$100+ million in dispute

On Monday,  Gov. Kevin Stitt said he will veto two parts of a budget package by lawmakers because they are a raid on pension funds.

Stitt will veto House Bills 2741 and 2742, which would take money supposed to go to pension funds and divert it to public education.

The money was supposed to go to pension funds for policemen, firemen and teachers. Lawmakers said diverting the money would not lessen payments to retirees. If Stitt’s vetoes are not overridden, they would add more than $100 million to those pension funds.

In the light of a growing revenue decline, the Oklahoma Legislature passed a new budget for the fiscal year and sent it to Gov. Kevin Stitt for his approval.

Oil prices have cratered and that casts a dark cloud over production tax revenue. The Chinese coronavirus pandemic has skyrocketed unemployment and business shutdowns/slowdowns have reduced tax receipts.

“This is a far better budget than many expected and that should come as a relief to the citizens who rely on core services and the agencies that serve them, given the effect of both depressed oil and gas prices and the pandemic on state revenues,” said Senate President Pro Tempore Greg Treat, R-Oklahoma City.

The budget cuts funding for state agencies, some by as much as 4%.

The total appropriated budget in SB 1922 is $7.7 billion, which is $237.8 million, or 3%, less than the FY 2020 budget, which was the largest in state history. The FY 21 budget will still be among the largest budgets in state history.

Under the agreement, most of the $1.4 billion, or 17%, revenue hole projected last month is filled by using reserve funds, cutting one-time spending, temporarily redirecting non-appropriated money into the budget, and agency reductions of 4% or less in most cases.

Lawmakers plan on using federal relief funds to prevent any cuts to public education and they promise no rollbacks on the recent teacher pay hikes. In fact, they want to give common education more money.

Under the agreement, the State Department of Education’s temporary appropriation reduction is 2.5%, or $78.2 million, of its $3 billion appropriation.

Oklahoma’s $200 million in COVID-19 relief money for common education fully offsets the temporary state funding reduction of $78.2 million, or 2.5%, to common education.

The budget bills include:

• Senate Bill 1921, which transfers $243.6 million from the Constitutional Reserve Fund to public schools.
• Senate Bill 1073 uses funding from cigarette and tobacco product taxes intended for Insure Oklahoma to be used to fund the state’s Medicaid program..
• Senate Bill 1944 directs the Office of Management and Enterprise Services to publish daily reports of all expenditures from the federal CARES Act on the state’s checkbook website. Oklahoma so far has received $1.2 billion in federal relief funds.

Higher education and CareerTech would also see temporary state reductions offset by federal relief funds.

“This budget prioritized education and healthcare, and kept the rest of core government functioning, which was a major achievement given the odds. When double-digit reductions were feared, keeping most budget reductions to 4% or less is a major relief,” said House Appropriations and Budget Chairman Kevin Wallace, R-Wellston.

The House vote on Senate Bill 1922, the general appropriations bill, was 77-23.

The Senate previously passed the bill, 36-11.

“A unified Legislature overwhelmingly delivered a best-case scenario budget for the people in a trying time,” said House Speaker Charles McCall, R-Atoka.

Oklahoma has received more than $1.25 billion in federal relief funds for COVID-19 expenses – far more than the $237.8 million spending reduction in the budget agreement.

“In addition to the work the Legislature has done, Governor Stitt has the ability to do more to mitigate reductions through many of the emergency funds at his disposal and his authority to innovate within the state agencies he manages directly,” Treat said.

Legislative budget leaders said the $1.4 billion revenue hole projected by Stitt was used in building the budget, but that the projection could change, allowing for midyear budget adjustments.

“Unlike the last budget hole three years ago, this one won’t require revenue raising measures and should end when the economy restarts,” McCall said.

“Oklahoma will bounce back strong and move forward.”