CUT OUR TAXES: Record state tax collections exceed expectations, bring Rainy Day Fund to all-time high

Another year, another record amount of money taken from the taxpayer and stuffed into the bottomless moneypit of state government. Oklahoma government is addicted to increasing spending year over year at the expense of the governed.

Having a state "savings account" is fine and dandy, but at a certain point, it's borderline criminal to take money that is not needed from the taxpayers. It's high time that Oklahoma taxpayers received some actual relief in the form of a tax cut. 

GOVERNOR STITT ANNOUNCES FY 23 REVENUE EXCEEDS EXPECTATIONS, DEPOSIT MADE TO RAINY DAY FUND

OKLAHOMA CITY (August 3, 2023) - Governor Stitt announced today the General Revenue Fund collections for fiscal year 2023 exceeded expectations and totaled $9 billion, which is approximately $1.6 billion, or 21.2%, above the estimate, and $493.7 million, or 5.8%, above prior year collections for the same period.

"Not only does this accomplishment stand as a testament to the benefit of our conservative fiscal policies, it represents the strength of our economy, the success of our businesses, and the hard work of Oklahomans," said Governor Stitt. "Oklahomans know how to spend their money better than the government, so let's leave more in their pocket. With a record $1.3 billion in the Rainy Day Fund and continued growth in our savings, there has never been a better time to cut taxes."

Gov. Stitt celebrates historic state savings balance of $2.8 billion

While I understand the wisdom of having some savings put back for the state... nearly three billion dollars (over a quarter of the annual budget) seems a bit much. That is money which has been wrung from the taxpayer. How about giving some of it back?

GOVERNOR STITT ACHIEVES HISTORIC STATE SAVINGS OF $2.8 BILLION

Stitt surpasses state savings target of $2.3 billion

OKLAHOMA CITY (Aug 3, 2022) – Governor Kevin Stitt achieved a historic $2.8 billion in state savings with the close of FY 2022. Under Governor Stitt’s strict fiscal management, Oklahoma has seen 3 years of historic General Revenue Funds collections and unprecedented state savings growth.

Gov. Stitt launches first TV ad of reelection campaign

Gov. Kevin Stitt is out with his first TV ad of his reelection campaign, touting accomplishments from his first term in office amid the difficulties of the pandemic and economic downturn.

Stitt, who faces token opposition in the GOP primary, is being challenged by RINO-turned-Democrat State Superintendent Joy Hofmeister. He holds a commanding lead over the duplicitous Hofmeister, who has clearly shown herself to be a pandering liar when it comes to her political ideology and philosophy.

An anti-Stitt group, led by a so-called Republican former legislator and political consultant affiliated with previous Hofmeister campaigns as well as figures like Congressman Markwayne Mullin, claims to have $10 million to spend against Stitt (link, subscription required, unfortunately).

I don't think Stitt will have any difficulty batting away two-faced Hofmeister or her allies.

STITT FOR GOVERNOR 2022 LAUNCHES FIRST TV AD, AIRING STATEWIDE

March 10, 2022 (Oklahoma City, Okla.) – The Stitt for Governor 2022 campaign announced today its first TV ad of the election season, which is airing on broadcast and cable statewide. The TV ad “Hard Times II” reflects on the environment that propelled Kevin Stitt to run for office as a conservative businessman and political outsider when Oklahoma was facing year-after-year budget short falls and government systems failing to deliver results due to political posturing. 

“Not long ago, Oklahoma was facing hard times,” Stitt opens in the TV ad. “While hardworking Oklahomans suffered, the political insiders were only helping themselves.” 

During the three years of Governor Kevin Stitt’s leadership, the State of Oklahoma has experienced a turnaround with: 

• First-in-the-region rankings for teacher pay and benefits and three consecutive years of historic increases in funding for common education, with more than $3 billion appropriated by the State annually. 
• A historic level of savings by the State, making it the 4th largest savings account in the nation, and a credit rating increase to AA and rating outlook of “stable” 
• Tax cuts for all Oklahomans (HB 2962, HB 2960, HB 2961, HB 2963)
• A historic high in workforce participation in Oklahoma and a historically low unemployment rate at 2.8%. 

“On day one, we got to work. We took power out of the hands of the insiders and put you back in charge,” Governor Kevin Stitt continues. “We cut taxes, slashed job killing red tape, started fixing our schools and turned a budget deficit into $2 billion in savings.”

Most recently, Governor Stitt signed into law the Redbud School Funding Act (SB 229) to increase funding to charter and traditional rural schools as well as signed into law an expansion of the Equal Opportunity Scholarships (SB 1080) to provide more school choice for low income and underserved families through increased investments. He continues to advocate for expansion of freedoms for parents in selecting schools that best meets students’ learning needs as well as for professional teachers to have a trajectory for making $100,000 salaries (HB 4388 and HB 4387).

With the perspective of a conservative businessman, Gov. Stitt also called for with the first-ever financial audit of the Oklahoma State Department of Education. Governor Stitt charged the State Auditor to identify all revenue sources flowing in the OSDE and to determine transparency compliance of financial transactions for all public education institutions.

“Oklahoma’s turnaround is working. Let’s keep it going,” concludes Governor Kevin Stitt. 

The TV ad can be viewed by clicking here, or watch below:

More tax cuts coming? State on track to save $884M for next year's budget

BOARD OF EQUALIZATION CERTIFIES STATE OF OKLAHOMA ON TRACK TO SAVE ESTIMATED $884 MILLION IN FY2022

Governor Stitt praises Legislature for prioritizing savings and strategic investments

OKLAHOMA CITY (June 21, 2021)— The Board of Equalization, chaired by Governor Kevin Stitt, voted today to certify revenue and expenditures for the Fiscal Year 2022 budget that includes an estimated $884 million in unspent/unencumbered funds.

Specifically, the Board of Equalization certified $9,064,748,251 in authorized FY22 expenditures and an estimated $9,948,810,340 available in certified and authorized funds plus cash.

The FY22 appropriations increased 23% from FY21 actual expenditures, which is due in large part to the improving economic conditions in the state.

1889 Institute: OK Legislature made no tough budgeting decisions during COVID-19

No Tough Budgeting Decisions during COVID-19

By Byron Schlomach

Governor Stitt has rightly called out the legislature for a complete lack of fiscal discipline in the last legislative session. The legislature’s budgeting cowardice has shown no bounds. Despite the shocks to the stock market of late, and the hit on already-challenged pension fund portfolios, the legislature diverted funds from them to keep the spending mill going. In the meantime, they also accepted something like a 30 percent pay raise even as they took two months off their legislative jobs.

Earlier this year, a newspaper editorial dismissed Governor Stitt’s fiscal concerns with, “The pandemic crisis isn’t a good time for a state budget fight.” One wonders just how devastated an economy must be before it’s justified to advocate for some government belt tightening.

Governor Stitt has acknowledged a rocky road ahead and hasn’t chosen to hide his head in the sand. The suggestion that budget cuts were in order after a couple of years of pretty free spending, and in the face of an economy devastated by a pandemic panic along with an oil price collapse, is more than reasonable. It’s necessary.

The legislature seems not to have wanted to be at the capitol doing business in the first place, with the pandemic providing an excuse to skip out on their jobs. Budget decisions made well before anybody had an inkling of what the overreaction to the COVID-19 would do to the economy, and before we realized just how badly oil prices would drop, have been allowed to stand.

