“Being conservative with our budget surplus today—will protect Oklahoma from having to cut core services in the future.” Gov. Kevin Stitt.
While much of the coverage of Oklahoma Gov. Kevin Stitt’s first State of the State address focused on education, he also gave a warning to legislators about relying too much on the state’s oil and gas industry for revenue. And he called for a massive increase in the state’s Rainy Day Fund.
“I’ve said often why I believe the state needs $2 billion in savings. When we look at states where the economy depends on the price of oil, they place a strong emphasis on savings during the good years,” said the Governor. “And one thing we know is true—oil prices are gonna go up and oil prices are gonna go down.”
He told legislators that when energy prices tumble, it directly affects the state’s sales tax collections, its income tax collections, the gross production tax and various other revenue streams.
“We must be honest with ourselves and recognize that last year’s tax increases made us more dependent on the price of oil,” continued Gov. Stitt. “We must be good fiscal stewards of the decision by creating more stability through savings.”
Legislators gave him heavy applause at that point in his speech, then he continued by explaining that by the end of fiscal year 2019, Oklahoma’s Rainy Day Fund will have nearly $874 million “with no additional support from a stabilization fund that’s often seen in the oil-rich states.”
“Meanwhile, Texas has $12.5 billion in total savings to weather another economic downturn. North Dakota’s total savings is more than $5.8 billion,” he added. “This is why I’m setting a goal for Oklahoma to have $1.1 billion in our savings by the end of fiscal year 2020.”
Gov. Stitt said to get there, the state must set aside an additional $250 million from revenue growth.
“Being conservative with our budget surplus today—will protect Oklahoma from having to cut core services in the future.”
