How should the state spend billions in one-time expenses? Stormy debates are ahead

Over the next two months, Oklahoma lawmakers will spend the vast majority of their time wrestling with the state's budget. And, just like the spring tornado season, the Legislature's annual budget process is filled with loud storms, frightened people, and lots and lots of wreckage.

But there is some good news.

In February, the state Board of Equalization certified nearly $14 billion for lawmakers to appropriate for the next fiscal year. Senate budget Chairman Roger Thompson, R-Okemah, said about $11.6 billion of that amount is recurring revenue — funds that cover ongoing state expenses.

Translation: The state is in the black and there is some extra money to spend.

But even with a budget in the billions, there's not that much extra money. For example, in a media statement about the budget, Thompson estimated cutting the state's portion of the grocery sales tax will cost about $312 million, leaving only about $132 million extra.

Translation: That remaining $132 million won't go that far.

Especially when agency heads say they need additional funds to keep up with inflation on top of an estimated $25 billion-plus in infrastructure and deferred maintenance costs.

One-time money a possible fix for some problems

Enter the one-time money.

Scattered among the various funds and reserves the state has, Oklahoma lawmakers can tap another $2 billion — on top of what they already have — to spend on things that would be considered one-time expenses. Think of it this way: Instead of funds for a salary for a new employee, an ongoing or recurring expense, the one-time money could be used by an agency to buy equipment or make repairs to a building.

Still, of that $2 billion stashed in various bank accounts, some lawmakers — at least those in the Senate — say they only want to spend about half that amount or even less this year.

More: What to know about Gov. Kevin Stitt's proposed budget — and why it might be a tough sell

"The real rough number is about $2 billion sitting in GR cash," Senate Pro Tempore Greg Treat said last week. "We want to make sure we leave $1 billion so we can weather any storm above and beyond what's in (the) rainy day, F-Map (the federal Medicaid Assistance program) savings or revenue stabilization funds."

And while Treat, R-Oklahoma City, and other members of the Senate are quick to acknowledge the need to pay for deferred maintenance projects and infrastructure needs, they are also serious about keeping substantial cash on hand — just in case.

Billions needed for deferred maintenance, infrastructure

"There are some infrastructure needs," Treat said. "Vice Chairman Hall and Senator Pugh both have bills dealing with infrastructure needs. One was with higher education and one deals with the rest of state government. They've combined those efforts, that's a sizable bill. I think he has $500 million in that right now."

This year, the Oklahoma State Regents for Higher Education have requested a 12.2% increase from the Legislature to $1.13 billion for the next yearly budget. House Speaker Charles McCall, R-Atoka, told the regents in December the relationship between regents and the Legislature “is the strongest it’s ever been.”

At the same time, Treat told the regents in December “(t)here is real opportunity in infrastructure investment in one-time money” this year.

Those expenditures could come on top of the $125 million that the Senate wants to earmark for the Oklahoma Water Resources Board (WRB). Paying for water system maintenance and upgrades are tough for cities that can't afford the millions of dollars it would cost, said Robby Short, a spokesman for the board. He said millions in additional funds are needed for grants and loans to water systems across the state.

In the House of Representatives, state Rep. Mark McBride, R-Moore, is pushing House Bill 4013. That bill would create the Oklahoma State System of Higher Education Capital Needs Evaluation Committee. The group would be tasked with evaluating needs, establishing project schedules and making recommendations to the governor and Legislature regarding the Oklahoma State System of Higher Education.

The measure also creates the Higher Education Capital Financing Fund, and earmarks $140 million for the four fiscal years following July 1, 2024. Beginning June 30, 2025, $50 million of the yearly total must be used for projects with the highest need of priority as critical infrastructure.

Still, though the Legislature could spend roughly $1 billion in one-time cash and remain in a good financial situation, Treat remains cautious, saying, "That doesn't mean we have to spend $1billion."

Treat: Be good stewards of state resources

"Let's make sure we are good stewards of taxpayer dollars and don't just spend because we have the ability to do it," he said.

Carly Putnam, policy director for the Oklahoma Policy Institute, a statewide think tank, countered that legislators need to reinvest in the state. New tax cuts shouldn't happen until the state has funded all its existing needs and maintenance, Putnam said.

"Anyone who has ever owned a home or a car or a pet knows there are expenses that come with doing that," she said. "Some of them are small and regular and some are: 'I took my car in for an oil change, and it needs new brakes."

The state, Putnam said, doesn't have any guarantee that it will regularly have big reserves that can be spent for one-time needs. The issues of flat budgets and constantly deferring maintenance or paying the bare minimum on maintenance mean the state doesn't have the chance to "think bigger" about how it can do better, she said.

"It doesn't give us the chance to say in so many years I bet we could overhaul this computer system or in so many years we could put in an HVAC system that was designed in this century," she said. "I think it kind of sets us up to fail."

The debate about exactly how much to spend on infrastructure is expected to continue. Since several weeks and a great deal of negotiation remain before a budget is finalized, lawmakers on both sides of the Capitol rotunda expect budget numbers to change.

And, just like tornado season, there will be some pain involved.

"We are still at the beginning of the process, so these numbers will not be our final numbers,” said Thompson, the Senate budget chief. “This is a dynamic process. It is a fluid process, and it is a work in progress.”

This article originally appeared on Oklahoman: Stormy budget debate ahead for the Oklahoma Legislature