House Speaker and Senate Pro Tem to Gov. Stitt: we won't budge on FY2020 budget fix

STATEMENTS: House Speaker and Senate Pro Tem respond to governor’s budget comments

OKLAHOMA CITY – House Speaker Charles McCall, R-Atoka, and Senate President Pro Tempore Greg Treat, R-Oklahoma City, [yesterday] issued the following statements in response to Gov. Kevin Stitt’s actions and comments today concerning stabilizing the FY 2020 state budget:

“The House and Senate remain united by our actions to swiftly stabilize the budget, and call on the governor to finish the job. Further legislative action is not needed when a stabilized budget is already on the governor’s desk. There is no benefit to having the budget certainty the Legislature swiftly provided jeopardized because of opposition to a noncritical issue representing 0.003% of the budget. This is especially true when the Legislature just gave the governor authority to allocate $50 million at his discretion during his catastrophic health emergency declaration.” – House Speaker Charles McCall, R-Atoka

“If there ever was a ‘rainy day’ in Oklahoma it would surely be during the middle of a catastrophic health emergency that has wrecked our economy. We have the savings to weather this storm in the short-term. That’s why the Legislature by overwhelming margins in both the House and Senate took steps to prevent cuts to core state services by accessing state savings.

The Legislature appreciates the job the governor is doing to manage the state’s response to the coronavirus pandemic, which is why we gave him unprecedented authority to direct the state’s overall effort. Among that authority is the ability to transfer up to $50 million in state funds to help with the ongoing pandemic response, and surely a portion of that money could be used to address digital services responding to the health crisis.

The governor was given more authority over state agencies last year, in large part to allow the state’s chief executive to identify and eliminate waste. When it comes to next year’s budget, which begins July 1, the Legislature is willing and ready to work with the governor on any ideas he has to save taxpayer dollars.” – Senate President Pro Tempore Greg Treat, R-Oklahoma City

Legislature stabilizes budget, affirms governor's health emergency declaration

Two press releases on today's legislative action. At the top is the State House, with the State Senate press release below (some additional detail contained in it).

Legislature stabilizes budget, affirms governor’s emergency response power for COVID-19

OKLAHOMA CITY – The Legislature on Monday stabilized the current year budget to prevent cuts to agencies and affirmed Gov. Kevin Stitt’s expanded health emergency declaration, which gives the governor additional authority to respond to COVID-19.

Monday’s proceedings operated under strict public health protocols, such as restricting access to the Capitol and allowing no more than 10 people in any room at any time. Sixteen House members voted remotely from their districts under a House rule allowing remote voting during the pandemic.

The House was able to accomplish its work in less than two and a half hours by using protocols to expedite floor proceedings for public health purposes. During that time, it sent five necessary measures to the Senate, which approved them.

“The Legislature acted swiftly and decisively to address these needs,” said House Speaker Charles McCall, R-Atoka. “The Legislature made sure there will be no budget cuts to state agencies this fiscal year during the pandemic response while giving the governor the ability to step up the state’s response. We had business to take care of for the good of the state, and we did not hesitate to complete it. We are keeping government functional.”

McCall added: “The spirit of collaborative productivity this Legislature has embraced made this possible, and I extend my thanks to all the members in both parties in both chambers for their decisive actions today for the State of Oklahoma.”

Budget stabilization

The budget stabilization bills withdraw money from state reserve accounts to address the revenue failure in the current fiscal year. Economic slowdowns caused by COVID-19 and low oil prices caused a $416 million revenue shortfall that will be filled with reserve funds under the legislation passed Monday. Agencies would not experience cuts under these measures.

The budget stabilization bills, which all passed the House unanimously, are:

• Senate Bill 1053 sends $201.6 million from the Rainy Day Fund to the Revenue Stabilization Fund.
• Senate Bill 199 sends $302.3 million from the Rainy Day Fund to the General Revenue Fund.
• Senate Bill 617 authorizes the Office of Management and Enterprise Services to withdraw up to half of the balance of the Revenue Stabilization Fund to avoid cuts to agencies and the 1017 fund for education in a revenue failure in the current fiscal year.

In total, the Legislature approved withdrawing $503.9 million from the Rainy Day Fund. Any excess funds will remain in the Revenue Stabilization Fund for use by the Legislature and executive branch budget officials in addressing potential future revenue failures, as authorized in SB 617.

After the withdrawals, the Rainy Day Fund balance is $302.3 million and the Revenue Stabilization Fund balance is $349.7 million.

Health emergency affirmation

House Concurrent Resolution 1001x affirms the governor’s declaration of an expanded statewide health emergency. Under state law, the Legislature’s affirmation of the declaration lasts for 30 days. It passed the House, 99-1, and Senate and, as a concurrent resolution, is not required to go to the governor. It is now in effect.

The governor’s declaration allows the executive branch to centralize state and county health department response efforts, let first responders to know if they are responding to a location with a COVID-19 patient, and the governor to waive certain laws and rules for the purpose of the pandemic response.

“There always has to be a check to power, even with people we trust,” said House Majority Floor Leader Jon Echols, R-Oklahoma City, who presented the measure. “This measure allows the governor very broad powers deemed necessary for an effective response. We will be watchful, however, to ensure that the governor acts in the best interest of all Oklahomans, which we are confident he will.”

The Legislature adjourned special session to the call of the chair, which would allow it to return to special session to revoke or change the powers granted to the governor within the next 30 days, if needed.

The governor was required by law to call a special session of the Legislature for the purpose of affirming or denying the expanded health emergency declaration.

Next steps

The Legislature had not been in the Capitol since March 17, when a staffer tested positive. Since then, the Capitol was deep cleaned as legislators worked from their districts and staff worked remotely.

The Legislature will stand in recess again and continue to work from districts until taking up next year’s state budget.

“Our next order of business is a budget for next year, and an agreement on that budget is approaching,” McCall said. “Once next year’s budget is done, a limited number of policy bills will come next.”

McCall said Monday’s action showed the necessity of the Legislature remaining in session at this time.

“The Legislature will remain ready to respond in a responsible manner, as we did today, to future needs as they may arise,” McCall said. “We have been able to remain productive in our districts without convening at the Capitol except when necessary to act, as we did today. This will remain our approach going forward.”

Oklahoma Senate approves measures stabilizing state budget, affirming governor’s health emergency declaration

OKLAHOMA CITY – The Oklahoma Legislature met Monday and approved measures to stabilize the state budget and affirm the governor’s health emergency declaration in response to COVID-19.

The Oklahoma Senate met in special session and regular session on Monday and employed social distancing measures to protect the health and safety of the senators and few essential staff working at the Capitol. Some of those measures included checking temperatures of those entering the Capitol, limiting the number of senators on the Senate floor to 10 at a time, and wearing cloth masks sewn by a Senate staffer.

The current state budget experienced a revenue failure of approximately $416 million due to the ongoing coronavirus pandemic and a steep drop in the price of oil and natural gas. In regular session, the Oklahoma Senate met and advanced measures to allow the use of state savings to prevent automatic budget cuts of approximately 6 percent because of the revenue failure.

“The state has total savings of approximately $1 billion for times just like this. It is appropriate for the Legislature to use these savings to prevent budget cuts to all state agencies, including those working hard right now to protect the health and safety of Oklahomans during the COVID-19 pandemic,” said Senate President Pro Tem Greg Treat, R-Oklahoma City. “Using savings and reserve funding will ensure agency budgets are kept whole and that critical services continue to be delivered to Oklahomans. I appreciate the work of our Senate appropriations chairman and the Senate budget staff on these measures to shore up the current state budget.”

