DALLAS - Oklahoma Gov. Mary Fallin delivered her budget proposal to the opening session of the state Legislature Monday.
The budget would cover a $300 million revenue shortfall with spending cuts and shifting funds from departments within the state government.
Along with the budget, Fallin also delivered her annual State of the State address, calling for structural changes in how revenues reach the state's general fund.
"We all know Oklahoma currently faces substantial budget challenges," Fallin said. "This is not because of a stagnant economy or declining tax receipts. Rather, it is because the General Revenue Fund -- the primary source of discretionary spending set by the Legislature each year -- is growing smaller. It is shrinking, both in dollars and as a percentage of overall collections, due to the increasing cost of mandatory off-the-top apportionments."
Fallin showed two charts representing the trend. Despite the fact that the state last year collected $13.6 billion, the most ever, the amount available to the general fund has steadily diminished, she said.
"In 2007, the Legislature appropriated 55 cents of every dollar taken in by the government," she said. "Last year, that declined to 47 cents. That is a decline that will continue if we do not fix the problem. Our projections show the percentage of the total revenue that lawmakers can appropriate will shrink to less than 44 cents of every dollar by 2017."
"Slowly but surely, elected representatives are losing the ability to guide state priorities and the flexibility they need to respond to changing circumstances," the governor said.
Fallin acknowledged that balancing the budget will be harder because oil prices fallen by half in the past six months and said the state "cannot afford business as usual."
Echoing her inaugural address, Fallin called for reduced rates of incarceration for drug offenders and the mentally ill, higher education standards and greater emphasis on health. However, the Republican governor stopped short of supporting accepting federal funds to expand Medicaid eligibility.
With about $2.04 billion of tax-supported debt, Oklahoma carries general obligation bond ratings of Aa2 from Moody's Investors Service and AA-plus from Fitch Ratings and Standard & Poor's.
