OKLAHOMA CITY (AP) _ A combination of a flat state budget and rising costs assures cuts in state services this year, according to a new report by the Oklahoma Policy Institute.


OKLAHOMA CITY (AP) _ A combination of a flat state budget and rising costs assures cuts in state services this year, according to a new report by the Oklahoma Policy Institute.

A $7.1 billion general appropriations bill adopted by the recently adjourned Legislature was billed as a "maintenance-of-effort" budget.

But the report says cuts in some services are inevitable because the budget did not include enough money for most agencies to cover steep rates of inflation for basic operations.

Rising costs of 6.2 percent are mostly associated with utilities, fuel and unfunded increases in employee health care and retirement expenses.

Some school districts already have announced plans to reduce school bus routes to compensate for higher fuel prices.

David Blatt, director of policy, wrote the report for the institute, which was formed this year to promote fiscal responsibility, expansion of economic opportunity and a reduction of poverty.

Blatt said total appropriations, counting some last minute spending before legislative adjournment on Friday, wound up $46 million above the previous year, less than 1 percent.

He said agencies are faced with retirement costs that have risen $66 million in the past three years and employee health care expenses that have more than doubled since fiscal year 2003.

The money appropriated by the 2008 Legislature is for the fiscal year that begins July 1.

The report said state government's funding problems, unlike other states, are not the direct consequence of a faltering economy.

"Instead, Oklahoma's flat revenue collections were triggered by the phased-in implementation of steep cuts to the state's personal income tax enacted in recent years," the report said. "The cumulative revenue loss from resulting income tax cuts is estimated to be $598 million by the upcoming fiscal year."

The report said Oklahoma's economy has benefited from soaring commodity prices in the energy and agriculture sectors, but cautions that the state is unlikely to be immune from the country's economic woes.

It said any prolonged or deep economic slowdown likely will exacerbate the state's current budget challenges and create major shortfalls in the years ahead.

It said the state's Rainy Day Fund, which has a balance of $572 million, will help cushion the impact of any downturn, but is not sufficient to avert deep budget cuts.

Blatt said the Institute will be monitoring decisions to deal with the budget squeeze and how they affect public programs.

 

Copyright 2008 The Associated Press.