KGOU

Capitol Insider: Following The Money For A New Fiscal Year

Jun 28, 2019

In this episode of Capitol Insider, KGOU's Dick Pryor and eCapitol's Shawn Ashley discuss the new state budget, which goes into effect July 1. The two discuss how lawmakers are dictating agency spending and moving money around to make the budget work.

FULL TRANSCRIPT:

Pryor: This is Capitol Insider, your weekly look inside Oklahoma politics and policy. I'm Dick Pryor with eCapitol News Director Shawn Ashley. Shawn, July 1 marks the start of the new fiscal year for state government.

Ashley: That's right. State agencies will be operating with an $8.1 billion budget. It marks the second year in a row in which agencies have seen an increase in appropriations. This year's increase comes not as the result of new taxes which were implemented, like was the case in 2018, but simply a growth in the state revenue, and in some cases the moving around of some money.

Pryor: Higher education receives a little over 3 percent increase in the new state budget, about three and a quarter, and it's supposed to provide pay raises for faculty and staff. Will there actually be enough money to fund the pay raises and the benefit cost bump that goes with them?

Ashley: That was one of the interesting issues raised Wednesday in a meeting of the State Board of Regents where colleges and universities from across the state came to discuss their tuition needs for the upcoming school year. Several college and university presidents or their designees pointed out that, while there was additional money flowing into their institutions, in some cases it will not be enough to cover those pay raises and benefits.

Pryor: OU and OSU were among the institutions that did not request tuition increases to cover costs, but State Regents did approve small tuition and fee increases around 2 percent for state colleges and universities.

Ashley: Yes, colleges and universities have seen funding declines over the last several years. Those are beginning to be made up with state appropriations, but they're nowhere near where they were several years ago.

Pryor: The State Department of Education is not approving a budget this year. Why not?

Ashley: Well, that sort of gets into some of the interesting parts of the legislative process. Lawmakers approved what is called a "budget limit bill" for the State Department of Education. What this does is to tell the department how to spend its money--how much should go into the state aid formula, how much should be spent on textbooks. The State Board of Education cannot change that, so there was really no reason for them to consider a budget.

Pryor: Did the legislature pass budget limiting bills for other agencies?

Ashley: Yes, there were a number of agencies this year, in fact an increased number of agencies this year, compared to previous years. In the case of the State Department of Education, for example, they have not had a budget limit bill since 2013. During the down economic times the legislature shied away from passing budget limit bills. The thinking was then that the agency heads or the boards and commissions that oversee certain agencies were the ones in the best position to decide how to spend that money, particularly when it was being reduced.

Pryor: So what is the purpose of the legislature telling agencies how they're going to spend their money?

Ashley: Well, you have a number of factors at play here. One thing it clearly sets forth is the legislature's priority for these various agencies. We saw, for example, in the State Department of Education budget limit bill $12 million for the Reading Sufficiency Act, an effort to make sure every student is reading at the appropriate level by the end of third grade. This is important to the legislature, and they wanted to make sure that it was fully funded. So it really allows the legislature to determine certain priorities that they believe will best benefit the citizens of the state of Oklahoma.

Pryor: In covering government we often follow the money. An interesting example of how the money moves is at the Department of Transportation involving revolving funds.

Ashley: That's right. Looking at this year's budget there is approximately $96 million that's being pulled from two revolving funds at the Department of Transportation.

Pryor: And revolving funds are essentially savings accounts.

Ashley: They're savings accounts. They're cash on hand for many state agencies. Put simply, the legislature needed that cash. What they're doing with that cash is sending it to school districts to reimburse them for lost property tax revenue under the manufacturer's ad valorem tax exemption. Now, they didn't want to leave those funds completely deprived of the money which they were taking out, so what the legislature is doing in the first six months of the fiscal year is paying back those two revolving funds at the State Department of Transportation. In order to do that they will divert sales tax money until those two funds at the Department of Transportation are refilled.

Pryor: All right. Thanks, Shawn.

Ashley: You're very welcome.

Pryor: That's Capitol Insider. If you have questions e-mail us at news@kgou.org or contact us on Twitter at @kgounews. You can also find us online at kgou.org and ecapitol.net, on Apple podcasts and Spotify. Until next time, with Shawn Ashley, I'm Dick Pryor.