Oklahoma’s state government will face a budget hole of about $869 million in the upcoming fiscal year, a 12.6 percent decrease from the current year, according to figures released Tuesday by Secretary of Finance Preston Doerflinger.
Doerflinger says lawmakers will have to make difficult decisions in the upcoming legislative session.
“I think it’s important for everybody to realize you’re not cutting your way out of this situation. I’ll start there. We have to have a serious conversation about revenue in this state,” Doerflinger told reporters.
As part of those conversations, Doerflinger specifically mentioned sales taxes on services that are taxed in surrounding states but not in Oklahoma.
“For me and for this administration, it’s more about the fact that our economy has changed to a services-based economy and I think we have to realize that, and at least have a serious conversation, looking at some of the sales tax and use tax exemptions and services that aren’t taxed today,” Doerflinger said.
Doerflinger says the declining revenue means an income tax rate cut from 5.0 percent to 4.85 percent will not go into effect. He adds that projections show there will not be a revenue failure during the current fiscal year, but there will not be a deposit in the Rainy Day Fund.
The Board of Equalization will meet on Wednesday to certify a budget shortfall of about $692 million. Doerflinger says the $869 million estimate is more accurate because it takes into account one-time money that was authorized during the current fiscal year.