Shale-rich Oklahoma facing uphill budget battle

Nov. 16 (UPI) -- Oklahoma Gov. Mary Fallin said she'd rather vote again on a previous plan to close a budget gap over what passed out of the state House for the shale-rich state.

"My preference would be a revote on 'Plan A+' that received 71 votes, just five votes short of passing," she said in a statement late Wednesday. "This is not what I want, and I can tell you the majority of the legislature doesn't want it either."

House Bill 1019X, a so-called Plan B budget measure, passed out of the House in a 56-38 vote. The plan calls for tens of millions of dollars in cuts to state agencies, but leans in part on an increase in the gross production tax on legacy oil and gas wells from 4 to 7 percent.

The governor said last week she was "extremely disappointed" that House leaders couldn't clear the three-fourths passage necessary to advance a previous measure to the Senate. That measure would have raised taxes on gross production from new oil and gas wells, cigarettes, motor fuels and low-proof alcoholic beverages. Fallin said that, by not passing that bill on, it killed a last-ditch effort to address a $215 million shortfall in the current budget.

House Bill 1019X now goes to the full state Senate for consideration. As it stands, the governor said the budget still leans too heavily on short-term fixes.

"The legislature is leaving close to a $550 million budget gap for next session, which starts in three months, mainly by using one-time gimmicks," she said.

House Democrats pointed across the aisle for pushing a budget that cuts about 2.5 percent from 50 different state agencies.

"Additionally, Republican leadership team failed on their promise to bring 75 percent of their caucus in support of a recurring revenue package that included a modest increase in the gross production tax," Democrats said in a statement.

Employees working for energy companies in the state lobbied against the budget plan last week, pointing to weakness in the energy sector brought on by historically low crude oil prices.

Oklahoma is home to about 4 percent of the total petroleum reserves in the country and accounts for as much as 5 percent of the total crude oil production.

Taxes on oil and gas production generated $52 million in October, a jump of 48.4 percent from last year. Compared with September, however, tax collections from oil and gas grew just 3.7 percent. About 65 percent of the new revenue came from a 1.25 percent state sales tax on motor vehicles, while a $5 vehicle registration added $1.9 million.