Government Shutdown Looms As Budget Battle Drags On

Saturday, May 20th 2006, 12:31 pm

By: News On 6

OKLAHOMA CITY (AP) _ It took almost 10 years of planning and $59 million to build the Oklahoma History Center, but a budget battle that threatens to hold up funding for state agencies could shut it down overnight.

``The employees might be furloughed. We probably would have to lock the door,'' said Bob Blackburn, executive director of the Oklahoma Historical Society, operator of the 214,000-square-foot museum that opened in November.

``Of course, in a centennial year, that would be ironic.''

As Oklahoma prepares to celebrate its 100th birthday next year, state lawmakers are locked in a political confrontation over the state budget for 2007 that matches Republican demands for the biggest tax cut in state history against Democratic plans to use record tax revenue to improve public education, health care and roads and bridges.

If not resolved by July 1, the election-year squabble could force most state government functions to shut down, including the history center.

``We get caught up in the wake of debates like this,'' said Blackburn, whose history center office is in the shadow of the state Capitol dome. ``What's especially ironic is that every elected official who's been over here says, `Bob, we're so proud of this place.' It's virtually unanimous.''

The 2006 Legislature enters its final week Monday as lawmakers prepare to adjourn by the constitutionally required deadline of 5 p.m. Friday. Unless a budget agreement and funding authorizations are approved by then, lawmakers will be forced to return to the Capitol in June to continue working on the budget.

Blackburn's is one of dozens of state agencies that would be affected if government were forced to shut down because lawmakers could not agree on how to use state revenue before the new fiscal year begins on July 1.

The consequences could be dire for the 574,000 people enrolled in the state's Medicaid health care program for low-income, uninsured Oklahomans.

``It could affect benefits. It could affect eligibility,'' said Nico Gomez, spokesman for the Oklahoma Health Care Authority, the state's Medicaid provider. ``It certainly could affect servicers or what we pay providers or how quickly we pay providers.''

The agency has experienced budget shortfalls before but has never been forced to function without any operational funds, Gomez said. The agency's $3.36 billion budget includes $635 million in state dollars. The rest comes from federal matching funds. OHCA is seeking $150 million more from the state in 2007.

With more than a month remaining in the 2006 fiscal year, Gomez said OHCA officials are not nervous over the prospect of beginning 2007 with no cash.

``We're not making any plans for contingency. At the beginning of June we'll have to start having those talks,'' Gomez said.

Lawmakers are attempting to write the largest budget in state history, about $7 billion that includes $1.1 billion in surplus revenue and windfalls due to strong economic growth and high oil and gas prices.

Negotiations between the Republican-controlled House and Democrat-led Senate were stalled for weeks as GOP House Speaker Todd Hiett promoted a tax-cut package that included elimination of the estate tax and reduction of the top income tax rate from 6.25 percent to 4.9 percent.

The cut would cost $480 million when fully implemented. The cost of Hiett's tax cut package, including eliminating the estate tax at a cost of $66 million a year, totaled more than $500 million. The top income tax rate was reduced from 6.65 percent last year.

To break the stalemate and try to avoid a special session, Gov. Brad Henry proposed a compromise state budget plan that included cutting the top tax rate to 5.5 percent, $2,400 annual pay raises for public school teachers and at least $150 million for a state research endowment.

The income tax cut would reduce state revenue by $93.2 million in the fiscal year that begins July 1 and $255 million when fully implemented, officials said.

Henry said his plan ``strikes a good balance'' between tax relief sought by the House and spending proposals favored by the Senate.

Democrats disagreed. They rejected the Democratic governor's plan and offered their own, calling for increased spending on education, including $3,000 teacher pay raises, and a tax break targeting middle- and low-income wage earners.

The tax relief proposal would match Oklahoma's standard deduction with the federal government's and reduce state revenue by $172 million when fully implemented.

The House and Senate remain far apart as lawmakers prepare to return to the Capitol, but state officials said they are optimistic an agreement can be reached in time to avoid a government shutdown.

``We're a long ways away from that point,'' said state Treasurer Scott Meacham, who helped Henry draft his compromise budget plan and is heavily involved in the budget negotiations.

``Budget standoffs happen all the time in states all over the country,'' he said.

State government has never been forced to shut down during a budget battle. But the state Tax Commission was closed for a few days during the administration of former Gov. Henry Bellmon during a dispute in which Bellmon refused to sign the agency's budget, Meacham said.

``What happens is that you run out of funding,'' he said.

Blackburn said that in a government shutdown, history center workers would still preserve the museum's priceless artifacts whether there was money to pay them or not.

But it would close the doors to thousands of school children and adults who visit the center every month to learn about their state's heritage after its first 100 years, Blackburn said.

``The tragedy is that we would have a missed opportunity that was there within our grasp,'' he said.