OKLAHOMA CITY — Though lawmakers will have an additional $1.8 billion to potentially spend this coming year, state leaders said they will need to be careful how they allocate that unexpected windfall.
The budget news unveiled at Tuesday’s Board of Equalization meeting was better than expected as many states across the country are grappling with budget deficits caused by fallout from the COVID-19 pandemic.
After December’s meeting, lawmakers thought they might only have an additional $631.2 million to spend.
Budget officials said Oklahoma’s financial fortunes for the upcoming 2022 budget year were further bolstered by federal coronavirus stimulus dollars, increased unemployment payments, the state’s COVID-19 vaccination program, employment rebounds and modest gains in oil price outlooks.
Oklahoma is in a stable position compared with last year’s budget, said House Speaker Charles McCall, R-Atoka.
The state’s shortfall for that budget year ballooned to nearly $1.4 billion as oil prices plunged to record lows and the COVID-19 outbreak continued to decimate the economy. Most state agencies saw their budgets cut an average of 4%.
“I think the state’s position is very strong,” McCall said. “And that’s because we didn’t appropriate our full authority last year ... combined with the economy recovering better than expected,” he said. “So, I think we’re in a great place for this session. Hopefully we continue to see those numbers increase as the economy continues to improve.”
Gov. Kevin Stitt said unemployment in April 2020 skyrocketed to 13% and oil prices turned negative.
He said the Legislature wisely cut spending and used some savings to shore up the budget in an effort to avoid deep cuts to state agencies.
“But the recovery was more of a ‘V’ instead of just really slow,” he said. “I credit the Oklahomans (for why) we really recovered quickly. So it is a relief because early on in April, it was looking like we were going to have a billion dollar shortfall.”
Still, Stitt said officials need to be careful how much they spend this year.
“It’s like if you had a rich relative that died, and you inherited $1 million this year, you’re not going to have … that person’s inheritance every single year,” he said. “So we have to be really cautious that we don’t raise the level of expenses above our recurring revenue. Let’s make sure we replenish our savings account.”
Stitt said he’d like lawmakers to save at least $300 million.
State Sen. Roger Thompson, R-Okemah, said even though the state has roughly 23% more to spend in the upcoming budget, $1 billion isn’t a lot when it comes to a state budget.
The Legislature has nearly $915 million in recurring expenses that will eat into much of that excess. Those include nearly $600 million in one-time expenditures, $200 million to cover the constitutionally-mandated cost of Medicaid expansion and $115 million in property tax reimbursements.
Thompson, Senate appropriations chair, also said the state budget has benefited from millions of dollars in federal coronavirus aid that has flowed into the state.
“I’m very cautiously looking at (fiscal year) 23, and so it is my belief that this is not a year that we spend all of our authorized funds,” he said. “As far as we are concerned on a state level, I think we still need to enter this year being very conservative in what we’re going to spend.”
Thompson said he expects Congress to pass another federal stimulus package that will be aimed at helping schools, cities and towns recover from fallout of the pandemic.
Janelle Stecklein covers the Oklahoma Statehouse for CNHI's newspapers and websites. Reach her at firstname.lastname@example.org.