$7,043
$7,000 $6,760
$6,500 $6,217
$6,000
$5,389 $5,491 $5,459
$5,500 $5,191 $5,145
$4,981
$5,000
$4,500
$4,000
FY'00 FY'01 FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08
Budget Trends: FY „02 – FY „09
$776.9
$800.0 $651.1
$561.8
$600.0
$400.0 $333.3
$200.0 $144.8
$18.7
$0.0
FY'05 FY'06 FY'07 FY'08 FY'09 FY'10
sour c e : Ok l a homa Ta x C ommi ssi on
Budget Trends: FY ‟02 - FY ‟09
FY‘07 – FY’08: Revenue Slowdown
General Revenue collections were almost flat in FY ‘08
compared to FY ‘07 (+%0.9, $54 million)
5.0% 4.0%
0.9%
0.0%
-5.0%
-5.3%
-6.6%
-10.0%
FY '02 FY '03 FY '04 FY '05 FY '06 FY '07 FY '08
Budget Trends: FY ‟02 - FY ‟09
FY ’09 Budget: Tightening the Screws
Most agencies appropriations frozen from FY ‘08
No funding for benefit cost increases teacher salary increases, state
employee raises
9.5
8.5
7.5 6.7%
6.5
5.5
4.5
3.5
2.5
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09
Oklahoma National
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
2007.2 2007.3 2007.4 2008.1 2008.2 2008.3 2008.4 2009.1 2009.2
U.S. Oklahoma
Budget Trends: FY „10
$140.00
$10.00
$120.00
$8.00
$100.00
$6.00 $80.00
$60.00
$4.00
$40.00
$2.00
$20.00
$- $-
Apr-1994
Apr-2005
Oct-1999
Dec-1986
Nov-1987
Oct-1988
Aug-1990
Mar-1995
Dec-1997
Nov-1998
Aug-2001
Mar-2006
Dec-2008
Jan-1986
Jul-1991
Jun-1992
Feb-1996
Jan-1997
Jul-2002
Jun-2003
Feb-2007
Jan-2008
Sep-1989
May-1993
Sep-2000
May-2004
U.S. Natural Gas Wellhead Price (Dollars per Thousand Cubic Feet)
-30.0% -27.7%
-30.1%
-35.0%
July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June
Budget Trends: FY „10
FY ’10 Budget: Revenues on the Skids
In February, FY ‗10 revenues estimated to come in >$600
million below FY ‘08 ;
6,500
General Revenue Collections,
FY '06 Actual - FY '10 Estimated (in $million)
5,981.1 5,946.4
6,000 5,902.7
5,710.0
5,649.2
5,500 5,407.2
5,356.6
5,000
FY '06 Actual Fy '07 Actual FY '08 Actual FY '09 June FY '09 FY '09 FY '10
December February Feburary
Budget Trends: FY „10
FY ‘10 Budget
$7,231.2 million total, including $641 million ARRA (stimulus)
Increase in total appropriations of $106 million (1.5 percent)
compared to FY ‗09
State dollars only: $500 million less than in FY ‘09
4,500
4,000
FY'00 FY'01 FY'02 FY'03 FY'04 FY'05 FY'06 FY'07 FY'08 FY'09 FY'10
State Appropriations ARRA
$3,000
$2,000
$1,000
$-
100% Estimate Appropriated Low Middle High
Current
Emergency,
Year
25.0%
Shortfall,
37.5%
Next Year
Shortfall,
37.5%
Budget Outlook: What Response?
Shortfall Options
Middle estimate of $706 million shortfall could be filled by:
RDF shortfall funds (3/8ths) - $224 million +
RDF emergency funds (1/4) - $149 million +
Full year across-the-board cuts of 6.4 percent
Budget Outlook: What Response?
Budget Outlook
What‘s the plan???
Seems to involve:
Keep cutting agency budgets 5 percent every month
Keep borrowing from any and all available reserves to make
up the difference
No Special Session
Tap the Rainy Day Fund to fill the gap
$6,000 $5,518
$5,000 $5,945
$5,275
$4,439 $4,735
$4,000
$3,000 $3,870
$2,000
$1,000
$-
FY 07 (act.) FY 08 (act.) FY 09 (act.) FY 10 (est.) FY 11 (est.) FY 12 (est.) FY 13 (est.)
Fiscal Year
Estimates by OK
Low Middle High Policy
Budget Outlook: Beyond FY „10
Budget Outlook
Time-released tax cuts still kicking in
• Structural deficit: A
situation that occurs
when a state‟s “normal
growth of revenues is
insufficient to finance
the normal growth of
expenditures year after
year”
(CBPP, “Faulty Foundations: State Structural
Budget Problems”)
Long-Term Fiscal Outlook
Oklahoma’s Structural Deficit
Projected Annual Budget Surpluses and Deficits
Before and After 2004-2006 Tax Cuts (2007 to 2035)
1,000
500
0
M i l l i o n $2005
(1,000)
After Tax Cuts
(1,500)
(2,000)
(2,500)
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035
Year
Source: Projections conducted in 2007 by Dr. Kent Olson, Professor of
Economics, Oklahoma State University
Long-Term Fiscal Outlook
Long-Term Recommendations
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