November 20, 2009 — Lt. Gov. Jari Askins gave Claremore Chamber of Commerce members a sobering but nonetheless encouraging report on the state of affairs from the state Capitol at Thursday’s Chamber luncheon.

“I guess it’s been not quite two years since I was last invited to be here at your chamber and then, we made it a great day — toured Pelco, the J.M. Davis Arms & Historical Museum, and the Will Rogers Memorial multiple times, and had an opportunity to see the then-new Robson Performing Center — that was an incredible opportunity,” she said. “It’s good to be back in Claremore and have another opportunity to visit with you again.

“Today, I’d like to talk about what I’ve seen happening, and what’s been happening as it relates to the state budget,” she said, “and what I think is going to happen as we lead into the legislative session which starts in February, and the impact I think exists in communities all across the state. Duncan is my home and so the impact being felt in my community is not unlike the impact, I believe, here in Claremore.”

One major concern, Askins said, is that as dollars are reduced and agencies are forced to downsize by attrition or layoffs, that employees have less money to spend in their communities.

“When you have that happen, people will only buy what they have to buy,” she said. “They don’t go to the dry cleaners, they don’t take the animals to the veterinarians if they don’t have to, they don’t do things that are ‘extras,’ and that’s not a good formula for economic recovery. What we need is dollars being turned over in our communities, and for people to feel like they’ve got money that they can spend — we need those dollars to turn over and help local businesses. That’s how things get better.”

As a member of the Oklahoma Board of Equalization, Askins said she annually looks ahead at the state budget.

“One of our functions is we look at numbers presented us, based on economic models, to anticipate what our revenues are going to be,” she said. “So when we meet in December, the amount of money we’re given as a belief of what the estimate of the following fiscal year. When we met last December, we were looking at the fiscal year of 2010 — that number is the number the governor uses to prepare his budget.

“We meet a couple of months later in February and we have about 60 more days of data, and when that formula is run again, that’s the estimate the legislature has available for appropriations,” she said. “Or, more specifically, 95 percent of that estimate is what the legislature has available to appropriate.

“In the three years I’ve been lieutenant governor, the number in February has been less than the number in December,” she said. “What happened was natural — gas prices started falling, so in April and May and June, we saw revenues coming in less than anticipated. Agencies were encouraged to be prudent and take some cuts on their own but there were no across-the-board cuts ordered to end the fiscal year.

“As appropriations were made for 2010, budget cuts were endured on an average of seven percent — that was pretty much an across the board cut for elected officials,” she continued. “What happened then was that we were already anticipating revenue was going to be less than what we’d guessed in February.

“We knew, even then, when we were anticipating revenues in February, that the dollar amount we were given to work with was what we had in 2004, so we were anticipating 2004 budget year with 2010 expenses,” she said. “Probably in most businesses, overhead went up between 2004 and 2010, and that’s the same thing that was happening with state government — we were getting ready to do 2010 services with a 2004 budget.”

Although Askins said state legislators knew it would be “tight,” none could have anticipated the continued fall of revenue throughout the fiscal year.

“Every state agency gets it budget monthly in a 1/12 allotment, so it’s divided up — state revenue dollars come in 1/12 at a time,” she continued. “But obviously, revenue doesn’t come into the state equally like that. July and August are our lowest (revenue) months — always have been, always will be — so we knew things were low, but we’d hoped they would pick up, so you started seeing state government offices ask for across-the-board cuts of five percent since August.”

These cuts, Askins said, would increasingly be felt across the state as legislators respond to cuts impacting their community.

One such impact recently felt, Askins said, was in Tahlequah with the announcement of the Department of Mental Health’s planned closure of the Bill Willis Center.

“I think we’re going to continue to see those kind of cuts occur or at least hear about agencies considering it,” she said. “What is frightening is many of us that are used to being involved in the budget is you now have the governor talking about using the Rainy Day Fund.

“In August, it looked like they might have a special session to put it to use in September, which didn’t happen and I think they were wise to wait and see if things picked up,” she said. “But now, because things haven’t picked up and are getting worse, you see the governor saying it’s time for us to look at tapping the Rainy Day Fund, but let’s get a better understanding of where our agencies are, so that the public can understand why we’re needing to tap into that portion of the fund available to stabilize the current year’s budget.”

The portion under consideration, Askins said, is three-eighths of the total fund, roughly $225 million, which could be used to stabilize the 2010 budget.

“But in the Capitol, there are several people who don’t want to tap into the Rainy Day Fund,” she said. “Tapping it would be targeted to certain agencies, and the rest of us would be asked to look at an additional seven and a half percent cut — even though my office could probably endure it, we’ve already reduced my staff by three, I could endure it better than some of our state agencies can. The state mental health, nutrition, and health care agencies would be the hardest hit, should this happen.

“So, I think what we’re looking at is a legislature and a governor who are trying to find some agreement,” she said. “There’s no reason for us to have a special session about tapping the Rainy Day Fund unless there’s some agreement.”

Special sessions, Askins said, cost between $80,000 and $100,000 a week, and without agreement between the governor and legislature, state government could wait until February to save the money which would be out from hosting a special session.

As to what she felt would happen, Askins was uncertain.

“Where the legislature and governor will go is really anyone’s guess right now,” she said. “It’s almost as interesting as it is in May when no one’s sure what the budget agreement will be. Walking around the Capitol, you hear a lot, but every county has state employees, and should there be reductions from five to seven and a half percent or furloughs, this translates to a reduction in available disposable income, so there’s less income that gets turned over in our communities. I honestly think there’s going to be a great strain on charitable and faith-based organizations to provide aid for more people than ever before.”

Although Askins said she hadn’t intended to give a “gloom and doom” type report, she felt it necessary to inform the public to know what was happening with the state budget to better understand why certain “down-the-road” decisions could be made at the Capitol.

Despite the strain currently being felt, Askins said there’s nowhere she’d rather live than Oklahoma.

“California is way worse than we are, in a lot of ways,” she laughed, “and there are other states struggling right now because they don’t require a Balanced Budget Amendment the way Oklahoma does. But we know this is a time for opportunity — Oklahoma has been actively trying to recruit business from the state of California for some time now. We know there are a lot of displaced Oklahomans in California with some connection to our state and those are the best business prospects.

“People who have a connection to us are easier to sell, so the Department of Commerce has been looking at us because they know there are businesses looking at moving out of California, which is having to cut services and raise taxes to try and recover from their multibillion dollar debt,” she said. “There is good news about what’s going on, you just need to know how to recognize it and how to sell what Oklahoma has to offer which is cheap energy, a great labor force, people with a great work ethic and communities such as Claremore that are willing to look down the road as how to grow and best respond to the needs of their citizens.”