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Oklahoma State Capitol and flag. (Image: Nicolas Henderson via Flickr)
Oklahoma State Capitol and flag. (Image: Nicolas Henderson via Flickr)

Oklahoma taps Rainy Day Fund for second consecutive year

OKLAHOMA CITY (AP) — Oklahoma’s overcrowded prison system and stretched public school districts will receive $78 million from the state’s Rainy Day Fund under an emergency agreement among state Republicans leaders aimed at plugging a huge budget hole this fiscal year.

It is the second consecutive year Oklahoma has tapped the fund reserved for extraordinary situations and follows a collapse in oil and gas prices that has ravaged the economy of the energy-dependent state.

Under the plan agreed by Gov. Mary Fallin and Republican legislative leaders, which will be considered by the House and Senate next week, $51 million will go to education and $27.5 million will go to prisons to make it through the fiscal year ending June 30.

If approved, that will leave about $307 million in the state’s constitutional reserve, or Rainy Day Fund, to help fill a projected $1.3 billion budget hole for the upcoming fiscal year.

“Building one budget each year is challenging, but when you’re having to deal with two — managing the current budget that we’re in as well as building next year’s — it’s been made even more challenging,” said House Speaker Jeff Hickman.

In January, a cut in the state’s individual income tax supported by Fallin dropped the top rate from 5.25 percent to 5 percent, a move that will cost the state about $147 million annually when fully implemented.

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Revenue collections so far this year have fallen well below projections, prompting mandatory cuts of 7 percent to state agency funding for the rest of the current fiscal year. Those cuts were particularly difficult for local schools, which have contracts in place for the current school year, and prisons, which are dealing with staff shortages and a steady increase in inmates.

“We hope that this measure will mean that schools will not take drastic means and have a four-day school week to finish the year,” said State Superintendent Joy Hofmeister.

Hofmeister said the two rounds of cuts so far this fiscal year have resulted in reductions to public schools totaling $109 million.

The money for state prisons will be used mostly to contract for prison beds in county jails and private prisons as the system deals with an influx of more than 1,000 inmates over the last year, said interim Department of Corrections Director Joe Allbaugh.

Oklahoma’s prison system is currently at 120 percent of capacity, with about 865 inmates being housed in county jails awaiting transfer to the state prison system.

Republican leaders say they’re still looking for ways to help fill next year’s $1.3 billion hole, which is about 20 percent of last year’s spending. Among the ideas being discussed are eliminating various tax breaks, expanding the state’s sales tax to some services, and freeing up dedicated transportation revenue by issuing a series of bonds for road and bridge construction.

Any proposal to increase taxes would require a three-fourths vote in the Legislature, which Hickman has acknowledged will be difficult in the House.

Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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