The budget stabilization bills are:

• Senate Bill 1053, which sends $201.6 million from the Rainy Day Fund to the Revenue Stabilization Fund.
• Senate Bill 199, which sends $302.3 million from the Rainy Day Fund to the General Revenue Fund.
• Senate Bill 617, which authorizes the Office of Management and Enterprise Services to withdraw up to half of the balance of the Revenue Stabilization Fund to avoid cuts to agencies and the 1017 fund for education in a revenue failure in the current fiscal year.

In total, the Legislature approved withdrawing $503.9 million from the Rainy Day Fund. Any excess funds will remain in the Revenue Stabilization Fund for use by the Legislature and executive branch budget officials in addressing potential future revenue failures. After the withdrawals, the Rainy Day Fund balance is $302.3 million and the Revenue Stabilization Fund balance is $349.7 million.

In special session earlier Monday, the Senate met and affirmed the Governor’s health emergency declaration in accordance with the provisions of 63 O.S. § 6101 - 6900 due to the ongoing COVID-19 pandemic. The declaration, which gives the Governor additional authority to coordinate the overall state response to COVID-19, also included a call for a special session of the Legislature to approve or reject the governor’s declaration.

The two measures approved by the Senate in special session were:

• House Concurrent Resolution 1001x, which affirmed the governor’s health emergency declaration; and
• House Concurrent Resolution 1002x, which allowed the special session to remain recessed for longer than three days.

“The coronavirus poses a significant threat to the health and safety of Oklahomans and it must be taken seriously. We must do all we can to protect life at every stage. That’s why the Senate voted to approve the governor’s health emergency declaration to assist in the coordination of the response to this threat on a statewide level,” Treat said.

The resolution approving the health emergency declaration included a provision that the Senate pro tem and House speaker would be given prior notice by the governor before any specific statutes or regulations were suspended under the health emergency declaration.

“There was some concern among lawmakers, the media and the public about prior notification of when rules and regulations would be waived as a part of the COVID-19 response. By adding a provision that the Senate and House leaders be notified before that occurred, we are able to maintain appropriate checks and balances while maintaining flexibility for the governor to direct and enact the state response to this health care crisis,” Treat said.

The special session resolutions are effective immediately. The special session adjourned to the call of the chair. The Legislature, if necessary, could reconvene within the next 30 days to address any other issues related to the health emergency declaration.

Additionally, during regular session the Senate adopted Senate Resolution 17 and a motion from Treat and Senator Kay Floyd to suspend certain rules in order to allow the chamber more flexibility to conduct business for the remainder of the session.

“Traditionally, the rules of the Senate have required members to be physically present for committee meetings and Senate floor proceedings. The ongoing health emergency, where health officials recommend limited in-person interactions, presents challenges for the Senate to conduct official business. That’s why the Senate waived certain rules so that for the remainder of this session and the special session, we can have flexibility to conduct official business, while still following health recommendations for social distancing,” Treat said.

Treat said the Senate granted senators permission to remotely or virtually participate in committee meetings and Senate floor proceedings. He said final implementation plans would be made public, and that the Senate would ensure the public could follow those proceedings online.

Gov. Stitt: revenue failure of $416M expected for current fiscal year

Governor Stitt updates Oklahomans on COVID-19’s impact to state finances

Governor, legislative leaders working to protect core services from revenue shortfall

OKLAHOMA CITY (April 3, 2020) – Governor Kevin Stitt announced today the State of Oklahoma is expected to experience a revenue failure of approximately $416 million for the remainder of fiscal year 2020 which ends June 30.

“This revenue failure is not unexpected given the significant impacts of the COVID-19 pandemic as well as the dramatic downturn in the oil and gas markets,” said Gov. Stitt. “Times like these further reinforce how critically important it was for our House and Senate leadership to work with me to save an additional $200 million during last year’s budget surplus.”

Under normal circumstances, this revenue failure would automatically result in 6.2% budget cuts to all state agencies. However, Gov. Stitt has called for a special virtual meeting of the Board of Equalization at 1 p.m. Monday to begin the formal procedures necessary for the state legislature to tap into the state’s savings account.

The State of Oklahoma’s Rainy Day Fund currently has a balance of $806 million, up to $302 million of which is constitutionally available to the legislature to supplement the FY20 budget. Additionally, due to the governor’s declaration of an emergency, the legislature is authorized to access an additional 25% of the Rainy Day Fund, or $201 million. 

Gov. Stitt and his administration have been in communication with House and Senate leadership and are working on the best plan to mitigate any potential cuts to state agencies.

“When our health department officials, public safety workers, emergency responders and so many others are working tirelessly to help the people of Oklahoma, I want everyone to know that we will prioritize protecting our core services for dealing with the COVID-19 crisis.” said Gov. Stitt.

“As the last few weeks have demonstrated, it will take time to fully understand the impact COVID-19 will have on our state revenue. We must be very cautious and remain fiscally prudent to restrain spending as we work with the legislature on next year’s budget.”

OCPA column: Saving works. What a surprise (to government “experts”)!

Saving works. What a surprise (to government “experts”)!

By Jonathan Small

Some special-interest groups suggest tax increases are the only way to deal with budget shortfalls. But Oklahomans are benefitting from a far better, preemptive solution: Saving money during boom years.

Last year, when the state had around $600 million in growth revenue, legislators were analyzing proposed ideas to increase spending. Gov. Kevin Stitt recommended setting aside $200 million of that total, a goal many lawmakers embraced.

Most families, upon receipt of an unexpected financial windfall, see the wisdom of cubby-holing some money rather than using it to increase ongoing expenses. No one buys a new house on the theory that a one-time bonus will cover the higher annual costs of a larger house payment. Yet that’s how government often operates.

Thus, Stitt’s proposal left some officials in shock.

Sen. J.J. Dossett, D-Owasso, argued, “I don’t believe we’ll have another economic downturn over the next few years. It’s just too early to start creating new savings accounts and putting money in new savings accounts.”

Sen. Allison Ikley-Freeman, D-Tulsa, said, “People are dying in the state of Oklahoma, and we’re putting money in savings for another day, for ‘just in case.’”

The Tahlequah Daily Press reported in July that Rep. Matt Meredith, D-Tahlequah, was negatively referring to the $200 million as “the governor’s slush fund.”

Oklahoma Education Association President Alicia Priest declared it was “discouraging that the budget puts $200 million into savings when we could have made a bigger investment in our schools, our students and our future.”

Despite those complaints, the bill setting $200 million into savings passed the Oklahoma House of Representatives 92-0 and cleared the Senate 37-9.

Today, due to falling oil prices and the COVID-19/coronavirus event, the state faces large shortfalls. The current-year budget may fall up to $200 million below what was appropriated. Projections suggest lawmakers will have around $600 million less to appropriate next year than what was originally appropriated for 2020 (and things may get worse).

As Stitt recently noted, being “very fiscally responsible” even when “everything looked rosy” last year has left the state with “the largest savings account” in Oklahoma history—a total of $1 billion in savings.

“That’s significant,” Stitt said, “and it’s going to help us get through this down time.”

Yes, it will. The savings decried by the teachers’ union may now protect teachers from mid-year budget cuts at schools and avoid education cuts next year. The “just in case” money decried by some may now preserve funding for Oklahoma’s health needs during a pandemic. And Oklahomans will be protected from another round of tax increases at a time when thousands are losing their jobs.

