The state panel that sets the amount the Oklahoma Legislature can spend on the state budget met as oil futures spiraled into negative territory for the first time ever.
In the Monday afternoon meeting, Jay Doyle, the Director of the Oklahoma Tax Commission, told Governor Kevin Stitt and other state officials that the economic impact of the coronavirus combined with that of unprecedented oil prices could last until 2022.
Stitt told State Board of Equalization and the media that Oklahoma is in a good place because nearly $1 billion dollars is in the state's savings account. However, he laid out two scenarios about how to use it. Before Monday's freefall in oil prices, the Governor and the state legislature had agreed to spend $459 million to keep the budget for the current fiscal year flat. That would allow the remainder of the money $578 Million to be used for next fiscal year.
In predictions set forward by the Tax Commission, the impact on Oklahoma's economy because of the lag in the oil and gas market will create a deeper and longer lasting effect, possibly into 2022.
If all of the savings currently in the Rainy Day Fund were used in Fiscal Years 2020 and 2021, there would be no money left to cover a shortfall in Fiscal Year 2022, which would begin in July 2021.
The Governor is asking the legislature to consider a scenario where the savings money would be spread out over three years to cushion the effects on core services such as education, corrections and healthcare.
Stitt also said that the curent remote working environment created by the COVID-19 restrictions could help state agencies become more efficient. While he did not go into details, Stitt indicated that the current situation could lead to an evaluation of the state's real estate footprint or how much office space the state leases.
In other words, for some state employees, the temporary remote working environment may become the norm. Stitt said he is looking forward to "rolling up his sleeves and digging into the issue."
He did not go into detail about what other efficience he and state leaders might be considering.
The State Board of Equalization approved a letter to be sent to the state legislature, advising them on how much money they are able to spend for the fiscal year that starts on July 1. Now, the legislature must decide whether to use all of the savings money allowed or save for a shortfall in Fiscal Year 2022.