Gov. Brad Henry and legislative leaders reached agreement Tuesday on a plan to reserve funds and make targeted cuts to address a $1 billion shortfall in the budget for the fiscal year that ends June 30.
But the agreement, made public six days before the 2010 Legislature convenes, does not address how lawmakers will balance the budget for the next fiscal year. State officials have been told revenues for next year will be $1.3 billion less than this year.
House Speaker Chris Benge, R-Tulsa, said the deal puts the state on the right path even though it doesn't directly address the 2011 fiscal year budget.
"This agreement maintains more than half of our state's total reserve dollars for fiscal year 2011 and beyond and also puts in place significant and strategic cuts that will reduce the size of government to better match state collections," Benge said.
The proposal calls for monthly allocations to state agencies to be reduced by 10 percent for the rest of the fiscal year. Agency allocations were cut by 5 percent in August and then that amount increased to 10 percent for December and January.
The budget cuts will result in an overall reduction of 7.5 percent for the fiscal year.
Vital state services like education, health and public safety will receive more money to supplement their budgets and reduce their share of the overall reduction. But every state agency will have to make some cuts this year, officials said.
Gov. Brad Henry said officials will use money from the Rainy Day fund and the state economic stimulus account to help balance the budget.
"Even with the use of those resources, however, we will still have to implement significant reductions to state programs, and unfortunately, Oklahomans will feel the pain of those cuts," Henry said.
Senate President Pro Tem Glenn Coffee, R-Oklahoma City, said the state, like Oklahoma families, faces tough choices in a difficult national economy.
"We will move forward with caution to engage this budget and on to the 2011 budget," Coffee said.
The deal makes public schools, higher education, the Oklahoma Health Care Authority and the Department of Corrections priorities, and each will receive a supplemental appropriation.
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