So-called “experts” often claim government financing isn’t comparable to household budgeting. The benefit of last year’s saving effort proves the “experts” are wrong, and Oklahomans should thank the policymakers who embraced savings.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.

Gov. Stitt releases first annual administration accomplishments report

GOVERNOR KEVIN STITT RELEASES INAUGURAL ACCOMPLISHMENTS REPORT

Oklahoma City, Okla. (Jan. 22, 2020)— Governor Kevin Stitt released today the 2019 Stitt Administration Annual Accomplishments Report. The inaugural report focuses on the Stitt administration's progress thus far and displays the work being done to improve transparency, accountability and efficiency in state government.

“Oklahomans gave us a mandate to deliver more accountability in State government and to protect taxpayers by strengthening the state’s fiscal transparency,” said Governor Stitt. “We have made great progress and continue to build the road map for delivering a better state government that moves Oklahoma towards Top Ten status.”

Highlights of the report include:

Agency Accountability: 
Gov. Stitt signed into law legislation that allows the governor to hire the directors at five of the 12 largest state agencies. Past governors have produced blue ribbon studies showing that responsibility and power is spread so far and thin across state government that essentially few can truly be held accountable by the voters. Within the first two months of the Stitt administration, the governor and the Legislature worked together to produce historic reform that delivers much-needed accountability for the delivery of critical services and the management of billions in tax dollars.

Since being sworn in, the Governor has been a part of hiring 18 new agency directors and making more than 410 appointments across state government.

Largest Savings Account in State History:
Gov. Stitt led the state to build its largest savings account in state history.

The cornerstone of Gov. Stitt’s budget was centered on setting aside an additional $200 million, beyond the Rainy Day Fund’s automatic collection, while also increasing funding for core services by more than 5%. As a result, the state has more than $1 billion in savings, allowing Oklahoma to better protect the taxpayer and core services during inevitable and unforeseen changes in the economy.

Teacher Pay Raises:
Gov. Stitt called for and signed into law another teacher pay raise, for a second year in a row, and increased the state’s spending in public education to a historic high of $3 billion in state revenue annually.

Historic Commutation Release:
Gov. Stitt signed the largest single-day commutation in U.S. history.

On Nov.1, Gov. Stitt signed 523 commutations, with over 450 immediately released, that were sent to his desk by the Pardon and Parole Board under the HB 1269 docket, giving hundreds of nonviolent, low-level offenders an opportunity at a second chance. This historic commutation docket was the result of months-long collaboration between the Department of Corrections, Pardon and Parole Board, 200 nonprofit volunteers and many more. On Nov. 4, Gov. Stitt and First Lady Sarah Stitt greeted the 55 women at the Dr. Eddie Warrior Correctional Facility who were released through the HB 1269 docket.

Top Ten Cabinet Tours:
Gov. Stitt launched the Top Ten Cabinet Tour to engage with Oklahomans across the state.

The Stitt administration is committed to listening to and working with the people of Oklahoma to deliver a Top Ten state, which is why the governor took cabinet members on the road to hold public meetings and tour local businesses and state field offices. The Top Ten Cabinet Tour made stops in Woodward, Owasso, Lawton and McAlester.

Digital Transformation:
Governor Stitt appointed the state’s first Secretary of Digital Transformation to help accomplish a vision to bring Oklahoma state government fully into the digital age. By leveraging technology, the state will become more transparency, efficient, and customer friendly. Since the beginning of 2019, Oklahoma has begun to implement digital transformation measures by:

• Launching checkbook.ok.gov, moving the state’s online budget transparency ranking from 47th in 2018 to seventh place at the end of 2019.
• Launching the Oklahoma Mobile ID application, allowing Oklahomans to have their licenses accessible on their smartphone devices.
• Modernizing state parks by making it possible for parks to accept credit cards in the field for the first time in state history. 
• Beginning the process to modernize the administrative rules website to make it more user friendly and transparent. 

A copy of the complete report is available by clicking here.

OCPA column: State savings effort makes sense

Savings effort makes sense

By Jonathan Small

Even when making out a family budget, there’s a tension between the need to put money into savings and covering the cost of the necessities of life. But most families understand not everything one wants is automatically a necessity. That’s not so with government agencies.

Oklahoma’s revenue collections are setting near-records, and this year’s state appropriated budget has topped $8 billion for the first time, yet Gov. Kevin Stitt and Republican leaders’ willingness to set aside $200 million–an amount equal to just 1.1 percent of total state spending—has been met with shock from some tax consumers.

By the end of the fiscal year, Oklahoma will have $1 billion in savings to guard against the inevitable future day when revenues will falter or decline. That’s a record amount, but represents only about 7 percent of total state spending.

If you don’t save when times are good, when are you going to save money, and how will you handle the inevitable downturns of a state economy that is highly reliant on oil prices? Those who criticize state savings don’t want to face the reality that most families face when doing their own budget: You can’t have everything you want whenever you want it, and everything is not a dire need.

State agencies’ funding requests show many government officials don’t understand that reality. Lawmakers started this year with roughly $600 million more to appropriate than last year. Yet the budget requests submitted by state agencies exceeded that amount by around $1 billion. And this year’s surplus, while primarily the result of economic growth, comes after lawmakers enacted $1.1 billion in annual tax increases and other revenue measures just since 2015.

Though they seldom admit it in frank terms, those who criticize putting money into savings think the answer to all financial challenges is to raise taxes year after year. Budget restraint and savings never enter their calculations.

But we know no amount of money will ever satisfy the demands of tax consumers. Unless legislators set priorities and maintain a healthy savings fund, it puts in danger the financial stability of both state government and the working families taxed to pay for state government.

This year’s budget provides much new spending, including the second round of teacher pay raises in two years, increased classroom funding for schools, and pay raises for many state government workers for the second year in a row. To pair those spending increases with sensible savings is a good idea. The governor and legislative leaders are to be commended for ignoring the rhetoric of those who will never be satisfied and exercising sensible restraint with our tax dollars.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.

Senate passes $8.1B state budget

Senate approves state budget

Budget includes huge investment in classrooms, teacher & state employee pay raises, and criminal justice reform funding

OKLAHOMA CITY – The Oklahoma Senate on Tuesday gave final approval to the state budget, which includes huge investments in public school classrooms, a teacher and state employee pay raise, as well as significant investments in criminal justice reforms all while saving $200 million.

The Fiscal Year 2020 budget bill, House Bill 2765, passed on a 37-11 vote.

“This is a tremendous budget for Oklahoma because it makes huge investments in our classrooms, gives teachers and state employees another significant pay raise, puts money toward criminal justice reforms, and saves $200 million to help in the event of an economic downturn in the future,” said Senate President Pro Tempore Greg Treat, R-Oklahoma City. “Senate Republicans kept our commitment to invest in education by appropriating $74.4 million for our classrooms. We also addressed our priority to fund criminal justice reforms. The budget also shows fiscal restraint because we’re putting away $200 million in savings, bringing the state’s total amount of savings to $1 billion. I want to thank Senator Roger Thompson, the Senate appropriations chairman, for his hard work, skill, and leadership in crafting this budget deal. I also want to commend the senators who chaired Senate appropriations subcommittee for sharpening their pencils and helping put together a great budget.”

The budget now goes to Governor Kevin Stitt’s desk for consideration.

