OKLAHOMA CITY (AP) — For the second time in four years, Gov. Brad Henry urged state lawmakers Tuesday to expand Oklahoma’s Rainy Day fund so more money can be deposited in it to cope with revenue shortfalls.
With the state facing a shortfall of $729 million for the fiscal year that ends June 30 and reserve funds in high demand, Henry said he hopes the idea receives more support than it did in 2006, when lawmakers rejected it.
“I think lawmakers will be much more receptive right now,” Henry told reporters at a news conference with state Treasurer Scott Meacham. “It is very important for states to have a strong Rainy Day fund. You can never go wrong by putting more money in your savings account.”
Oklahoma voters approved the Rainy Day fund in 1985, and the state Constitution limits it to 10 percent of general revenue receipts. Henry said he wants lawmakers to schedule a statewide referendum to raise the cap to 15 percent.
Had the Legislature and voters agreed to that amount in 2006, Oklahoma would have almost $900 million in the Rainy Day fund instead of the current $600 million, according to state estimates.
“If we had taken the action I advocated back in 2006, we would have more money in our savings account to respond to today’s crisis,” Henry said. “It would not solve all of our problems, but it would give us more room to maneuver as we balance the budget and attempt to protect core services.”
Officials have said revenue will be more than $729 million short for the fiscal year that ends June 30 and next year’s revenue is expected to be $1.3 billion less than this year’s.
Henry recalled that the state faced a $700 million revenue shortfall when he took office in 2003 and the Rainy Day fund was nearly empty. He proposed tightening spending restrictions on the reserve fund and making it harder to raid, changes voters approved in 2004.
The account was filled to its constitutional capacity for the first time in 2005 and has remained at capacity ever since.
“I have zealously guarded the Rainy Day fund,” Henry said.
Meacham said the fund was used in the past as a special projects fund when its real purpose is to keep the budget sound.
“The Rainy Day fund is a key tool ... to deal with revenue downturns,” Meacham said.
Henry also endorsed House Speaker Chris Benge’s proposal to create a fund to offset falls in income based on volatile oil and natural gas prices. Similar to the Rainy Day fund, the energy stabilization fund would hold gross production taxes on oil and gas when prices rise and income exceeds an amount set by state officials. It would distribute that money when energy prices are low.
“I think it makes sense to level those peaks and valleys,” the governor said.
Henry’s Rainy Day proposal received support from state Sen. John Ford, R-Bartlesville, who has filed a bill to raise the fund’s cap from 10 to 15 percent.
“The oil bust of the 1980s taught us the importance of having an emergency savings account,” Ford said. “This recession has shown us we need to expand that fund.”