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February 2, 2010

Henry: State faces ‘painful’ financial future

By SEAN MURPHY, Associated Press Writer

Tuesday, Feb. 2, 2010 — OKLAHOMA CITY (AP) — Gov. Brad Henry warned Oklahomans they face a “painful” future Monday, lamenting that a raid on a $600 million state savings account this year won’t be enough to avoid further budget cuts amid an economic downturn.

Henry, a Democrat from Shawnee, vowed to protect health services and education from deep cuts, but said a grim “fiscal storm” was unavoidable.

“Certainly, more cuts are unavoidable,” the term-limited governor said in his final State of the State address to legislators. “Agencies and programs, already hit hard by fiscal reality, will be asked to absorb further reductions. There will be an impact, and it will be painful.”

Oklahoma next year will see its annual budget drop from $7.2 billion to $5.9 billion, due mostly to a gloomy national economy and a drop in natural gas prices. The state has few prospects for raising revenue as legislators have said no tax increase shall pass.

“As we respond to this fiscal storm, we must keep the needs of these hardworking Oklahomans at the forefront,” he said. “At no time is that more urgent than now, during economic distress, when people increasingly must turn to us for help.”

He said the budget cannot be balanced “at the expense of the most vulnerable among us.”

Henry’s budget proposal, also released Monday, recommends using most of the Rainy Day Fund — about $484 million — to limit agency budget cuts through June 30.

Next year, Henry wants to use nearly $700 million in federal stimulus funds on health care and education. The financial plan also proposes $200 million in “revenue enhancements” such as a one-year moratorium on income tax credits and higher fees charged in various state agencies.

Senate President Pro Tem Glenn Coffee said he would be open-minded, to a point, as he reviewed the governor’s plan.

“I don’t know what those will include, but it will not include raising taxes,” said Coffee, R-Oklahoma City.

Coffee acknowledged that without new revenue streams, more budget cuts are inevitable.

“There will be cuts in almost every area,” Coffee said. “The question is how deep those cuts will be.”

In the 34-minute speech — interrupted 46 times for applause — the lame-duck governor offered few new initiatives.

House Speaker Chris Benge said there is still ample opportunity for new programs.

“I believe that though the budget will heavily influence the decisions we make this year, it doesn’t have to suck the wind out of the whole session,” said Benge, R-Tulsa. “There are many policy positions, like government modernization, education reform, energy security and workers’ compensation reform that will help grow Oklahoma’s economy and create jobs.”

Henry urged legislators to maintain funding commitments to Insure Oklahoma, which helps business pay for health insurance for employees, and for a state program that matches endowed professorships at state colleges and universities.

He also called on lawmakers to find ways to fund a $1 billion research endowment to fund research in Oklahoma and to increase the current 10 percent cap on Rainy Day Fund Deposits to 15 percent — a proposal that drew a standing ovation from members of both parties.

The governor also warned legislators that partisanship can have a price: “Slashing government spending can make for catchy campaign rhetoric, but rhetoric has ramifications — human ramifications — that demand to be considered.”

As Henry entered the House chamber, all members rose except Republican state Rep. Mike Reynolds. Reynolds rose only when Henry introduced his family in the gallery.

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