|
 |  | | << Back to Wellhead | 
| Budget takes top priority during legislative session February 2010 | |
| The Oklahoma legislature is back to work, and elected officials have one thing on their mind.
The budget.
Most election years, the state capitol would be abuzz with political speculation as term limits take their toll on long-time policy makers - this year the list of politicians making their swan song includes the governor and majority leaders of both the House and Senate. But in 2010, it will be a $1.3 billion budget decline that will dominate legislative small talk.
Despite an annualized across-the-board cut of 7.5 percent since August, an amount equal to $300 million in cuts for the 2010 fiscal year, it’s expected an additional $525 million in funds from available cash resources — a combination of Rainy Day funds and Federal Stimulus Payment funds — will be used in order to balance the books by June 30. That will leave approximately $860 million in available cash resources to appropriate in 2011 and beyond.
The revenue projections for the 2011 fiscal year are even bleaker. It’s currently estimated the state will have $5.3 billion in revenues to appropriate, although final estimates are not due until next month and could see that projection rise. That number is the smallest budget appropriation in the past six years and is down from $6.6 billion in revenues for 2010 and $7.1 billion in revenues for 2009, a 25 percent decline in just two years.
For the 2010 budget, in addition to the $6.6 billion in revenues, the state used $630 million of federal stimulus money to reach a total budget of $7.2 billion. However, with $300 million in savings realized, the annualized budget for 2010 is $6.9 billion. Those cuts are expected to be carried forward into the 2011 budget, as well.
As you can see, the budgetary politics of this session will center not upon if to cut, but where else to cut, how much more deeply to cut, and also upon how much of the available cash resources they want to leave for 2011 and beyond.
How does all this budget talk relate to the items on the OIPA legislative agenda?
OIPA’s legislative efforts are focused on extending the current gross production tax incentives for at risk wells, amending the oil and gas lien act to ensure producers and royalty owners are paid for products sold and seeking an industry consensus on 1,280-acre spacing for horizontal drilling.
Since none of our agenda items require an increase in appropriations from the state and should be deemed “revenue neutral” by the Oklahoma Tax Commission, we should not have to worry about having our proactive issues threatened from a revenue impact viewpoint. However, with the shortfalls the state is facing, any number of means could be sought to increase state revenues.
From the regulatory angle, additional funds could come via new or increased fees and permits.
From the enforcement angle, additional funds could be generated via new or increased fines and penalties.
From the tax angle, additional funds could come via temporary suspension or revocation of gross production tax incentives.
Although unlikely, such desperate financial times could cause our elected friends to ask our industry for harsh concessions.
|
| | | << Back to Wellhead |
|
|
 AD
|
| Issues |
|
|
| Topic |
|
|
|
|
|
