Feb

2

What happens if it keeps raining?

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As we pointed out in a press release yesterday, Governor Henry’s budget calls for spending more than $550-million of the $600-million in the state’s Rainy Day Fund, leaving just $43-million in the state’s savings account.  So what would happen if the rain continues?

Even if there isn’t a revenue shortfall, there could be a natural disaster or other event that could require the Governor and Legislature to tap the Rainy Day Fund.  The law allows 25% of the fund to be used if the Governor declares and legislators agree that “emergency conditions exist.”  Under the Governor’s budget proposal, there would be less than $11-million for such an emergency.

Governor Henry knows what it’s like to come into office with a budget hole and little money available in the Rainy Day Fund, yet that’s the exact situation he is leaving for Oklahoma’s next Governor. 

Consider the fact that the Equalization Board determined that there was $5.3-billion available to spend in the next budget, yet Governor Henry’s plan calls for nearly $6.9-billion in spending!  How does he do that? 

By raiding the Rainy Day Fund and coming up with new taxes and fees.  Of the $1.6-billion in extra money the Governor spends, less than $100-million comes from the “surgical cuts” he talked about in his State of the State address.  The rest comes from: stimulus funds ($696-million), Rainy Day funds and other cash reserves ($258-million), new bonds ($233-million), revenue enhancements ($204-million), compliance initiatives ($190-million) and a few other measures making up the rest.

And what if those revenue enhancements and compliance initiatives don’t bring in the amount of money the Governor is projecting?  Well, that will be a mess for the next Governor to clean up.  That mess will be made that much worse when you consider there won’t be $696-million in stimulus funds available to plug any gaps.  Do you know how many times the state’s revenues have increased by $700-million or more from one year to the next?  It’s only happened once in the last decade and it’s hard to believe it ever happened before that.

Rather than stick it to the next Governor and legislature, OFRG hopes lawmakers will find a way to pare down more spending so that the FY 2012 budget won’t have as large of a hole and the Rainy Day Fund will be able to provide more of a cushion in the event of an emergency.

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