OKLAHOMA CITY – Oklahoma’s Board of Equalization voted unanimously Monday to declare a revenue failure during a late afternoon meeting at the state Capitol.
The action came after an earlier meeting was canceled following a political fight between the legislature’s Republican leadership and Governor Kevin Stitt. That meeting, which also sparked a lawsuit by the legislature, was originally set for April 6 but was canceled after lawmakers and Stitt disagreed over funding of the governor’s Digital Transformation initiative.
Legislative leaders, Stitt said, had reneged on a promise to fund the project. Last year the fund received about $15 million in state funds. Shortly after the legislature sent the governor a series of emergency funding bills, including Senate Bill 199 which cut funding to the governor’s program, Stitt canceled the Board of Equalization meeting, effectively preventing the legislature from tapping more money from the reserve fund.
After the meeting the Republican leaders of the House and Senate issued a tersely written media statement that reminded the governor the Republican-controlled legislature had ‘a veto proof’ majority.
Since that time, as fallout from the Covid-19 pandemic has increased, the legislature – facing what could already be called a contentious election year – asked the Oklahoma Supreme Court to intercede in the fight.
On April 9, the governor signed two of the legislature’s three budget bills – Senate Bill 1053 and Senate Bill 617 -- but called out legislative leaders for playing politics with his digital initiative.
“We had a deal with the Legislature to fully fund state government for April, May and June. House leadership wanted to use this time to play Washington D.C. politics to sneak in some last-minute changes while Oklahomans are hurting,” the governor said during a press conference where he signed the bills.
Monday’s action allows lawmakers to tap more money from the state’s Constitutional Reserve Fund – commonly known as the Rainy Day Fund – to balance the state’s budget for the remainder of fiscal year 2020. It is expected lawmakers will need to draw a total of about $459 million to meet the financial shortfall.
“We agreed to use $459 million to keep the 2020 budget flat,” Stitt said, following the meeting.
The action also effectively ends a hearing that was set for Tuesday in front of referee of the Oklahoma Supreme Court.
Still, even with the 2020 budget effectively done, members of the legislature and the governor are bracing themselves for what is expected to be an ugly budget for the 2021 fiscal year.
Information released by the Oklahoma Tax Commission and the governor’s office projects a revenue loss of $1.366 billion for the 2021 budget year and a $1.6 billion for the 2022 fiscal year.
“State government is going to be hurting for the next couple of years,” the governor said.
And even with the $534 million remaining in the Rainy Day Fund, state agencies could see cuts well beyond 6 percent. To fight that, Stitt said he was sending a letter to legislative leaders asking them to adjust their estimated revenue for FY 2021 and to plan accordingly.
That action was approved Monday by the equalization board on a 6-1 vote; Attorney General Mike Hunter abstained from the yes vote. Hunter said the state is poised to receive $1.6 billion in federal stimulus money which could be used to offset the effects of the Covid-19 pandemic.
He said he was optimistic that the use of those funds – which some officials say are restricted solely to coronavirus mitigation – would be flexible and could be used in other areas of state government.
“We are still waiting on guidance from the federal government,” Hunter said.
Stitt said he had asked state agencies to code any Covid-19 related expenses so the state could be reimbursed with federal money. He said he had also written a letter to Oklahoma’s congressional delegation asking for flexibility on how the state uses the stimulus funds.