State appropriations vary based on economic and revenue growth. In years where the economy is strong, appropriations can grow a great deal. When the economy is weaker,  revenues do not grow as fast and may decline, so spending does not grow as much, and may even fall.

 


State appropriations suffered a steep downturn of 2002-04, but recovered through FY 2008. The fall resulted from revenue losses during the economic downturn following 2001. The rebound was aided both by the national economic recovery and by rapid oil price increases that raised revenue from severance taxes. Most of the recent growth revenue in this period went to a few large agencies and programs, while many agencies received standstill funding and a few saw appropriations fall.

Spending growth slowed again in FY 2009-11. Even before the onset of the economic recession, most agencies received flat funding in the initial budget for FY'09.Once the recession hit Oklahoma, beginning in late 2008, revenue collections began to fall far short of projections. Appropriations were cut in the last month of FY ‘09 and the shortfall continued and worsened through FY'10. Appropriations from regular state funds fell by more than $1 billion from the previous year and were only partially made up by stimulus funding and the Rainy Day Fund.  In spite of appropriation of most of the balance of the Rainy Day Fund and continued stimulus funds, the overall budget for FY 2011 is $245 million, or 4%, less than the reduced FY '10 budget.

Appropriations in FY 2012 are likely to be lower yet.  State revenue is expected to grow, but not enough to make up for revenue lost from the end of the stimulus and exhaustion of the Rainy Day Fund. If the economic recovery continues and natural gas prices recover, future budgets should be stable or grow slowly. However, full revenue recovery may be hampered by policies that reduce future revenue collections and the slow pace of economic recovery.

Click here for our FY '11 Budget Highlights

Click here for our FY '11-14 budget outlook

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