DALLAS – Oklahoma Gov. Mary Fallin and the Republican leaders of the Legislature agreed to use $78 million from the state rainy day fund to avoid deeper cuts in education and prisons in the current fiscal year.
"All of us can agree that four-day school weeks and draconian cuts to corrections are not acceptable and are not going to happen," said Fallin, a Republican. "This is the most responsible option available to keep vital state services for education and corrections going between now and the end of June when this fiscal year ends."
If the Legislature approves the plan, lawmakers will have about $307 million left in the rainy day fund to apply to a $1.3 billion budget gap for the next fiscal year beginning July 1. Legislation authorizing the withdrawal of the money should be completed next week, officials said.
Senate President Pro Tempore Brian Bingman and House Speaker Jeff Hickman agreed to use the funds to avoid deeper cuts.
"The Rainy Day Fund is there for emergencies and right now it's pouring in Oklahoma," Bingman said.
"Last year we had $611 million less to build our budget than the year before and we didn't cut funding for our public schools," Hickman said. "That meant higher cuts to other agencies in order to not cut education."
State Superintendent of Public Instruction Joy Hofmeister said that school districts that were already suffering because of the declining oil and gas industry will get some breathing room.
"It is our hope that districts will not have to take such drastic measures as a four-day school week," Hofmeister said.
Oklahoma is one of the states hardest hit by the weak energy industry.
In February, state Treasurer Ken Miller recorded the tenth consecutive month of falling gross revenue.
February receipts of $758.5 million were down by almost $90 million, or more than 10%, compared to February of last year. It was the lowest February total since 2011 when the Oklahoma economy was recovering from the recession.
"With oil prices off their 2014 peak by some 70% and our state's anchor industry in the midst of correction, we have apparently not yet found the bottom and continue to see the spillover effect in all major revenue streams," Miller said.
Twelve-month gross receipts to the Treasury shrank by more than 5% compared to the previous 12-month period, and – at $11.4 billion – is the lowest 12-month total since October 2013.
Monthly collections from oil and natural gas production taxes have been lower than the same month of the prior year for one year and two months. February gross production collections were more than 45% lower than last February. Monthly receipts are based on production activity from December when the average price of benchmark West Texas Intermediate crude oil was $37.19 per barrel. Average oil prices were below that level in both January and February.
The Oklahoma Business Conditions Index remained below growth neutral for a 10th consecutive month. The index from a monthly survey of supply managers fell to 39.4 in February from 48.3 in January. Numbers below 50 indicate economic contraction is expected during the next three to six month.
Oklahoma's general obligation credit is rated AA-plus by Standard & Poor's with a stable outlook.
Moody's Investors Service placed a negative outlook on the state's Aa2 GO rating in December.