“Tough choices by the Legislature in recent years put our state in a much better financial position, and because of those decisions we had nearly $600 million in new funding to appropriate. This budget makes great use of those dollars by making a $157.9 million investment in public schools, which includes $74.4 million into our classrooms so local schools can hire more teachers to lower class sizes or purchase classroom supplies. Overall, this is a great budget that makes significant investments in critical services while saving $200 million to help when the inevitable economic downturn hits in the future. I want to thank the Senate appropriations subcommittee chairs who did a tremendous job in delving into the numbers to help us come up with a great budget deal,” said Senator Roger Thompson, R-Okemah.

Among the highlights of the FY’2020 budget include:

• $200 million in savings to help Oklahoma weather a financial crisis; Oklahoma’s total savings at the end of this year will be $1 billion
• EDUCATION
• $157.9 million for common education:
• $1,220 teacher pay raise on average, second-consecutive year for a teacher pay raise.
• $5.5 million for the Reading Sufficiency Act.
• An additional $74.4 million for classroom funding for schools to hire additional teachers to lower class sizes, hire counselors or other support staff, or purchase classroom supplies.
• $18 million for the CareerTech system for pay raises and course additions.
• $28 million for higher education to bolster research programs and provide a professor pay raise.
• $7.5 million for concurrent enrollment
• GOVERNMENT MODERNIZATION
• $37.7 million for a state employee pay raise of up to $1,400, the second-consecutive year for a state employee pay raise. 
• $1.7 million for the creation of the Legislative Office of Fiscal Transparency (LOFT)
• $16.4 million for digital transformation of state government services to enhance transparency and to improve customer service.
• $700,000 to hire more auditors for the State Auditor’s Office to conduct more audits of state agencies.
• CRIMINAL JUSTICE REFORMS
• $20.1 million to reform the funding of District Attorney offices.
• $10 million for “Smart on Crime” programs through the Department of Mental Health and Substance Abuse Services.
• $1.5 million for the Women in Recovery diversion program.
• $1.7 million to expand drug courts options for nonviolent offenders.
• HEALTH CARE
• $62.8 million for Graduate Medical Education program to support physician training.
• $105 million reallocation to increase provider rates for physicians, hospitals and nursing homes.
• $29 million saved to a new preservation fund to preserve Medicaid provider rates when the federal government’s 3-year rolling average results in a rate decline.
• $2 million to decrease Developmental Disability Services (DDSD) wait list.
• $8 million to increase DDSD provider reimbursement rates by 4 percent.
• $4.6 million to increase immunizations and staff county health departments throughout the state.
• RURAL OKLAHOMA
• $500,000 to fund a public-private partnership to maintain clean water in Northeast Oklahoma and areas with high poultry density.
• $1.1 million for wildfire mitigation and additional resources for rural fire fighters.
• $1.5 million to improve rural flood control dams.

Gov. Stitt, legislative leadership agree to FY2020 budget deal

GOVERNOR KEVIN STITT ANNOUNCES FY 2020 BUDGET DEAL WITH HOUSE AND SENATE LEADERSHIP

 Oklahoma City, Okla. (May 15, 2019)- Governor Kevin Stitt, House Speaker Charles McCall, and Senate President Pro Tempore Greg Treat announced today the Fiscal Year 2020 budget deal. 

“This year’s budget is historic. Holding firm to my commitment of no new taxes, we will put away $200 million more in savings while also increasing the state’s investment in core services by more than five percent,” said Gov. Stitt. “For the first time in state history, we will increase Oklahoma’s savings account, in order to protect core services in the future, without the law forcing it. For the first time in state history, we will give Oklahoma teachers a pay raise for a second year in a row. For the first time in state history, we will fully fund the Reading Sufficiency Act while also putting an additional $74 million into the funding formula for local classroom needs. For the first time in state history, we will fully fund our roads and bridges, and we will also make the largest deposit into the Quick Action closing fund, helping Oklahoma compete for new jobs. We will move the needle in criminal justice reform by investing in drug courts and diversion programs, and we will reform District Attorneys’ funding model so they are not reliant on high fines, fees and court costs that have created a debtor’s prison. We will prioritize funding for oversight, transparency and audits as well as funding to modernize the delivery of state services, making it customer-focused and cost efficient. Congratulations to the Legislature and leadership for their hard work; I am committed to helping carry it across the finish line as the Legislature works to send this fiscally responsible budget to my desk for signature.”

“This is an amazing budget deal that makes huge investments in classroom funding, teacher pay, mental health, corrections and other critical areas all while holding back $200 million in savings,” said President Pro Temp Greg Treat, R-Oklahoma City. “We can make investments in core services, while still showing fiscal restraint to prepare and save for tougher economic times. Working together, we’ve accomplished an incredible amount this session. When history looks back at this session and this budget deal, it will be recorded as one of the most significant in history. I appreciate the work of the Senate appropriations chair and subcommittee chairs for their tireless and diligent work to craft this incredible budget. I also thank Governor Stitt and Speaker McCall for their leadership and willingness to work with me to ensure all of our priorities were fulfilled in this budget. It’s a great day for Oklahoma and the investments we are making in this budget will help us achieve our goal of making Oklahoma an even better state!”

“This budget agreement moves Oklahoma forward by increasing funding for education, rural infrastructure, public safety and healthcare,” said Speaker McCall, R-Atoka. “We believe increasing teacher pay directly addresses the teacher shortage by incentivizing new teachers into the classroom and keeping the veteran teachers we already have. The Legislature has now increased the common education budget by more than 26 percent during the last two years. We are also prioritizing funding for county roads and bridges, nursing homes, concurrent enrollment programs for high school juniors and seniors and pay increases for corrections officers in our prisons and all other state employees. This budget is an investment in Oklahoma, and I am very grateful for my colleagues in the House, Senate leadership and Gov. Stitt for their hard work during budget negotiations.”

A copy of the budget deal can be found below:

Oklahoma Budget FY 2020

Highlights | May 15, 2019 

SAVINGS

• $200 million in Oklahoma’s savings account, putting Oklahoma on the path to storing two months of expenses, more than $1 billion, to protect core services in difficult times.

EDUCATION: $203 million increase for public education across the spectrum

• $157.7 million for common education:
• On average $1,220 teacher pay raise. Compromise language has been agreed to that will require school districts on the funding formula, which is 97% of school teachers, to deliver an on average $1,220 pay raise. The compromise language will require school districts to report how those pay raises will be executed and sustained within districts, and the reports will be made available online for the public to view.
• $5.5 million for the Reading Sufficiency Act, fully funding the third-grade reading initiative for the first time in state history;
• An additional $74.3 million for local schools to use to hire additional teachers, counselors, social works or address their unique needs in their districts.
• $18 million for career tech centers to increase compensation for employees and teachers
• $28 million for higher education to bolster research programs and provide a salary increase for college teachers
• Graduate Medical Education funding for of physician residency programs for Oklahoma’s teaching hospitals (see below in health care section)

AGRICULTURE AND RURAL OKLAHOMA

• $500,000 to fund a public-private partnership to maintain clean water in Northeast Oklahoma and areas with high poultry density
• $90,000 to hire an additional state veterinarian
• $1.1 million for Wildfire mitigation funding and additional resources for rural fire fighters
• $1.5 million to improve rural flood control dams

GOVERNMENT MODERNIZATION

• $37.7 million for an additional state employee pay raise of up to $1,400. This builds upon the state employee pay raises given in FY’2019 of up to $2,000 per employee.
• $15 million for digital transformation of state government services to enhance transparency and make customer service more efficient and effective
• $1.7 million for the creation of the Legislative Office of Fiscal Transparency
• $700,000 to hire more auditors and increase the State Auditor’s office capability to conduct more regular audits across state agencies

