OKLAHOMA CITY — Just hours after state leaders learned there may be millions more to spend next year, newly elected Gov. Kevin Stitt had a blunt warning for the Republican-controlled Legislature.
“I also want to warn the legislators and the agency heads: This is not a blank check, this is not something that you can just come in and say, ‘Hey, how can we fund our different pet projects?’” the incoming Republican governor said Wednesday afternoon. “Because I was elected governor to make sure that we do government differently, that we hold agencies accountable.”
In all, lawmakers learned Wednesday they could have $612.4 million — or 8 percent — more to spend when they sit down to hash out the upcoming state budget. However, budget officials cautioned state leaders that the surplus could shrink by February if oil and gas prices continue to fall or the economy sputters.
“I’m optimistic about 2019 but want expectations to be realistic,” said state Senate President Pro Tem Greg Treat, R-Oklahoma City, in a statement. “Even though the preliminary estimate shows growing revenue, there are many existing obligations and priorities heading into next year. Senate Republicans will keep our commitment to teachers and want to build on the huge investment made in education last year. There are other critical needs the Legislature will prioritize and balance as we work on the budget.”
State Sen. Roger Thompson, R-Okemah, who serves as the state Senate appropriations chair, said there are at least $176.8 million in debts that first must be paid.
“We’ve got some obligations we’re going to have to take care of,” Thompson said. “So it’s not going to be like another $612 million that we can start divvying up among all the agencies.”
Those debts include $80 million to pay for a workers' compensation lawsuit loss, $19 million to pay for Capitol renovation bonds, about $63 million to cover lost federal graduate medical education funding for the state’s teaching hospitals, and $14.8 million to offset a drop in children’s health care funding, he said.
Still, Thompson said his phone starts ringing every morning at 4:30 a.m. with “people wanting a part of that money.”
During his press briefing Wednesday, Stitt said he already has plans for much of that surplus.
He said the state owes counties about $100 million in property tax reimbursements to cover wind subsidies. Another $30 million is needed to fund the state’s graduate medical education program. He wants to use $17 million to pay off bond obligations and use still more to help teachers cover rising health care costs.
“We always predicted that the economy is starting to take off, that we did not need new taxes, that revenue was starting to take off,” Stitt said.
State Treasurer Ken Miller said much of the $612 million in surplus revenue was generated by new taxes recently passed by the Legislature, including increased gross production taxes on oil and gas producers and a fuel tax.
“The takeaway is things have improved greatly in Oklahoma,” Miller said. “We have a structurally balanced budget for (fiscal year) '19. We have increased funding for next year’s budget, and our Rainy Day Fund is getting filled up, so things have greatly improved.”
State Rep. Kevin Wallace, R-Wellston, who serves as the appropriations chair for the House, said state agencies have requested more than $2 billion in additional expenditures — well above the expected surplus.
“There’s a big gap there, yes,” he said.
He attributed the ballooning coffers to economic growth but also legislative action.
“There was a lot of legislation that actually puts us on a much stabler footing and more sound, balanced budget,” he said. “We do have economic growth, which is always good, also, but the majority of it, yes, was by legislative action.”
Education funding remains one of the top priorities for both constituents and Republican House caucus members, Wallace said.
Personally, Wallace said he’s also concerned about funding the Department of Corrections and developing a more long-term plan as well as a path forward to fix incarceration. He said that might take criminal justice reform.
David Blatt, executive director of Oklahoma Policy Institute, a liberal-leaning think tank, said in a statement that the “healthy revenue growth” gives lawmakers an opportunity “to undo some of the damage caused by years of stagnant funding and shrinking services.”
He said lawmakers shouldn’t use the healthy economy as an excuse to press for permanent tax cuts or to roll back revenue increases.
“Instead, the fiscally responsible choice is to fund Oklahoma schools, health care, mental health and addiction treatment, and other services that are the bedrock of healthy communities, thriving families, and a strong economy,” Blatt said.