Newspaper article THE JOURNAL RECORD

Oklahoma City Gov. Brad Henry and Legislature Prep for 'Tight Budget Year'

Newspaper article THE JOURNAL RECORD

Oklahoma City Gov. Brad Henry and Legislature Prep for 'Tight Budget Year'

Article excerpt

Gov. Brad Henry has the same problem every year: he has to use the revenue estimates presented to the state Board of Equalization in December to craft his executive budget.

But by the time the Equalization Board meets again in February, estimated collections for the upcoming fiscal year have changed significantly.

Questioning what he called an "optimistic" prediction of a strong increase in personal income tax collections, Henry said Thursday he is expecting a sizable change in the revenue estimate come February.

"I'm urging caution," said Henry. "It looks like it's going to be a tight budget year." Henry said he will present a balanced budget to the Legislature when the session convenes on the first Monday in February.

For now, the state Board of Equalization has certified the Office of State Finance's December estimate, which shows the Legislature will have $5.8 billion to spend for the fiscal year that begins July 2008, based on total collections of more than $6.1 billion.

At Thursday's meeting of the Board of Equalization, Henry and his chief negotiator, state Treasurer Scott Meacham, questioned state Finance Director Tony Hutchison regarding the reasonableness of forecasting an 8.5-percent increase in income tax collections next year, when the current year's income tax collections show growth at about 3.3 percent for the year.

"These numbers are from (Oklahoma State University's) econometric model," said Hutchison. "We've asked the questions, and they've defended those numbers, but we'll be keeping an eye on those areas."

Meacham said he expects Oklahoma's economy will continue to grow over the next fiscal year, but not as quickly as the economy has grown over the last three years.

Oklahoma has been outpacing the nation in personal income growth, fueled primarily by growth in the oil and gas industry. That rapid pace will likely be unsustainable into the future, said Meacham.

Recent monthly income tax collections would indicate a trend of slowed growth, said Meacham. When adjusting to account for the impact of the tax cuts enacted last year, July's income tax growth rate of 10.2 percent was followed by a growth rate of just 6. …

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