ROAD AND BRIDGES

• Fully funding Oklahoma Department of Transportation’s 8-year plan
• Restored $30 million in funding to CIRB supporting county roads

PUBLIC SAFETY

• Funding prioritization for two new trooper academies, putting an estimated 80 more troopers on the roads in 2020.
• $2 per hour pay increase for correctional officers, which is a 14% raise. This will bring correctional officer pay to the regional market average and in turn will bolster the Department’s recruitment effort to fill vacancies.
• $1 million to reduce the backlog of untested rape kits

CRIMINAL JUSTICE

• $20 million to reform the funding of District Attorney offices
• $10 million for Smart on Crime programs through the Department of Mental Health and Substance Abuse Services
• $1.5 million for the Women in Recovery diversion program
• $1.7 million to address increasing demand for mental health services

JOBS / ECONOMIC DEVELOPMENT

• $19 million for the Quick Action Closing Fund, prioritizing recruitment opportunities to grow Oklahoma
• $1 million for additional job growth and economic development specifically in the automotive industry and in aerospace through the Department of Commerce’s Aerospace Commerce Economic Services (ACES) program
• $1 million to assist new entrepreneurs and small business innovators through the Oklahoma Center for Advancement of Science and Technology
• $5.3 million to modernize and expedite the Oklahoma Corporation Commissions’ permit processing for energy development

HEALTH CARE

• $62.8 million for Graduate Medical Education program to support physician training for rural hospitals
• $105 million reallocation to increase provider rates for physicians, hospitals and nursing homes
• $29 million saved to a new preservation fund to preserve Medicaid provider rates when the federal government’s 3-year rolling average results in a rate decline.
• $10 million to decrease the Developmental Disability Services wait list and increase provider rates
• $4.6 million to increase immunizations and staff county health departments throughout the state

OCPA column: Gov. Stitt’s budget is the most transparent in years

Gov. Stitt’s budget is the most transparent in years

by Curtis Shelton, policy research fellow at the Oklahoma Council of Public Affairs

Gov. Stitt’s first State of the State address officially marked the start of the legislative session. Along with his speech, he delivered his first annual Executive Budget Book. This is the governor’s proposed budget for the upcoming fiscal year.

This year’s Executive Budget Book stands out from those in years past by including not just appropriations but also total spending. While state appropriations for fiscal year 2018 were $6.8 billion, total state spending reached $17.3 billion. The proposed budget highlights the top 12 state agencies, showing how much money they receive from state appropriations, direct apportionments and agency fees, and federal money. It is encouraging to see the new governor take a holistic approach to the budget. This is a level of transparency from the executive branch that Oklahomans have not seen in some time.

In his budget, Gov. Stitt proposes a $1,200 teacher pay raise which would move Oklahoma teachers’ salaries to number one in the region. The governor also asks lawmakers to use the unneeded $30 million bailout to the Oklahoma State Department of Health to pay for performance audits and increase funding for the Quick Action Closing Fund (a fund that can be expended by the governor for economic development and related infrastructure development).

The governor has also focused on improving government instead of simply expanding its scope. By identifying one-time expenditure items—such as certain criminal justice reforms—state government will provide support for citizens without increasing its operational budget with recurring costs.

According to state officials, certified revenue is projected to increase by $612 million. However, numerous obligations held by the state must be accounted for with this surplus. Some of these obligations include replacing the lost federal money for graduate medical expenses and the Children’s Health Insurance Program (CHIP) due to a reduced federal matching rate, as well as debt payments for the State Capitol restoration project. The governor has also proposed directing the rest of this surplus money to the state’s Rainy Day Fund with the goal of raising the account to $1.1 billion by fiscal year 2020.

With one more revenue estimate to go in late February, the final surplus prediction is not yet official. Falling oil prices suggest the estimated surplus will fall below that $612 million mark. Regardless, Oklahoma is still enjoying a better economic environment than it has had in several years and has a governor who appears intent on encouraging this growth rather than extracting every last drop of revenue in order to expand government.

Curtis Shelton serves as a policy research fellow focusing on fiscal and tax policy for the Oklahoma Council of Public Affairs.

Fallin places 'Vision Fund' question on November ballot

Governor Mary Fallin Places Vision Fund Question on November Ballot

It joins four other measures that voters will be asked to consider

OKLAHOMA CITY – Governor Mary Fallin today signed an executive proclamation placing on the Nov. 6 general election ballot a measure that would create the Oklahoma Vision Fund to support the operation of state government.

State Question (SQ) 800, if approved by a majority of voters, would consist of annual deposits of at least 5 percent of the total collections of the gross production tax.

No more than 5 percent of the Vision Fund could be used for service payments due on bonds or other financing instruments. Four percent of the average annual principal balance of the endowment fund could be transferred to the General Revenue Fund each year.

Lawmakers this year approved Senate Joint Resolution 35, which supporters said would better prepare for the cyclical nature of Oklahoma’s energy economy and would help keep core services funded in downturns.

The deadline for the governor to sign paperwork for state questions to be placed on the Nov. 6 general election ballot is Aug. 27.

Fallin earlier placed three other referendums approved by legislators on the ballot, and signed paperwork authorizing one initiative petition measure to be on the November ballot.

• SQ 793 (initiative petition) would amend the state constitution by allowing optometrists or opticians to practice in retail establishments, and would allow the Legislature to regulate them.
• SQ 794 (legislative referendum) would provide certain rights for crime victims, such as expanding the court proceedings at which victims have the right to be heard and being notified of the defendant’s release or escape from custody.
• SQ 798 (legislative referendum) would establish a joint ticket for the top two statewide offices, like candidates for U.S. president and vice-president. If voters approve the question on the Nov. 6 general election, it wouldn't take effect until 2026.
• SQ 801 (legislative referendum) would give local school boards the flexibility and options to use existing property tax funds for use in the classroom, such as teacher pay and textbooks, without raising taxes.

The deadline for the governor to sign paperwork for state questions to be placed on the Nov. 6 general election ballot is Aug. 27.

AG says Doerflinger's Rainy Day Fund raid was legal

The official with the longest title in state government, Secretary of Finance, Administration and Information Technology and Office of Management and Enterprise Services Director Preston Doerflinger surprised many officials at the Capitol and observers around the state when news broke in March that he had completely emptied the state's Rainy Day Fund to pay the state's bills. This occurred without anyone in the Legislature being made aware, causing questions to arise from many regarding the legality of the raid.

In the wake of the controversy, Doerflinger requested an opinion from Attorney General Mike Hunter on the matter. Hunter issued his opinion today; here's the "meat" of his statement:

It is, therefore, the Official Opinion of the Attorney General that transfers pursuant to 62 O.S.Supp.2016, § 34.55(A) from the Constitutional Reserve Fund to the General Revenue Cash-flow Reserve Fund as needed to satisfy monthly allocation of appropriations do not violate OKLA. Const. Art. X, § 23, so long as:

1. Such transfers are temporary transfers to other State funds that will be returned to the Constitutional Reserve Fund, and are not permanent expenditures out of the Treasury;
2. Such temporary transfers do not alter the annual budget for the current fiscal year or alter the amounts available for appropriation from the Constitutional Reserve Fund for the next fiscal year, but instead will be returned to the Constitutional Reserve Fund before any funds are expended or transferred from the General Revenue Fund for the next fiscal year;
3. Such temporary transfers are not made to avoid declaring a revenue fai]ure and reducing appropriations as a result of a revenue failure, but instead such transfers are made based on a reasonable estimate that increased revenues later in the fiscal year will be available to both satisfy monthly allocations without reductions and repay the Constitutional Reserve Fund; and
4. Such temporary transfers do not have the practical effect of interfering with the Legislature’s ability to appropriate monies from the Constitutional Reserve Fund.

