Oklahoma may use hundreds of millions of dollars from savings to deal with the impacts of an oil slump and the pandemic over this fiscal year and the next. While the state has reserves, the amount of the shortfall is unclear.
Josh Goodman, state economic development officer at the Pew Charitable Trusts, says states can get a better picture of potential problems by running budget stress tests, which banks started doing after the federal Dodd-Frank Act.
"The tests look at various economic scenarios," Goodman said, "and help set targets for how much money the state should save to give policymakers confidence they can cover unanticipated revenue shortfalls for at least two years."
Goodman says few states are running budget stress tests, but the states that do find them helpful.
"For instance, Minnesota produces stress tests annually," Goodman said. "And that can really inform decisions like, when should states use their reserves? How much do they need to save for maybe next year, rather than just using it this year?"
Oklahoma Gov. Kevin Stitt on Thursday signed two out of three bills lawmakers sent him this week to close a projected $416.8 million hole in the current fiscal year budget.