Oklahoma leaders reach deal on $7.1 billion state budget

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OKLAHOMA CITY (AP) — Republican leaders in Oklahoma agreed to tap dozens of agency revolving accounts and other one-time sources of money to ease cuts for state agencies in a budget that will slightly reduce overall spending and that faced immediate bipartisan opposition from critics who described the plan as "fiscally irresponsible."

The roughly $7.1 billion budget deal reached between House and Senate leaders and Gov. Mary Fallin managed to close nearly all of a $611 million gap, but still must be approved by rank-and-file members in both chambers. The budget hole was filled by using revenue sources like $120 million from the state's Rainy Day Fund, $121 million from the Cash-Flow Reserve Fund, $125 million from various agency revolving accounts and $50 million from the state's Unclaimed Property Fund. Budget writers also diverted about $70 million from a program that funds improvements to county roads and bridges.

"All in all, I think it's a very positive budget considering the challenges," said House Speaker Jeffrey Hickman, R-Fairview. "We were able to come up with a budget that holds common education flat, which is obviously a priority for our House Republican caucus."

Under the plan, most agencies will receive funding cuts ranging from less than 1 percent to 7.25 percent, eight agencies will receive appropriation increases, and 12 agencies, including the Department of Education, will receive flat appropriations.

Under the plan, funding for public schools remains flat at about $2.5 billion, while the state Department of Health also received no cuts in funding. Colleges and universities, along with the state's career and technology centers, will be cut by about 2.4 percent.

The plan immediately drew criticism from members of both parties for its heavy reliance on one-time sources of revenue and its diversion of motor vehicle revenue from county transportation projects.

"The budget heavily depends on one-time revenues to fund ongoing expenses, and that certainly isn't a sound budgeting technique," said Rep. Jason Murphey, R-Guthrie. "It's not fiscally responsible."

Amber England, director of the public education advocacy group Stand for Children, said even a flat budget for public schools amounts to a cut because of an increase of more than 7,000 students over the last year.

"Parents must be aware of this and should expect a continuation of larger class sizes and more difficulty retaining and recruiting teachers which ultimately means even more elimination of classes like art, speech, music, and foreign languages," England said.

The Rainy Day Reserve Fund currently contains $535.2 million, and the $120 million taken from there will mark the first time the fund has been tapped to help balance the state budget since Fallin took office in 2011. The $50 million from the state's Unclaimed Property Fund is more than half of the $90 million balance in that account, which comes from things like unclaimed life insurance policies, oil and gas royalty payments and paychecks, said Tim Allen, a spokesman for the Treasurer's Office.

"The important thing to remember is that no one gives up their money," Allen said. "Anyone who shows up with a claim, and it's their money, they get it."

Oklahoma Secretary of Finance Preston Doerflinger, the chief budget negotiator for Gov. Mary Fallin, acknowledged some criticism of the use of one-time revenue is fair, but he noted many of the agency revolving funds that were accessed replenish each year.

"Do I think that the point is valid? Yes. But great concern was taken to try to minimize the reliance on true one-time funds," Doerflinger said.

Doerflinger said the budget also reflects many of the governor's priorities such as protecting education and improving the health of its citizens.

"It's been the governor's guiding philosophy throughout this entire process to look at places where our citizens were most vulnerable and at risk if services were cut or diminished," Doerflinger said.

Among the agencies that will receive budget increases under the plan are the Department of Corrections (3 percent), Department of Public Safety (4.8 percent), Health Care Authority (1.9 percent), Office of Juvenile Affairs (2.6 percent) and Department of Mental Health and Substance Abuse Services (.6 percent).

Even with an increase of $18 million, the Health Care Authority's Chief Executive Officer Nico Gomez said the agency will have to eliminate some services such as dental work, sleep studies and allergy treatment, and reduce payments to nurse practitioners and physician assistants. But he said the boost in funding will allow the agency that oversees the state's Medicaid program to avoid broad cuts to reimbursement rates for physicians, hospitals and nursing homes.

"We will still have to go through and propose some cuts to balance the budget to offset the reduction in federal funding and also keep up with medical inflation, but the $18 million was critical, critical to our budget to avoid deeper, more painful cuts," Gomez said.


Follow Sean Murphy at www.twitter.com/apseanmurphy

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