Doerflinger issued the below statement in response:

Statement by Secretary Doerflinger regarding Attorney General opinion on Constitutional Reserve Fund borrowing

OKLAHOMA CITY — On April 5, Secretary of Finance, Administration and Information Technology Preston L. Doerflinger asked the Attorney General for an opinion on borrowing from the Constitutional Reserve Fund for monthly agency allocations.

Upon today’s issuing of that opinion, Secretary Doerflinger offers the following statement:

“I asked for the opinion to seek clarity for the current administration, future administrations, legislators and the public. We are grateful to Attorney General Mike Hunter for providing that clarity. We were always confident we worked within statutory and constitutional guidelines.

“Hopefully this opinion helps settle the issue and will help leaders focus on the state’s revenue problem that forced us to borrow from the Rainy Day Fund to make allocations to state agencies. An over-reliance on one-time funding sources and the absence of significant structural budget reform promise to make the upcoming fiscal year another challenge.”

BACKGROUND AND UPDATE ON THE RAINY DAY FUND

The balance in the Constitutional Reserve Fund, also known as the Rainy Day Fund, is currently zero. The balance at the beginning of fiscal year 2017 was $240.7 million. The entire amount was borrowed to make monthly agency allocations and keep government running without deepening cuts to agency budgets.

In May, after General Revenue Fund collections were reconciled, $4.2 million was repaid to the Rainy Day Fund and then disbursed to the Department of Human Services per House Bill 2342. The next month, upon receiving and verifying May collections, $60.185 million was returned to the Rainy Day Fund and then distributed to the State Department of Education for ad valorem reimbursement by June 15 as called for by SB 842.

These actions left a balance owed to the Rainy Day Fund of $176,352,678, which will be returned when FY 2017 general revenue is reconciled after the close of the fiscal year.

That amount will be available to satisfy the remaining $83 million of Rainy Day Fund appropriations made by the Legislature and signed by the Governor for FY 2018: $32 million for the Health Care Authority per SB 844, $33 million to the State Department of Education per SB 852 and $18 million to the State Department of Education per HB 2360. That will leave the FY 2018 beginning balance of the Rainy Day Fund at $93.3 million.

OCPA's England: Was It Legal to Drain Oklahoma’s Rainy Day Fund?

Trent England - OCPA Vice President for Strategic Initiatives

Was It Legal to Drain Oklahoma’s Rainy Day Fund?

Gov. Mary Fallin’s administration has drained Oklahoma’s Constitutional Reserve Fund, often called the Rainy Day Fund. Executive branch officials spent all $240 million from the Fund to pay the state’s monthly bills rather than declare a larger or additional revenue shortfall. Whether or not this was good budget policy, was it legal?

Can the executive branch spend money from the Constitutional Reserve Fund at will, so long as they promise to repay those funds before the end of the fiscal year? Here is a look at the law.

Oklahoma’s Constitutional Reserve Fund is established and governed by the Oklahoma Constitution, section 23 of Article 10. The section creates the framework for the state’s budget process and begins as follows:

The state shall never create or authorize the creation of any debt or obligation, or fund or pay any deficit, against the state, or any department, institution or agency thereof, regardless of its form or the source of money from which it is to be paid, except as may be provided in this section and in Sections 24 and 25 of Article X of the Constitution of the State of Oklahoma.

To ensure a balanced annual budget, pursuant to the limitations contained in the foregoing, procedures are herewith established as follows:

[Sub-sections 1, 2, and 3 are about revenue forecasts.]

4. Surplus funds or monies shall be any amount accruing to the General Revenue Fund of the State of Oklahoma over and above the itemized estimate made by the State Board of Equalization.

5. All such surplus funds or monies shall be placed in a Constitutional Reserve Fund by the State Treasurer until such time that the amount of said Fund equals fifteen percent (15%) of the General Revenue Fund certification for the preceding fiscal year. Appropriations made from said Fund shall be considered special appropriations.

The Oklahoma Constitution then describes how the fund can be used (bold and italics added):

6. a. Up to three-eighths (3/8) of the balance at the beginning of the current fiscal year in the Constitutional Reserve Fund may be appropriated for the forthcoming fiscal year, when the certification by the State Board of Equalization for said forthcoming fiscal year General Revenue Fund is less than that of the current fiscal year certification. In no event shall the amount of monies appropriated from the Constitutional Reserve Fund be in excess of the difference between the two said certifications.

[The rest of sub-section 6 creates a manufacturing incentive program, which up to $10 million of reserve funds can be spent on under certain limited circumstances.]

7. Up to three-eighths (3/8) of the balance at the beginning of the current fiscal year in the Constitutional Reserve Fund may be appropriated for the current fiscal year if the State Board of Equalization determines that a revenue failure has occurred with respect to the General Revenue Fund of the State Treasury. In no event shall the amount of monies appropriated from the Constitutional Reserve Fund pursuant to this paragraph be in excess of the amount of the projected revenue failure in the General Revenue Fund, which total amount shall be computed by the State Board of Equalization, for the entire fiscal year. Monies appropriated to any state governmental entity from the Constitutional Reserve Fund pursuant to this paragraph may only be made in order to ensure that the monies actually received by the entity for the then current fiscal year are equal to or less than, but not in excess of, the total appropriation amount for such entity in effect at the beginning of the then current fiscal year.

8. Up to one-quarter (1/4) of the balance at the beginning of the current fiscal year in the Constitutional Reserve Fund may be appropriated, upon a declaration by the Governor that emergency conditions exist, with concurrence of the Legislature by a two-thirds (2/3) vote of the House of Representatives and Senate for the appropriation; or said one-quarter (1/4) could be appropriated upon a joint declaration of emergency conditions by the Speaker of the House of Representatives and the President Pro Tempore of the Senate, with a concurrence of a three-fourths (3/4) vote of the House of Representatives and Senate.

And that is all. Those are the only three ways to access Oklahoma’s Constitutional Reserve Fund. In each case, an appropriation is required--in other words, a piece of legislation explicitly authorizing expenditure of monies from the Fund. In each case, that appropriation can only be made if certain conditions are met. This is what makes the fund a Reserve Fund. The fact that all this is spelled out in the Constitution is what makes it the Constitutional Reserve Fund.

The Constitutional Reserve Fund is not just another state bank account. Staff in the Governor’s office point to a statute that empowers them to shift funds among the state’s “treasury funds” to pay the state’s monthly bills. But statutes trump constitutional provisions exactly never.

