Thursday, May 29, 2008

Standstill Budget = Cuts?

An issue brief examines the standstill budget and whether or not it will bring about cuts to vital Oklahoma services. Keep in mind the impact the tax cuts had on this budget.

A question to ponder: can it really be a standstill budget when it increases $47M?

The Oklahoma Legislature adjourned last week after having approved appropriations for the upcoming year of $7.089 billion, an increase of just $47 million, or 0.7% compared to the current year.

A new issue brief from Oklahoma Policy Institute examines the main features of the FY '09 budget and reveals that flat funding may lead to cuts in programs and services in the year ahead.

With tax cuts enacted in previous sessions hampering revenue collections, most state agencies received no additional funding to cover rising costs or mandatory employee benefit increases. The brief notes that inflation for the goods and services purchased by state and local government are rising even faster than costs for the economy as a whole. In addition, agencies have been left to absorb costs for employee pension contributions that have increased by $66 million in the past three years and employee health care costs that have more than doubled since FY '03.

While most agencies will do whatever they can to avoid cutting services to the public, in some cases cuts may be unavoidable. As the new fiscal year approaches, close monitoring will be needed to understand what decisions are being taken to manage the budget squeeze, and to track the effects of these decisions on public programs and the clients and communities they serve.

The brief also notes that while Oklahoma has so far dodged the economic downturn plaguing other states, any prolonged or deep economic slowdown is likely to exacerbate the state's current budget challenges and create major shortfalls in the years ahead.

Just click here to read and download the full issue brief or a two-page fact sheet on the FY '09 Budget Basics from the OK Policy website.

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