Capitol Insider: Revenue Estimate Predicts Flat State Budget
State revenues are expected to remain steady, with slow growth, for the remainder of this fiscal year. eCapitol's Shawn Ashley tells KGOU's Dick Pryor the state Board of Equalization learned there will be $8.339 billion available to appropriate in Fiscal Year 2021, only $9.4 million more than the current fiscal year.
Dick Pryor: This is Capitol Insider, your weekly look inside Oklahoma politics, policy and government. I'm Dick Pryor with eCapitol news director Shawn Ashley. Shawn, the state Board of Equalization has approved the initial fiscal year 2021 revenue estimate that will guide the governor in developing the next state executive budget. You were at the meeting. What do the numbers show?
Shawn Ashley: Well, the numbers show slowing growth going into fiscal year 2021, which does not begin until July 1st of 2020. The numbers approved by the board on Friday give about eight point three billion dollars to the governor to write his executive budget. That's the same amount as was appropriated for FY2020, the current fiscal year. When all is said and done it looks like there's about nine million dollars of growth. That's only about zero point one percent. A driving force in that is anticipated declines in general revenue fund collections compared to the current fiscal year. And as deputy budget director Shelley Park pointed out, had it not been for more than 300 million dollars of cash carried forward from FY2019 into the current fiscal year, the actual number would be declining for the FY2021 budget.
Dick Pryor: Why was there such a small increase over last year?
Shawn Ashley: One of the driving factors is in the General Revenue Fund and it's the oil and gas sector. Gross production taxes on natural gas are expected to be down 145 million dollars or better than 46 percent in Fiscal Year 2021. Gross production taxes on oil are also expected to decline somewhat, as well. All of this has to do with energy prices. Those prices have dropped already and are expected to go down a bit more before turning upward, according to the forecasts the board was given. And we also see that trickling down into other areas of revenue collections where we don't see as much growth - in areas like the individual income tax, for example, or in the sales tax. And then in some other areas, such as use tax collections, we're also seeing declines as well.
Dick Pryor: This estimate means money will be tight, but it appears agencies may not have to cut their budgets.
Shawn Ashley: That's correct. I mean, to begin with, what we see are flat numbers - numbers for Fiscal Year 2021 that are equal to those that were appropriated for FY2020, the current fiscal year. And, Governor Stitt said after the Board of Equalization meeting that he is looking at pulling out one-time appropriations from various agencies and making that money available to be redistributed during the budget process. And what he means is where agencies had asked for money to purchase new computers perhaps, or to repair a building they don't need that money in their budget again. So, he wants to pull that out and rededicate it to other needs and priorities of the state. When asked how much money that would amount to, he said thus far they're looking at about 250 million dollars that would be available.
Dick Pryor: This was the first Board of Equalization meeting for many state elected officials, including the governor. But they will have another important meeting in February.
Shawn Ashley: Well, that's right. This is a multi-step process. The meeting in December gives the governor the number he will use to write his executive budget. And as we've said, he's looking at writing a flat budget based on the numbers that were approved Friday. The board will meet again in February to consider any economic changes that have taken place between December and that meeting. The number might move up. It might move down. Whatever numbers approved at that meeting in February is the starting point for budget negotiations between the governor and legislative leaders.
Dick Pryor: Governor Stitt and 35 Oklahoma-based tribal nations are still locked in a dispute over whether tribal gaming compacts expire or renew on January 1st. The governor wants to renegotiate and has asked for an eight-month extension to do that. Tribal leaders oppose that extension, saying the compacts will automatically renew for 15 years on January 1st. Where does this go from here?
Shawn Ashley: Well, the governor was asked about that following the Board of Equalization meeting. And, he said his door remains open for tribal leaders who want to come in and talk and then negotiate about the compacts and in the weeks and months to come. At the same time, when asked whether this might end up in court, he said all options are on the table. If some resolution is not reached by the end of the year, one would expect that perhaps the governor might have to move forward since he claims the compacts expire on January 1.
Dick Pryor: At issue is Part 15(B)of the compact. What does it say and what is the crux of this dispute?
Shawn Ashley: Part 15(B) of the model compacts is a rather interesting piece of state statute because it says a number of things. First of all, as the governor claims, part 15(B) says the compacts expire on January 1st, 2020. But then, as the tribes point out, it has a caveat that if there are other electronic gaming operations taking place, the compacts would auto-renew. And earlier this year, the Oklahoma Horse Racing Commission approved licenses at the horse tracks to allow electronic gaming to take place in their racinos. So, the tribes say that trigger has been met and therefore the compacts auto- renew. At the end of Part 15(B) is the language related to negotiation. And what it says is that 180 days before the compacts expire, either the governor or the tribes can ask that they be renegotiated. And, Governor Stitt says that is what he did in the beginning of July when he contacted a number of the gaming tribes and published an op-ed piece in the Tulsa World that talked about his view of the need to renegotiate those compacts. So it does three things, some of which seem to contradict one another and really outline the dispute that exists today.
Dick Pryor: It's interesting. The governor says Class III Gaming will be illegal on January 1st. The gaming tribes say their casinos will be open for business as usual.
Shawn Ashley: Yes, we're going to have to see how this conflict plays out between now and the end of the year.
Dick Pryor: Thanks, Shawn.
Shawn Ashley: You're very welcome.
Dick Pryor: And that's Capitol Insider. If you have questions, e-mail us at email@example.com or contact us on Twitter @kgounews. You can also find us online at kgou.org and ecapitol.net. Until next time with Shawn Ashley, I’m Dick Pryor.