What about the claim that they simply borrowed the money and plan, or at least hope, to put it back? First, there is simply no express or implied power to do that in any of the constitutional provisions above. Second, the Constitution does actually mention--and limit--the use of debt to pay the state’s bills. The final sub-section of section 23 of Article 10 anticipates revenue shortfalls and says:

10. The Legislature shall provide a method whereby appropriations shall be divided and set up on a monthly, quarterly or semiannual basis within each fiscal year to prevent obligations being incurred in excess of the revenue to be collected, and notwithstanding other provisions of this Constitution, the Legislature shall provide that all appropriations shall be reduced to bring them within revenues actually collected, but all such reductions shall apply to each department, institution, board, commission or special appropriation made by the State Legislature in the ratio that its total appropriation for that fiscal year bears to the total of all appropriations from that fund for that fiscal year; provided, however, that the Governor shall have discretion to issue deficiency certificates to the State Treasurer for the benefit of any department, institution or agency of the state, if the amount of such deficiency certificates be within the limit of the current appropriation for that department, institution or agency, whereupon the State Treasurer shall issue warrants to the extent of such certificates for the payment of such claims as may be authorized by the Governor, and such warrants shall become a part of the public debt and shall be paid out of any money appropriated by the Legislature and made lawfully available therefor; provided further, that in no event shall said deficiency certificates exceed in the aggregate the sum of Five Hundred Thousand Dollars ($500,000.00) in any fiscal year.

It is a basic legal principle that such explicit provisions as are found throughout Article 10, section 23, of the Oklahoma Constitution exclude any other claims to power (expressio unius est exclusio alterius). And if the Governor has no constitutional authority to take funds from the Constitutional Reserve Fund in the way she did, simply calling the taking of funds a “loan” does not cure or obscure the violation.

The Governor has also sidestepped the legislative branch. While the Constitution does establish a way, with large supermajorities, for the legislature to tap the Constitutional Reserve Fund without the Governor’s approval, it does not authorize any method for the Governor to access the fund without the legislature. The Governor’s actions here challenge the fundamental idea of the separation of powers, which is specifically described in Article 4, section 1, of the Oklahoma Constitution:

The powers of the government of the State of Oklahoma shall be divided into three separate departments: The Legislative, Executive, and Judicial; and except as provided in this Constitution, the Legislative, Executive, and Judicial departments of government shall be separate and distinct, and neither shall exercise the powers properly belonging to either of the others.

In addition to serving as Vice President for Strategic Initiatives at the Oklahoma Council of Public Affairs, Trent England hosts a radio program, The Trent England Show, from 7-9 a.m. every weekday on Oklahoma’s AM 1640, “The Eagle.” Trent earned a law degree from The George Mason University School of Law and a bachelor of arts in government from Claremont McKenna College.

Fair opposes proposal to expand Rainy Day Fund

Government is not a family or business and shouldn't hoard money! 

Government should reduce size!

by Steve Fair

Oklahoma state government has a Rainy Day Fund, aka the Constitutional Reserve Fund.  It works as a savings account for government so in the case of an emergency, it can be tapped.  Any revenue over 95% of revenue estimates collected in a year is deposited into the Rainy Day Fund.  The state constitution caps the amount to be deposited to the fund at 15% of the General Revenue Fund estimate provided by the State Board of Equalization for the prior fiscal year.

     The legislature can tap the Rainy Day Fund if the state’s official estimate shows that the following fiscal year will bring in less than the current year.  3/8 of the Rainy Day Fund can be used for supplemental funding.  Another ¼ of the fund can be tapped if the governor and ¾ of the legislature declare a state of emergency.

      Twice in the past eleven years, Oklahoma voters have changed how the fund works.  In 2004, the amount of money the legislature could use was reduced from 1/2 to 3/8.  The change passed by a 2 to 1 margin.  In 2010, Oklahoma voters narrowly passed a proposal to increase the amount that was to be deposited to the fund- from 10 to 15%.  The measure passed by a mere 20,000 votes statewide. Now it appears voters will be asked to vote on changes to the Rainy Day Fund in November 2016.

     State Representative Jon Echols, (R-OKC), says he intends to file legislation in the upcoming legislative session allowing voters to amend the Constitution to both increase the cap – but not lower it – and allow the Legislature to appropriate directly to the fund.

     “The idea that we should cap how much money the state can save is, frankly, ridiculous.  Not only is there a cap on how much we can save, there is also legitimate doubt among House staff as to whether the Legislature has the authority to make direct appropriations into the Rainy Day Fund. Neither of those restrictions make any sense. We had a $600 million budget gap last year, and we are now looking at up to $1 billion less this year to appropriate. Our current approach is shortsighted and bizarre. Taxpayers expect us to be prudent and develop a long-term approach to state spending. This is not the way a citizen would run his or her family and it certainly isn’t the way we should run our state,” Echols said.

     Oklahoma Finance Secretary Preston Doerflinger says he would like to create another fund, similar to the Rainy Day Fund that would allow state government to sock away some funds for down budget years.  In an editorial in The Oklahoman, Doerflinger said, “I think there are tools we should put in place, maybe a separate fund that would help equalize these types of downturns in the energy sector.  It might cause some smoothing or leveling of the pain that occurs if you were to see something this dramatic in the future.”

     First, Echols has a point.  Why restrict how much money the legislature can put in savings?  After all, saving money is better than government spending it.  That sounds pretty good, but government is not a family or a business.  When government socks away tax dollars into a savings account that means they are overcharging taxpayers.  If there is a surplus, give it back to the people it belongs to- the taxpayers. Government, at all levels should operate efficiently, but not be banking up a surplus- in good or bad times.

     Second, the legislature taps the Rainy Day Fund virtually every year.  It doesn’t even have to cloud up before they hit the savings account.  That is why voters overwhelmingly voted to reduce how much the lawmakers could tap.  The fund was set up for emergencies, but every year there is an emergency.

     Third, the legislature should consider fundamentally changing the budgeting process and force agencies to justify every penny of tax dollar they are appropriated.  They should also commit to identifying and eliminating waste.  They need to force government agencies to consolidate.  Stabilization should never be the goal of government.  It should be to become more efficient and reduce in size and scope.

    Currently the Rainy Day Fund has a balance of $382 million.  With an expected budget shortfall of $1 billion or more, it’s a sure bet the legislature will be tapping the fund.  Until Oklahoma government is truly right-sized and streamlined, giving Oklahoma government more money- whether in a savings account or not- is inconsistent with good government. Government should be saving money by cutting operational costs, not by efficient management of more money.

Steve Fair is a longtime conservative activist, and current National Committeeman for the Oklahoma Republican Party. He blogs at Fair and Biased.

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I am in full agreement with Steve Fair on this issue. Rather than relying on tapping the Rainy Day Fund every year, state leaders should actually cut government. Excess taxpayer dollars should be returned to the people, not stockpiled in an excuse for not making tough budget decisions.

Muskogee Board of Education Approves Pay Raises Despite Funding Cuts

The Muskogee Board of Education approved agreements with two school unions that included pay raises, despite the fact that the district is facing funding cuts in state funding.

New teachers will be receiving a $325 raise over last year, and support personnel will get $0.10 more per hour (a rather measly pay raise, if you ask me).

This all comes at a time when the school district had nearly 3% cut from its state funds for August, which could grow to a five percent cut in the coming months. Also, in 2012 the Muskogee Public Schools will be have a 15% cut in funding, due to the stimulus money and Title 1 money coming to an end.

John Little, the chief financial officer for MPS, is hoping that the legislature will allocate money from the Rainy Day Fund to help cover the shortfall, and this brings out the real motive.

The Oklahoma Education Association and other liberal unions and organizations have been calling for the legislature to convene a special session to disperse money from the Rainy Day Fund, since the state had a budget shortfall this year.

Calling a special session would cost the state more money, and we should not be raiding the Rainy Day Fund at this time. School districts and other state agencies should tighten their belts, and not hand out pay raises when they know they can't afford them.

The Rainy Day Fund is for the state government to use in dire financial straits, not to cover pay raises that should never have been issued in the first place by greedy agencies.