State budget strained despite growth in economy

Tuesday, December 7th 2004, 5:06 pm

By: News On 6

OKLAHOMA CITY (AP) -- The Oklahoma economy is growing and tax collections are up, but officials warned Tuesday that writing a state budget won't be easy because of previous commitments and cutbacks.

Senate Appropriations Chairman Mike Morgan, D-Stillwater, has directed budget subcommittee chairmen to begin work on next year's budget.

"Two years ago, we had a $700 million revenue shortfall," Morgan said. "In the coming session, we'll be facing a $500 million challenge as we fill key funding gaps and continue some of the important work we began last year to move our state forward.

"With that in mind, we're going to start the process of identifying our budget needs before Christmas."

Among the commitments made by lawmakers that now must be funded is raising teachers' pay to the regional average. A recent survey showed Oklahoma was ahead of only South Dakota in teacher salaries.

Morgan said subcommittees will be meeting in the next two weeks to get a head start on writing the budget.

That's prior to the Equalization Board's meeting in late December, when lawmakers will learn exactly how much money they will have to spend.

The Legislature will hold a one-day organizational meeting on Jan. 4, then recess until beginning a four-month session on Feb. 7.

At the January meeting, Rep. Todd Hiett, R-Kellyville, is scheduled to be installed as the first Republican speaker in 82 years.

House Appropriations Chairman Chris Benge, R-Tulsa, said he would focus on government efficiency.

Benge said lawmakers will write a budget exceeding $5.5 billion. "We will be assessing the budgets of separate agencies as soon as possible and setting priorities," he said.

Morgan said the Senate also would look for ways to make government more effective and efficient.

The November state revenue report showed an increase in collections for the 16th straight month. For the first four months of the fiscal year, tax collections are up $164 million.

A report released this week by the Community Action Project, a Tulsa-based anti-poverty program, said growing revenues should produce a substantial increase in money available to spend on government services next year, plus a hefty deposit in the constitutional Rainy Day Fund.

"Despite the recent recovery, the state budget has not yet returned to pre-downturn levels in nominal terms and remains some $640 million less in Fiscal Year 05 than what it would be if the budget of four years ago had simply kept pace with population growth and inflation," said David Blatt, CAP policy director.

"Cuts to many key programs and services have not been fully restored in such areas as education, health care, juvenile justice and others," Blatt said.

The largest budget shortfall in state history, almost $700 million over two years, forced agencies to slash programs and jobs in 2002 and 2003.

"Even with vigorous revenue growth and voter approval of new revenue sources finding the money to balance next year's budget will be a demanding task," Blatt said.

Last month, voters approved a net cigarette tax increase of 53 cents, but most of that money has been earmarked to expanding health care coverage.

A state lottery and a new casino gaming law will produce new funds for education, but will have little or no impact next year, officials said.