News Channel 9 reports today that Governor Henry will propose increasing the amount of money that can be deposited into the state’s rainy day account.
I agree that we should deposit more money into the account but that only partially addresses the fiscal challenges the state faces every seven to ten years due to normal cycles in the economy.
We must also be disciplined about not spending every dollar that comes in the door of the state treasury immediately. Speaker Benge mentioned recently that he is considering proposing an energy stabilization fund designed to smooth-out the peaks and valleys of the state's budget.
The state's budget volatility is due in large part to the volatility of tax revenue generated from Oklahoma's energy industry. The up-and-down cycle of energy tax collections follows the fluctuations in energy prices. The fund would function by setting aside a portion of the revenue from energy industry taxes while prices and tax revenues are high so that when the prices fall the financial reserves can be tapped to stabilize the budget.
I also support transitioning to a two year budget cycle to further stabilize the budget. Several other states already budget for two year periods.
These ideas and more will be proposed and debated during this session. It’s obviously too late for such solutions to be helpful this year. But considering that each of these proposals seem to have some level of bipartisan support we should be expected to be better prepared when the state faces the next budget shortfall which hopefully will not return soon.