Fallin Proposes Budget That Would Cut Some Appropriations for Oklahoma DOT

AASHTO Journal, 5 February 2016

The Oklahoma Department of Transportation and most other state agencies would see their fiscal 2017 state discretionary appropriations cut by 6 percent amid falling receipts from oil and natural gas output, under a budget proposed by Gov. Mary Fallin.

If it becomes law, the budget would cut ODOT’s state-provided legislative appropriation by $11 million in the year that begins July 1, to about $174 million from nearly $185 million in the current fiscal year. The general fund appropriation was nearly $209 million as recently as 2014 but has been falling since.

However, that annual appropriation is just one part of ODOT’s total funding. An agency spokesman said most of its state-provided money is allocated by law directly to ODOT each year, and its total budget also counts the federal-aid funding that will grow under the new federal FAST Act.

ODOT’s total budget for 2016 was $1.954 billion, budget documents show, up nearly 5.5 percent from $1.853 billion in fiscal 2015.

Still, this budget cut and another on Jan. 4 of $13.2 million are having an impact. In a statement provided to AASHTO Journal, ODOT Executive Director Mike Patterson spelled out how this affects the agency.

“The Oklahoma Department of Transportation certainly understands the challenges our state leaders face in balancing the budget,” Patterson said. “The governor’s budget proposal for FY 2017 includes a 6 percent cut in appropriations for most state agencies, including ODOT.

“The recent $13.2 million cut to our capital program due to the state revenue failure in the current fiscal year and this proposed $11 million cut for the upcoming fiscal year mean some future construction projects in the eight-year construction work plan will likely have to be postponed.”

He added: “We are leaving some vacant positions unfilled, delaying purchase of vehicles and equipment and delaying replacement of some outdated facilities in order to direct more resources to maintenance and asset preservation to keep many of our highways in service until they can be reconstructed in the future.”

Fallin said the state has a nearly $1 billion projected shortfall that is partly due to the way it walls off some recurring revenues instead of directing them into general fund appropriations for core services. So she proposed some budget process reforms that would permanently redirect more revenue into the general fund.

But she said the state that is a significant producer of oil and natural gas is also suffering from weaker budget revenues from that sector. “We’ve seen a 70 percent drop in oil prices in less than two years, which has a tremendous impact on our revenue,” she said in her Feb. 1 State of the State address.

“There is an excess supply of oil and natural gas in the marketplace, and instability in worldwide markets doesn’t help,” she added.

She also proposed expanding the sales tax to more goods and services by curbing exemptions not allowed in surrounding states, and proposed increasing the tax on cigarettes by $1.50 a pack.

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