The state's budget shortfall next year could total $900.8 million.
According to a news release from Preston Doerflinger, Secretary of Finance, Administration and Information Technology, low oil prices are having a huge negative impact on the state's General Revenue Fund.
Doerflinger says November GRF collections of $354.1 million were $50.1 million, or 12.4 percent, below the official estimate upon which the FY 2016 appropriated state budget was based, and $28.4 million, or 7.4 percent, below prior year collections.
Total GRF collections for the first five months of FY 2016 were $2.1 billion, which is $101.9 million, or 4.6 percent, below the official estimate and $97.3 million, or 4.4 percent, below prior year collections, he said.
Oklahoma state government builds a five percent cushion into every appropriated state budget to prevent mandatory budget reductions if revenues fall below the official estimate, according to Doerflinger. If revenues are projected to fall more than five percent below the estimate for the remainder of the fiscal year, he said, a revenue failure is declared and mandatory appropriation reductions must occur to maintain a balanced budget.
While the five percent threshold was not reached through November, on Monday, December 21, 2015, the Board of Equalization will consider an updated FY 2016 revenue forecast that projects GRF collections falling 7.7 percent, or $444.3 million, below the initial estimate the board approved in June. If the board approves the updated forecast, a revenue failure declaration will be necessary.
Doerflinger says he told state agencies Tuesday of the likely revenue failure.
Following a revenue failure declaration, monthly general revenue allocations to agencies are reduced across the board by a percentage sufficient to cover the dollar amount of the shortfall projected for the remainder of the fiscal year. Most, but not all, appropriated state agencies receive monthly general revenue allocations.
The reductions each agency will receive will be determined following the Board of Equalization meeting. The state last declared revenue failure in 2009 during the most recent national recession.
The board on Monday will also make the first projection of revenues available for the next appropriated state budget.
Preliminary information shows the board will consider a revenue projection that would result in $900.8 million, or 12.9 percent, less revenue for the FY 2017 appropriated state budget than was appropriated for FY 2016.
The appropriated state budget comprises about one third of all state spending.
State Superintendent of Public Instruction Joy Hofmeister released a statement in response to the news:
"The state revenue failure will have a significant and painful impact on our schools during a time in which every dollar is precious. It is difficult to foresee a scenario in which Oklahoma’s schoolchildren will not feel the negative impact of this crisis," Hofmeister said. "The Oklahoma State Department of Education and schools across the state of Oklahoma are bracing to take action given the new fiscal reality. Our hardworking and committed educators are already doing heroic work under difficult circumstances. We owe it to them and most importantly to the children who depend on them to move forward responsibly and with the importance of every single student’s education in mind."