Budget & Tax

Stitt calls for spending cuts, restraint

April 7, 2020

Ray Carter

Gov. Kevin Stitt is calling for modest cuts to state government spending in response to the current budget shortfall. That apparently puts him at odds with the Republican-controlled Legislature, which voted this week to preserve current spending levels by tapping state savings.

“When Oklahomans are struggling, I’m going to protect the taxpayer,” Stitt said. “And asking state agencies to cut expenses by one or two percent seems very reasonable to me.”

The state shortfall for the fiscal year 2020 (FY20) budget, which runs through June 30, is about $459 million after accounting for all sources, Stitt said, and a substantial shortfall is expected for the FY21 budget as well. While the state has a record $1 billion in savings today, Stitt said spending cuts should be in the mix along with the use of savings.

“Asking the state government to also cut expenses by one or two percent is very reasonable in the current situation that we’re in,” Stitt said. “We’re talking about agency cuts. We’re talking about how do we protect agencies going forward. We’re talking about how much of the money to spend out of savings.”

Stitt made those comments at a press conference one day after lawmakers advanced three bills to take a total of $503.9 million from the state’s Constitutional Reserve Fund, typically called the “rainy day” fund.

Stitt has said he will sign Senate Bill 1053, which takes $201 million from the Constitutional Reserve Fund and shifts that cash to the state’s Revenue Stabilization Fund to use for filling budget holes for the remainder of the current fiscal year.

However, he has not committed to signing two other budget bills passed by the Legislature this week.

Senate Bill 199 moves three-eighths of the money now in the state’s “rainy day” fund, or $302 million, and places it in the state’s general revenue fund to address the FY20 shortfall.

Senate Bill 617 alters statutory language regarding the conditions and procedures for withdrawal of funds from the Revenue Stabilization Fund for FY20, allowing the director of the Office of Management and Enterprise Services (OMES) to withdraw up to one half of the highest balance during FY20.

As lawmakers were considering those measures on Monday, Stitt canceled a meeting of the state Board of Equalization in which the group was expected to certify a budget shortfall for FY20. Shortly after canceling that meeting, Stitt’s office issued a release citing a “technical issue” in legislation advanced by the Legislature.

During his Tuesday press conference, Stitt said part of his objection was that digital modernization efforts were facing cuts in one bill passed by the Legislature on Monday.

All three budget bills passed both chambers of the Legislature with almost no opposition, suggesting veto overrides could occur if Stitt does not sign the measures.

However, Stitt noted that the millions appropriated through SB 199 cannot become available until the Board of Equalization certifies a shortfall.

“Until we have that BOE meeting, you can’t grab the $300 million out of the savings account,” Stitt said.

He said the State Board of Equalization “could still meet later this week,” but noted that 48-hour notice is required.

At the same time, the state is expected to receive $1.5 billion from the federal government, and $844 million of that total can be used for virus-related spending at state agencies. However, officials have said those funds cannot be used to address shortfalls. It’s not yet clear how the federal funding will impact spending plans for the 2021 state budget.

The governor said negotiations with legislative leaders are ongoing, and specifically ruled out tax increases as a response to the budget shortfalls projected for 2020 and 2021.

“Cutting expenses and tightening our belt in state government, I believe that’s what Oklahomans want me to do,” Stitt said. “And we’re going to continue to fight for that.”

Following Stitt’s press conference, House Speaker Charles McCall and Senate President Pro Tempore Greg Treat issued a joint statement saying they oppose making any spending cuts at this time.

“The position the Legislature stated by veto-proof majorities Monday is not changing. The Legislature will not authorize cuts to core services during a pandemic response because the public needs its services right now,” said McCall, R-Atoka. “The state’s reserves, which exist for emergencies just like this, are sufficient for services to continue uninterrupted. The legislative branch controls the power of the purse, and we have made our position clear on behalf of our constituents across the state.”

“The Legislature, both Republicans and Democrats by overwhelming margins, took the necessary actions to protect state services from deep budget cuts,” said Treat, R-Oklahoma City. “In the midst of a catastrophic health emergency, we must prevent budget cuts to public schools, health care, first responders and other core state services. The Legislature is a co-equal branch of government vested with the authority to write the budget. We take that role seriously. I am hopeful that the governor signs all the legislation that was sent to his desk this week.”

Senate Democratic Leader Kay Floyd also responded through a separate statement.

“Today, Governor Stitt floated a proposal to cut funding for state agencies by one to two percent,” said Floyd, D-Oklahoma City. “Oklahoma Senate Democrats were disappointed to hear this and are strongly opposed to budget cuts to core services. Every day dedicated and hard-working state employees are on the frontlines of Oklahoma’s efforts to combat the spread of COVID-19. Now is not the time to be reducing much needed resources for state agencies. Oklahoma Senate Democrats call on Governor Stitt to act quickly to prevent a revenue failure by convening the State Board of Equalization and signing the budget bills passed by the Legislature.”

On Twitter, House Democratic Leader Emily Virgin of Norman responded, “I’m calling on Governor Stitt to set aside this petty power struggle and do what's right for the people of Oklahoma who are currently navigating an unprecedented crisis. Sign the bills, Governor, and keep our core services funded.” 

Note: This story has been updated to include comments from legislative leaders.