The Woodward News

November 12, 2013

Economy focus of chamber meeting

Rowynn Ricks
Woodward News

Woodward, Okla. — Oklahoma's state economy has once again reached pre-recession levels.

State Treasurer Ken Miller provided an overview of the economy to members of the Woodward Chamber of Commerce during their monthly luncheon on Monday.

In presenting his "Oklahoma Economic Report," Miller said that the state's 12-month gross receipts are at "an all time high of $11.4 billion."

He said this surpasses the previous record of $11.3 billion that was set in Dec. 2008, just before the Great Recession caused the economy to face some sharp declines.

Of the record $11.4 billion that was collected in gross receipts between November 2012 and October 2013, Miller said the vast majority comes from income tax (36%) and sales tax (37%) collections.

Gross production taxes then make up 7% of the collections, with motor vehicle taxes making up another 6%, he said.  The remaining 14% comes from various other sources.

As collections have now surpassed pre-recession totals, so too has the state's spending.

For Fiscal Year 2013-2014, Miller said the state's appropriations total $7.11 billion, which is slightly above the $7.09 billion that was appropriated in Fiscal Year 2008-2009.

"But that doesn't mean that every agency is funded back to where they were before the recession," he said.

That's because the recession led the state to change some of it's budgeting priorities and look for ways to spend taxpayers' money more efficiently.

For example, Miller said not only has the state's treasurer's office not returned to pre-recession funding, but it continues to cut its budget.

"In my office, I think we were cut around 20 percent during the recession.  Then last year we requested a 5 percent cut," he said, noting with a laugh, "that's the first time I ever got everything I've asked for" in budget requests.

He said his office has requested another 5 percent cut for this next year.

"I'm proud of the fact that we're continuing to cut our budget and find efficiencies," Miller said.

But even with this change in priorities, Miller said the state's overall spending didn't experience the same sharp decline as collections.  State appropriations only fell about $500 million with a low of $6.51 billion in appropriations in Fiscal Year 2012.

The state was able to maintain that level of spending in part because it drew from the Rainy Day Fund to help cover the continued expenses, he said.

In 2009, Oklahoma's Rainy Day Fund held almost $600 million, Miller said.  But after making withdrawals to cover budget shortfalls in 2010 and 2011, he said the account was nearly emptied.

"We drew it down to $2.03 in 2011," he said.

However, now that "good times are returning," the state treasurer said that the Rainy Day Fund has been rebuilt over the past couple of years, so that it too is also nearing pre-recession levels.

Currently the fund stands at $535.2 million after the legislature approved drawing out $45 million earlier this year to help with tornado recovery in Moore, he said.

"I think that's a good use, because that's what the fund is for, emergencies and budget shortfalls," Miller said.

But while the state economy has seemingly recovered from the Great Recession, Miller said Oklahoma will continue to face a number of economic challenges.

He said a lot of the economic concerns are "home-grown," meaning they were generated here in America in our nation's capitol.  This includes concerns over rising healthcare costs due to changes from the Affordable Health Care Act, concerns over the impact of the recent government shutdown, and concerns about a potential national default and any "downgrade in our rating as a result of that," he said.

Miller said it will take "good leadership in Washington" to sort out those issues.

But there are also concerns that fall closer to home, with one hot button topic being pension reform, he said.

To help address the state's nearly $11 billion in unfunded pension debt for state employees, Miller said he and Governor Fallin have developed 2 proposals.  The first is a proposal to unify the state's 7 separate public pensions under one administration to help save on costs in running the pension programs, he said.  The second is to look at implementing a 401(k)-style retirement system for new hires instead of the more expensive defined benefit plans.