The numbers look good as Oklahoma lawmakers get to work on the 2020 budget, but the head of a local think tank said Thursday lawmakers need to start thinking far ahead.
Oklahoma’s current $7.6 billion billion budget is the best it’s been in years. Historic tax increases last year added more than $500 million in revenue, and the total boost since 2016 is more than $1 billion. Oklahoma Policy Institute Executive Director David Blatt said that allowed for teacher pay raises and modest increases in other areas of state spending.
"So, there was undeniable and important progress made last year, but we still have a long way to go to fully pull ourselves out of the hole we dug over the past decade," Blatt said.
Adjusted for inflation, Oklahoma's 2019 budget is below a 2001 peak, and Blatt said if state spending had kept up with personal income growth since 2008, the budget would be almost $10 billion.
While Oklahoma lawmakers will have more money to spend in the 2020 state budget, it may not be as much more as it appears.
The State Board of Equalization certified $8.3 billion last month, $720 million more than what was actually appropriated this year. But there are several new obligations the state must meet, including reimbursing schools for funding lost to tax incentives — and oil prices have dropped.
"So, the $600 million to $700 million revenue growth could shrink to $250 million to $400 million. That’s still a decent sum of money but not quite the golden ticket that offers all you can eat at the chocolate factory," Blatt said.
The state certification is based on oil near $55 a barrel.
Blatt warned despite an improved short-term outlook, the state still has a structural budget deficit, because normal revenue growth is not keeping up with necessary expenditures.
"By 2030, state revenues will be $1.26 billion below what it will take to fund our current services budget," Blatt said.
Blatt recommended several steps to solve the problem, including undoing income tax cuts on high earners, holding off on tax cuts, and revising or repealing the three-fourths supermajority required by State Question 640 to pass tax increases.
Blatt presented his overview at Oklahoma Policy Institute's annual budget summit in Oklahoma City.
