Professional Documents
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post-secondary;
More college graduates; Well-functioning infrastructure; Healthy communities Access to timely and affordable care; Public health; Safe streets; Stable safety net for those in need.
communities depend on effective public structures and systems common goals as a state alongside private businesses, non-profits, philanthropies, faith groups, and families
Budget Trends: FY 10 FY 12
Quarterly Change in Personal Income, Oklahoma and National, th Quarter 2007 to 3rd Quarter 2011 4
Budget Trends: FY 10 FY 12
Its a Revenue Problem
Five consecutive quarters of worsening collections; Revenue dropped more than twice as steeply as during the last downturn; Revenues recovering over past eight quarters.
30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 11 12 -12.1% -29.5%
Budget Trends: FY 10 FY 12
Budgets for each of the past three years (FY 10, FY 11 & FY 12) have been successive variations of a similar theme:
Large shortfalls in projected revenues; Fear of devastating budget cuts; Use of non-recurring revenues to partly bridge the budget gap; Budget cuts across state government but less severe for core education, health, human service, public safety agencies.
Budget Trends: FY 10 FY 12
Budgeting Through the Crisis
FY 12 appropriations of $6.603 billion:
Three consecutive years of declining appropriations; $163 million, 2.4 percent, below FY 11; $522 million, 7.3 percent, below FY 09; $157 million, 2.3 percent below FY 07.
State Appropriations, FY '06- FY '12 (in $ Millions, includes supplementals, excludes Rainy Day "spillover" funds)
$30
Total= $6,603
$641
$224
$838
$273
$554
$100
$99
$6,217
$6,760
$7,043
$7,095
$6,404
FY '10 Final
FY '11
FY '12
Budget Trends: FY 10 FY 12
Budgeting Through the Crisis
Governors Henry and Fallin and the Legislature used various revenue enhancements to help bridge budget shortfalls and reduce the severity of cuts; Most new revenues were one-time/non-recurring; Totaled close to $3 billion over 3 years, including:
Federal funds from the stimulus bill (~$1.5 billion); State Rainy Day Fund ($597 million); Cash transfers from various funds ($525 million); Enhanced tax compliance ($154 million); Suspending and deferral of tax credits ($129 million).
Revenue Enhancements, FY '10 - FY 12 (in $millions)
Total: $2,988
Suspension and deferral of tax credits, $129 Tax compliance efforts, $154 Fee increases, $34 Other measures, $59
Budget Trends: FY 10 FY 12
Budgeting Through the Crisis
90 percent of appropriations consistently goes to 10 agencies that provide core services; Over 65 agencies share remaining 11 percent of funding
FY '12 Appropriations: Total and 10 Largest Agencies (excludes supplementals)
DHS; $537 ; 8.3%
Corrections; $460 ; 7.1% Transportation; $107 ; 1.6% Mental Health; $187 ; 2.9% Career Tech; $134 ; 2.1%
Higher Ed.; $945 ; 14.5% All Other Agencies; $699 ; 10.7% Common Ed.; $2,278 ; 35.0%
Notes: Transportation also received $70 from bond issue; OHCA excludes revenue from hospital provider assessmber (SHOPP)
Budget Trends: FY 10 FY 12
Budgeting Through the Crisis
Almost every agency has absorbed repeated and significant cuts over past three years; Some 40 agencies more than half of all appropriated agencies have absorbed cuts of greater than 20 percent since FY 09; Cuts to some key health, human service, education and public safety agencies have been less severe: Mental Health -12.7%; DPS -12.6%; Higher Ed -9.1%; Corrections -8.6%; Common Education -7.9%; DHS -3.9%; OHCA +12.7% No agencies have been funded to cover rising operating and employee benefit costs over the past three years; Budget cuts and funding shortfalls continue to impact Oklahoma students, teachers, families, public employees, non-profit organizations and private sector businesses.
Budget Trends: FY 10 FY 12
Impact of Cuts
Agencies have reduced staffing, eliminated or cut back programs, closed offices and facilities, cut rates to private contractors, and raised user fees. Some examples: About 1,600 fewer teaching positions this school year than last, while the number of students has increased by nearly 6,000. Some districts have turned down thermostats and required teachers to do janitorial work. Department of Education eliminated bonuses for National Board Certified Teachers, research-based teacher training programs, evaluation contracts, and other programs;
Budget Trends: FY 10 FY 12
Impact of Cuts
In the past three years, the Health Department has been cut by 20 percent, forcing layoffs for at least 300 employees. Health Department eliminated 17 child guidance centers serving pre-school children with developmental delays; Department of Mental Health and Substance Abuse Services reduced beds and closed centers for childrens mental health and adult substance abuse, cut contracts to all providers; Significant reductions in counseling programs for abused women and children and prenatal education for low-income mothers; Office of Juvenile Affairs cancelled youth detention and gang prevention programs.
Budget Trends: FY 10 FY 12
Unmet Needs
Oklahoma is ranked 49th in overall health of its residents, ahead of only Mississippi. Seventy percent of those needing treatment for serious mental illness and 77 percent of adults in need of substance abuse treatment not receiving appropriate care. For youth who need substance abuse treatment, 80 percent not receiving care. DHS waiting list for services for individuals with developmental disabilities at over 6,000; some on list as long as 10 years. Oklahomans receiving Medicaid assistance are at an all-time high. At the same time, Medicaid reimbursements have been reduced, which means fewer physicians are willing to take Medicaid patients.
Oklahoma State Taxes, Total and as Share of Personal Income, FY '82 FY '10
8.0%
Sources: State personal income from Bureau of Economic Analysis; Tax collections from Annual Executive Budget
$651.1
$776.9
FY'09
FY'10
Sources: State personal income from Bureau of Economic Analysis; Appropriations from various sources
$4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 FY '01
FY '02
FY '03
FY '04
FY '05
FY '06
FY '07
FY '08
FY '09
FY '10
FY '11
FY '12
You have to be sure you're right before cutting tax rates or shrinking the tax base. The Legislature and the governor cannot say in following years, Oops, we made a mistake.
- Larkin Werner, OSU Regents Professor of Economics, Nov. 2011
"I will tell you that state income tax had absolutely no impact in terms of the decision of merging the company and where the corporate headquarters is located.
Phillips Petroleum CEO Jim Mulva, discussing the companys merger with Houston-based Conoco Inc. and decision to locate its new headquarters in Houston, November 2001
For 24 years, Ive been conducting interviews with executives of companies that we tried to recruit to Ardmore that ended up locating elsewhere. Not once in all those years did a company that rejected Ardmore base its decisions on taxes.
Ardmore Chamber of Commerce President Wes Stucky, Oct. 2011
If our ability to educate and train employees for a 21st century economy is damaged through lack of funding, if we cant maintain our roads and bridges, strong health care system, robust research and technology infrastructure, safe streets, etc., then the benefits of a reduction in the income tax rates may be limited.
Tulsa Metro Chamber Vice President & Former House Speaker Chris Benge, Oct. 2011
I can't sit here and say having no income tax, having low property tax, whatever, is going to make a big difference We have to have a state that's known for excellence.
Ardmore Chamber of Commerce Pres. Wes Stucky, Oct. 2011
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