Newspaper article THE JOURNAL RECORD

Commentary: Oops! What Is It about the Best-Laid Plans?

Newspaper article THE JOURNAL RECORD

Commentary: Oops! What Is It about the Best-Laid Plans?

Article excerpt

A $285 million reduction in revenue estimates established by the state Board of Equalization last week may force Gov. Brad Henry to revise downward his optimistic $7.2 billion budget for the fiscal year beginning July 1.

Similarly, Republican legislative leaders may have to rethink plans for further tax cuts in addition to those already scheduled.

Henry says the reduction will not impact his budget a great deal, but will require some downward adjustment. Unless it was bloated as suspected, a $285 million drop would seem to have more than a little impact.

Speaker of the Oklahoma House of Representatives Lance Cargill, R- Harrah said, "The budget must be brought in line with the fiscal realities we face."

How to do it may not be easy and could lead to a break in bipartisan efforts on the budget and taxes.

Having less additional money to spend may not be all bad. Led by Henry and abetted by the Legislature, the state has been on a spending spree for the past two fiscal years. The governor appeared on his way there again.

While much of the spending went for valid existing programs that needed boosting, a good chunk went for expanding government.

This year's revenue growth is more in line with a sustainable level of spending and tax cuts than the previous two years and brings a return to budgetary reality.

The cutback is not surprising. Crude oil and natural gas price declines during the current fiscal year resulted in a substantial reduction of $66 million in anticipated revenues from the state's gross production tax.

Because of the scheduled lowering of the maximum individual income tax rate, the board approved an estimated loss of $104 million from that tax source.

It sometimes takes a while for the economic stimulus from income tax cuts to show up in growth revenue, but that amount still it seems high. The actual cut is only 0.25 of one percentage point.

Three alternatives to trimming the budget are available - raising taxes, borrowing money or raiding the Constitutional Reserve (rainy day) fund. None are satisfactory.

Repealing or postponing cuts in the maximum income tax rates statutorily scheduled to be implemented the next two years is not likely to happen. …

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