An Oklahoma lawmaker wants the Oklahoma Constitution amended so the state can increase the amount that can be placed in the “Rainy Day” Fund.
State Rep. Jon Echols said he intends to file legislation that would allow voters to amend the Constitution to both increase the cap – but not lower it – and allow the Legislature to appropriate directly to the fund.
The “Rainy Day” Fund, also known as the Constitutional Reserve Fund, serves as the state’s savings account. The state Constitution allows the Legislature to appropriate only 95 percent of the certified revenue estimate. Any revenue collected above 95 percent of the estimate is transferred to the Reserve Fund. In addition, the fund is capped at 15 percent of the previous year’s certification level.
The fund currently has a balance of approximately $382 million. Last year, the Legislature used $150 million out of the fund to help offset a $600 million budget hole.
“The idea that we should cap how much money the state can save is, frankly, ridiculous,” said Echols, R-Oklahoma City. “Not only is there a cap on how much we can save, there is also legitimate doubt among House staff as to whether the Legislature has the authority to make direct appropriations into the Rainy Day Fund. Neither of those restrictions make any sense. We had a $600 million budget gap last year, and we are now looking at up to $1 billion less this year to appropriate. Our current approach is shortsighted and bizarre. Taxpayers expect us to be prudent and develop a long-term approach to state spending. This is not the way a citizen would run his or her family and it certainly isn’t the way we should run our state.”
Echols said that Oklahoma Secretary of Finance Preston Doerflinger agrees that a new approach is needed. In a November 23 news story, Doerflinger said the state should consider creating an entirely new budget stabilization fund.
“I think there are tools we should put in place, maybe a separate fund, not much different than the Rainy Day Fund, that would help equalize these types of downturns in the energy sector. It might cause some smoothing or leveling of the pain that occurs if you were to see something this dramatic in the future,” Doerflinger was quoted as saying.
Echols doesn’t want to create a new fund; rather, he wants voters to reform the current fund to make it easier for the state to save money.
Echols noted that North Dakota has nearly $3.3 billion in savings.
“We are an oil and gas state, also, but we don’t save money like a state dependent upon the roller-coaster energy industry should,” said Echols. “Some say it is pointless to discuss saving money when we are facing another budget hole, but I believe that is exactly why we should be discussing it. Our revenues are going to return to normal levels at some point. If we don’t make a change now, we won’t be able to save money when we do have excess revenues.”
Echols said his proposal would require the Legislature to pass a resolution that would place a state question on the ballot for voters to decide.