The House in early May passed a $7.7 billion general appropriations bill for Fiscal Year 2021. The governor first vetoed three of the appropriations bills that supported the budget. When those bills got overridden with votes in the House of 97-3, 95-5 and 94-4, he vetoed the entire budget. In what was perhaps the fastest veto override in state history, the House overrode his veto within hours of it being filed. The budget is now law.
Frankly, the governor’s assessment of this budget was just inaccurate.
Senate Bill 1922 is $237.8 million, or 3%, less than the FY20 budget, which was the largest in state history. It is much improved over the $1.4 billion, or 17%, cut the governor and the state Board of Equalization estimated would be necessary in late April. The Legislature arrived at this budget by utilizing several creative, fiscally conservative and innovative measures – including using some state savings and money in agency revolving funds, utilizing apportionment reforms and issuing transportation bonds. This holds cuts to about 4% for most agencies and 2.5% for education. With the use of federal money, education actually will see an increase for the year, and those relief funds could help offset cuts at other agencies as well.
This budget is one that protects core services of government without raising taxes. If our revenue picture is actually better than the executive branch predicts or improves quickly, some of these cuts could be offset at mid-year.
I want to delve into a few specifics of this budget. First, for education. If the governor’s vetoes had stood, education could have been cut 12.5%. Our budget cuts only 2.5%, or $78.2 million, cut from common education’s $3 billion appropriation, and still protects public schools, where we increased funding by $650 million over the last three years. Nor will this cut affect the $7,300 teacher pay raises enacted over the last two years.
Public schools are receiving $200 million in federal stimulus funds that can be used on any COVID-related expense. This could include technology purchases for distance learning and other instructional practices changed as a result of the pandemic. Lawmakers will continue to pursue greater flexibility over these and other federal funds in the coming months, but for now school boards will be able to code for a number of COVID-related expenses.
As to the Legislature’s temporary reduction in the additional amount appropriated to state pension funds, let me answer a few questions I’ve heard. The Legislature is not taking money from the pension funds as has been inaccurately said by the governor and some who have reported his words.
The Legislature is still sending more than $200 million in additional money to the funds on top of employee and employer contributions, which remain the same. We just are not sending as much money as we have the past. The additional money was initially needed to build the plans’ fiscal solvency from years when the plans were not performing as well as they are now. Benefits this year are unchanged. In fact, the House has passed a COLA that would increase benefits should it pass the Senate and be signed into law by the governor. We are not touching the corpus of the funds.
Again, no withdrawals are being made from these funds. This budget instead temporarily redirects $111.9 million to education, and that amount will be put back into the pensions with an increase when the state revenue picture improves.
I am proud to say that the FY21 budget increases transportation funding to by about $4 million. We moved some transportation money to education but offset that with bonding some roads projects. The transportation secretary told us at the time we presented this to him that this actually preserves transportation’s eight-year plan and does not harm it.
This budget also holds the Oklahoma Health Care Authority budget flat at a little over $1 billion. Other areas of health care do see some reductions, but mostly in the form of one-time expenses.
This year’s budget is far better than many expected when we first heard the revenue projections resulting from COVID-19 and the global trade war that dramatically dropped the price of oil and gas. Just as many Oklahomans are having to do right now, the state had to tighten its belt. That we were able to do so while keeping cuts to state services to a minimum is a relief. This budget prioritizes education, but also protects things such as the state’s eight-year transportation plan and the County Improvements for Roads and Bridges fund. It protects many services for rural residents, something I fought hard for. We’ve also planned for FY22 by leaving some money in savings that can be used if we need it. We have every reason to believe the Oklahoma economy will rebound, but we are prepared if that recovery is slow. Because we built our reserve funds in good years and were prudent in our expenses, Oklahoma is in much better shape than many states that are projecting double-digit reductions. We’ve been here before, and we’ve survived. We will survive this time as well.
Please remember, I’m here for you if you need anything. I can be contacted at Mike.Sanders@okhouse.gov or (405) 557-7407.