House Speaker Jeff Hickman, R-Fairview, talked budget and the upcoming legislative session when he spoke at Enid Rotary Club Monday.
Oklahoma's legislative session begins Feb. 1.
Oklahoma's sales tax revenue has trended down since July, Hickman said, stating Oklahoma is living through an "oil bust at this point." Hickman said unless the forecast improves, Oklahoma may experience a second revenue failure.
The first revenue failure in December required across-the-board cuts of 3 percent for state agencies this fiscal year.
The Legislature is expected to have $900 million less to budget for fiscal year 2017.
"December was not a good month," he said, which is normally a good month because of holiday spending. "We were 13.18 percent below the estimate and about 15.5 percent below where we were just a year ago."
The price of oil in December was $35 per barrel.
"Our budget was built on oil in the mid-$50 per barrel price," he said.
Hickman said state agencies should be preparing and making "good budgetary decisions" toward the next fiscal year.
The Legislature may change fiscal year 2016 allocations, Hickman said, but the change would have to be completed within the first week of session.
Hickman said the House considered that option.
He said the reason the state faces continued budget challenges is because of off-the-top money automatically allocated to agencies.
"We have $3 billion that goes directly to state agencies," he said. "Even if oil was $60 or $70 per barrel. We would still face the structural budget challenges that we have to address as a state — $1.7 billion in tax credits, $7 billion in sales tax exemptions. Those are billion with a 'b.' We’re talking about a budget shortfall for this year’s budget of $900 million but $3 billion the Legislature doesn’t control."
Hickman requested his office compile a report of agency funding since 2007.
The report from his office showed funding for pre-K through 12th grade was up by 5.83 percent since FY 2007.
"You’ll hear talking points about how we’re leading the nation in cuts and, quite frankly it’s the opposite," Hickman said. "Now, we have had some enrollment growth; we aren’t getting enough money into teacher’s salaries — those are true things — but we are up on our education funding."
Hickman said Oklahoma is No. 48 for teacher salary but No. 30 for benefits.
"The challenge is that (benefits) is where the pay raise has been going these past years," he said. "When you have a $20 and $30 million increase in health insurance costs just for education — that’s money that typically would have been going into salaries that’s going into mandated cost increases. Those are things we have to get our arms around as a state, as a country, and address because we do want to see more in the pockets of teachers and classrooms. We just need to balance that with other compensation structures."
Priority was placed on education, which was a good thing, Hickman said. To increase education funding, other state agencies took budget cuts.
Hickman said keeping common education at a flat budget, with not cuts, would be nearly impossible with a $900 million budget shortfall. If education was not cut, other state services could be "completely crushed," he said.
Since 2007, the Office of Emergency Management was cut 24.7 percent and Oklahoma Department of Environmental Quality was cut 28.5 percent.
'There is no standard'
Hickman said the Legislature asked Oklahoma Corporation Commission if it had full authority to manage the seismicity issue in Oklahoma. In the month of January, Oklahoma has experienced more than 70 earthquakes.
The House met with Commissioner Dana Murphy on Oct. 31, 2015, to review statutory authority allowed by the commission. OCC said it had the authority it needed.
"Fast forward a few months and we saw SandRidge challenge the authority," Hickman said.
Hickman filed House Bill 3158, which would allow OCC to immediately respond to emergency situations and take necessary action without notice and hearing.
Hickman said OCC also needs additional resources to contract with a data firm. Oklahoma Corporation Commission's budget has been cut 27.7 percent since 2007, Hickman said.
Currently, all information on saltwater disposal wells is in filing cabinets and not in an electronic format.
"There is no standard," he said. "Some reports are handwritten, some mail them in, some fax them in — when they get there it’s all paper and you have some many, they (OCC) are having to pull employees from other places to file these things in filing cabinets."
Then when a commissioner wants information, employees are once again pulled from other areas, Hickman said. The data is compiled and provided to commissioners several days later, he said.
Hickman has served as speaker of the House for three years. He was elected in 2004 and will reach his term limit this year.