Oklahoma's first revenue shortfall since 1983
Wednesday, December 19th 2001, 12:00 am
By: News On 6
OKLAHOMA CITY (AP) _ A $70 million revenue shortfall will force state budget cuts and an increase in state income taxes, officials said Wednesday.
Blamed on falling natural gas prices, it is the first shortfall in Oklahoma since 1983, when a collapse in an oil boom sent state revenue collections on a downward spiral and forced a series of tax increases.
Officials also announced that lawmakers will have $267 million less to spend next year than they appropriated this year, based on projections to be submitted to the state Equalization Board on Friday for certification.
``This is not the best news, but it could have been worse,'' said Gov. Frank Keating, who noted that the shortfall comes despite a growth in sales and income taxes. ``Hopefully, this is a short-term situation.''
Tom Daxon, director of the Office of State Finance and a member of Keating's cabinet, said he is notifying agency officials of his decision to declare a shortfall, reducing monthly budget allocations across the board by 2.1 percent until the end of the fiscal year on June 30, 2002.
House Speaker Larry Adair, D-Stilwell, said Daxon's action might be premature and suggested Daxon should have waited to declare a shortfall until after tax collections from December are tallied in early January.
``That really makes a lot of sense, six days before Christmas'' added House Majority Leader Danny Hilliard, D-Sulphur. ``I hope that doesn't squash the banner revenue month we were hoping to get to help with this problem.''
Keating said the development should provide momentum for his plan to overhaul the state tax system by eliminating the income tax, sales tax on groceries and the corporate franchise tax, and making the state estate tax match the federal tax rate.
The $2.7 billion in state tax collections that would be lost under the plan would be largely replaced by a 5.9 percent tax on services not now taxed.
Adair said the revenue problems will not help Keating's drive.
``I think this probably complicates more the issue of whether, in fact, we can do the governor's program,'' he said. ``Based on everything we're seeing right now, I don't know if we can sell something like this.''
Under ``safety net'' clauses in previous legislation, a reduction of the income tax from 7 percent to 6.75 percent will be suspended, as will an additional reduction to 6.65 percent scheduled to go into effect in January, Daxon said.
Daxon defended his shortfall declaration.
``By declaring a revenue shortfall, we set the stage for state agencies to evaluate their budgets and to determine the best way to provide their services with less-than-anticipated money.''
Under the Oklahoma Constitution, across-the-board budget cuts are required if there is a revenue shortfall. The Legislature convenes in February and can alter the reductions.