Magna Carta News
Tuesday, October 14, 2003
Oklahoma House of Representatives
October 14, 2003
FOR IMMEDIATE RELEASE
Contact: State Rep. Larry Ferguson
Capitol: (405) 557-7344
Cleveland: (918) 358-2365
By REGINA BIRCHUM
House Media Specialist
OKLAHOMA CITY -- Despite reports of an improving economy, Rep. Larry Ferguson said state agencies are not likely to receive an increase in funding this upcoming session and cautioned them to be realistic when submitting budget requests.
The Cleveland Republican said many agencies have begun to publicly announce their funding requests for the next fiscal year. "All are asking for an increase," he related.
The Department of Human Services has requested $118 million more than it was appropriated last year, the Corrections Department has requested an additional $47 million, $140 million more has been requested for public schools, and the Health Care Authority wants $73 million in new funding to provide medical care for the needy.
"These are all legitimate requests," Ferguson said. "But before people get too excited over asking for an increase in funding, we need to stop and look at last year's budget."
In order to minimize budget cuts last year, Ferguson said the Legislature tapped several sources for funds, restructured debt and used creative revenue enhancement measures, funds which will not be available for next year's budget. "We financed those appropriations with smoke and mirrors," he said.
The budget for Fiscal Year 2003 included $267 million in "one-time funds," including $48 million withdrawn from the now near empty "rainy day" fund. The remaining $219 million came from other sources, including $82 million which was borrowed from a combination of three state pension funds. Ferguson said in this instance, not only will the Legislature have to replace those funds but it also will begin to repay the loan plus interest.
In order for the Legislature to make appropriations at the same level as last year, there must be enough new revenue to replace the amount of one-time funds that shored up last year's budget. "We are beginning the next budget $267 million in the hole," Ferguson said.
The financial report for the first quarter of Fiscal Year 2004 was released Tuesday by the Office of State Finance, "and we had growth of about $20 million above the estimate," Ferguson said. Nevertheless, he pointed out, the State of Oklahoma still has "a long way to go before we can break even" for next year.
"If the growth rate for the remainder of the fiscal year continues at the prevailing rate, we will have $80 million in new funds, or $187 million less than we need to fill the financial hole we created with one-time funding."
On top of the need to replace last year's one-time funding, Ferguson said state employee health insurance premiums will increase approximately 15 percent beginning in January. Those agencies that pay for state employee health benefits don't have room in their current budget to adjust for the increase, he warned. "Some of those agencies were cut to the bone last year. If they have to make additional cuts it will be very difficult."
Ferguson noted that over the past two years, agencies faced additional budget cuts on a monthly basis. "It wasn't but a few months ago that employees were wondering if they would even have a job," he said. "We've been fortunate not to need to make monthly reductions lately, but it won't take much for those days to reoccur."
He also cautioned against relying too heavily on rising oil and gas prices, which have given Oklahoma's tax revenue such a needed boost lately. "Most of the $20 million growth in revenues came from the unstable gross production tax," he said. "We're so reliant on overseas oil, which we don't have much control over. Prices can change in an instant. Or what if we have another mild winter?"
Income taxes and sales taxes appear to be flat for the first quarter, Ferguson continued. "This certainly is better than the last couple of years, but we need to see a health growth in sales and income taxes if we are going to avoid having less money to appropriate next year."
Ferguson said he doesn't fault agencies for asking for more funds. "It's the natural thing for them to do." However, he added that the public needs to be reminded they are only requests and are not based on how much money the state is going to have. "I don't want agencies and the public to anticipate money that won't be coming."
The nine-term legislator, who is a member of the House Committee on Appropriations and Budget, noted that 90.6 percent of all legislative appropriations are earmarked for 12 agencies, leaving more than 64 agencies to split the remaining 9.4 percent of the total appropriations pie. "We still have a challenging year ahead of us."
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October 14, 2003
FOR IMMEDIATE RELEASE
Contact: State Rep. Larry Ferguson
Capitol: (405) 557-7344
Cleveland: (918) 358-2365
By REGINA BIRCHUM
House Media Specialist
OKLAHOMA CITY -- Despite reports of an improving economy, Rep. Larry Ferguson said state agencies are not likely to receive an increase in funding this upcoming session and cautioned them to be realistic when submitting budget requests.
The Cleveland Republican said many agencies have begun to publicly announce their funding requests for the next fiscal year. "All are asking for an increase," he related.
The Department of Human Services has requested $118 million more than it was appropriated last year, the Corrections Department has requested an additional $47 million, $140 million more has been requested for public schools, and the Health Care Authority wants $73 million in new funding to provide medical care for the needy.
"These are all legitimate requests," Ferguson said. "But before people get too excited over asking for an increase in funding, we need to stop and look at last year's budget."
In order to minimize budget cuts last year, Ferguson said the Legislature tapped several sources for funds, restructured debt and used creative revenue enhancement measures, funds which will not be available for next year's budget. "We financed those appropriations with smoke and mirrors," he said.
The budget for Fiscal Year 2003 included $267 million in "one-time funds," including $48 million withdrawn from the now near empty "rainy day" fund. The remaining $219 million came from other sources, including $82 million which was borrowed from a combination of three state pension funds. Ferguson said in this instance, not only will the Legislature have to replace those funds but it also will begin to repay the loan plus interest.
In order for the Legislature to make appropriations at the same level as last year, there must be enough new revenue to replace the amount of one-time funds that shored up last year's budget. "We are beginning the next budget $267 million in the hole," Ferguson said.
The financial report for the first quarter of Fiscal Year 2004 was released Tuesday by the Office of State Finance, "and we had growth of about $20 million above the estimate," Ferguson said. Nevertheless, he pointed out, the State of Oklahoma still has "a long way to go before we can break even" for next year.
"If the growth rate for the remainder of the fiscal year continues at the prevailing rate, we will have $80 million in new funds, or $187 million less than we need to fill the financial hole we created with one-time funding."
On top of the need to replace last year's one-time funding, Ferguson said state employee health insurance premiums will increase approximately 15 percent beginning in January. Those agencies that pay for state employee health benefits don't have room in their current budget to adjust for the increase, he warned. "Some of those agencies were cut to the bone last year. If they have to make additional cuts it will be very difficult."
Ferguson noted that over the past two years, agencies faced additional budget cuts on a monthly basis. "It wasn't but a few months ago that employees were wondering if they would even have a job," he said. "We've been fortunate not to need to make monthly reductions lately, but it won't take much for those days to reoccur."
He also cautioned against relying too heavily on rising oil and gas prices, which have given Oklahoma's tax revenue such a needed boost lately. "Most of the $20 million growth in revenues came from the unstable gross production tax," he said. "We're so reliant on overseas oil, which we don't have much control over. Prices can change in an instant. Or what if we have another mild winter?"
Income taxes and sales taxes appear to be flat for the first quarter, Ferguson continued. "This certainly is better than the last couple of years, but we need to see a health growth in sales and income taxes if we are going to avoid having less money to appropriate next year."
Ferguson said he doesn't fault agencies for asking for more funds. "It's the natural thing for them to do." However, he added that the public needs to be reminded they are only requests and are not based on how much money the state is going to have. "I don't want agencies and the public to anticipate money that won't be coming."
The nine-term legislator, who is a member of the House Committee on Appropriations and Budget, noted that 90.6 percent of all legislative appropriations are earmarked for 12 agencies, leaving more than 64 agencies to split the remaining 9.4 percent of the total appropriations pie. "We still have a challenging year ahead of us."
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