Oklahoma lawmakers’ inability to pass a special session budget fix has not gone unnoticed.
A new report from credit ratings agency Moody’s called the lack of a permanent fix after nearly six weeks “credit negative.” Oklahoma has had a credit negative outlook from Moody’s since 2015, and that won’t improve until lawmakers start passing balanced budgets with recurring revenue.
There may be some progress with the Senate adding the gross production tax to a package of tax increases and sending it back to the House with a three-fourths majority. The House Joint Committee on Appropriations and Budget passed that bill Tuesday, and a floor vote is expected Wednesday. Moody’s analyst Josh Grundleger said the exact solution isn’t that important to creditors.
"The bottom line from our perspective is that the revenues match the expenditures, so we’re a little bit more agnostic, I think, on what the particular solution is, whether it’s an expenditure cut, a revenue source," Grundleger said.
Moody’s noted the legislature had turned back to one-time spending to deal with the current $215 million dollar budget hole, including taking a maximum withdrawal out of the rainy day fund. Grundleger said that might be OK in an emergency like a sudden slump in oil prices, but Oklahoma has been tapping into its reserves for years.
"Obviously, after using a fund, a cash — you know, drawing down your account could lead to it being depleted, and then you have nothing left in that instance," Grundleger said.
There are still some positives, however, when it comes to Oklahoma’s credit rating.
"Aa2, it’s the third-highest rating in our rating universe, so there’s a lot of positives still going on within the government and within the fiscal position of the state despite some weak spots here," Grundleger said.
