Oklahoma needs a billion-dollar rainy day fund, governor says

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Oklahoma Gov. Kevin Stitt urged lawmakers to boost the Sooner State’s rainy day fund to $1 billion to avoid the kind of revenue shortfalls that came after the 2014 collapse in oil prices.

That crisis was worsened by income tax cuts that further curtailed revenue. Since then, former Gov. Mary Fallin and Republican legislators have approved new revenue measures amid recovery in the oil market that have enhanced the current budget surplus of $612 million.

“We must be honest with ourselves and recognize that last year’s tax increases made us more dependent on the price of oil,” said Oklahoma Gov. Kevin Stitt.

Bloomberg News

Oklahoma is expected to make a $422 million deposit into the state’s Rainy Day Fund, bringing its total to $878 million. But the first-year governor Stitt is looking to double that amount under an $8.2 billion state budget.

Compared to Texas’ $12.5 billion rainy day fund and North Dakota’s $5.8 billion, Oklahoma’s reserves are relatively meager, Stitt said.

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“When we look at states where the economy depends on the price of oil, they place a strong emphasis on saving during the good years,” he said in his State of the State address Monday. “When energy prices tumble, it directly impacts the state’s sales tax collection, the state’s income tax collection, the gross production tax and various other revenue streams. We must be honest with ourselves and recognize that last year’s tax increases made us more dependent on the price of oil.”

To build the fund, Stitt recommends setting aside an additional $250 million from revenue growth in fiscal year 2020.

Also citing the example of neighboring Texas, Stitt called for a $1,200 annual raise for Oklahoma teachers who walked off the job in protest of low pay in 2018. Stitt also asked for a $5 million bonus recruitment fund.

“The fact that Texas is preparing to pass a teacher pay increase — at a cost of $3.7 billion — compels us to review and reform our state’s funding formula and to take the handcuffs off local communities wanting to compete, recruit, and retain the very best teachers,” Stitt said.

“School support staff, like teaching aides, custodians, and food and transportation workers, also need raises to reflect the important jobs they are doing to make our schools a safe place to learn,” Stitt said.

“Schools need more investment in the state funding formula, not only to give teachers a raise, but also to bring down class sizes and restore arts, music, and other important opportunities for our kids. Our economy needs a reinvestment in higher education, which has been cut most in the nation since 2012, with rising tuition and lost programs as a result.”

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