OKLAHOMA CITY, Feb. 2 (UPI) -- State agencies in Oklahoma may be facing budget cuts of at least 10 percent in part because of the pressure from lower oil prices, the governor said.
"We've seen a 70 percent drop in oil prices in less than two years, which has a tremendous impact on our revenue," Oklahoma Gov. Mary Fallin said in her annual State of the State address. "There is an excess supply of oil and natural gas in the marketplace, and instability in worldwide markets doesn't help."
In 2014, when oil prices were near $110 per barrel, Oklahoma had one of the fastest growing economies in the United States. With oil near $30 per barrel, the state has a $1 billion budget gap.
According to federal data, Oklahoma oil reserves represent just over 3 percent of total U.S. supply. For October, the last full month for which the U.S. government has data, Oklahoma produced about 13 million barrels of oil.
Fallin pointed to outdated tax policies and revenue collection deficiencies as problematic for Oklahoma coffers. If lawmakers don't find ways to fix "decades-old structural budget problems," the governor said most state agencies may face 13.5 percent in cuts in the 2017 fiscal year.
This year, lawmakers will appropriate about 45 percent of tax receipts, against 55 percent before the U.S. economy teetered on the brink of recession in 2007.
Fallin said changing the tax regime would result in $200 million in new revenue. Moving non-revolving funds from "one-time" to general would add another $1.5 billion to state pockets, she added.
"We can use our budget crisis to create new opportunities to build a solid foundation for Oklahoma," she said.