Budget & Tax

State savings on pace to grow

November 18, 2022

Ray Carter

At the end of the last state budget year, which concluded on June 30, Oklahoma government had roughly $2.8 billion in savings—a figure that was virtually unimaginable at the start of Gov. Kevin Stitt’s first term in office.

New data now show the state is on pace to add even more money to the state’s “rainy day” fund at the end of the ongoing budget year due to surplus collections.

Figures released by the Office of Management and Enterprise Services (OMES) show that General Revenue Fund collections for the first four months of fiscal year 2023 are $2.9 billion, which is $622.3 million, or 27.5 percent, above the estimate.

Each year, lawmakers are allowed to spend up to 95 percent of revenue-collections projected for the next year, creating a 5-percent cushion that avoids cuts if projections miss the mark. Money that exceeds 100 percent of projections must be deposited into the state’s Constitutional Reserve Fund (commonly called the “rainy day” fund) until the fund reaches an amount equal to 15 percent of the current revenue estimate for the General Revenue Fund.

While collections for the remainder of the year will determine if any “rainy day” deposit is ultimately made, the current pace would provide $622.3 million in additional savings if the remaining eight months of collections simply hit projections.

“We continue to be encouraged by the upward trend of revenue collections that indicates the strength of Oklahoma’s economy,” said state Chief Operating Officer and OMES Interim Director John Suter. “Oklahoma has outperformed expectations across several key revenue sources and remains fiscally strong."

At the end of the 2022 state budget year, Oklahoma government had more than $1 billion in the Constitutional Reserve Fund, another $171 million in the state’s Revenue Stabilization Fund, and a Medicaid stabilization fund held $197 million. The state also had $382 million left unspent from the 2021 budget year, and $964 million in unspent funds from the 2022 budget year. The latter two categories remain available in the state’s general revenue fund.

Stitt has made state savings a financial focus during his administration to avoid the fiscal chaos that occurred throughout the second term of his predecessor, former Gov. Mary Fallin.

During Fallin’s second term, an oil bust severely impacted state tax collections and spending often outpaced recurring revenue. As a result, during Fallin’s second term the Oklahoma Legislature voted repeatedly to raise taxes on income, gasoline, automobiles, oil-and-gas production, and tobacco.

But under Stitt, lawmakers have not only increased savings but also cut income taxes.

In recent months, Stitt has argued state reserves are now sufficient to withstand a budget shortfall even if taxes are reduced further.