The Revenue Process

Board of Equalization Board of Equalization December Board of Equalization Meeting December Board of Equalization Meeting Governor’s Executive Budget Governor’s Executive Budget February Board of Equalization Meeting February Board of Equalization Meeting June Board of Equalization Meeting June Board of Equalization Meeting Constitutional Reserve Fund (Rainy Day Fund) Constitutional Reserve Fund (Rainy Day Fund) Cash Flow Reserve Fund Cash Flow Reserve Fund The Revenue Process

Constitutional Provisions Article X Section 23 Ensures a Balanced Budget Ensures a Balanced Budget Sets up the Revenue Certification Process Sets up the Revenue Certification Process Establishes the Constitutional Reserve Fund Establishes the Constitutional Reserve Fund Provides for Monthly Allocation of Revenue Provides for Monthly Allocation of Revenue Allows for Reduction of Appropriations Allows for Reduction of Appropriations

Board of Equalization Constitutional Entity - sets Appropriations Authority; Other Constitutional and Statutory Duties Constitutional Entity - sets Appropriations Authority; Other Constitutional and Statutory Duties Members: Members: 1. Governor 2. Lt. Governor 3. Treasurer 4. Superintendent of Education 5. Attorney General 6. Auditor and Inspector 7. Secretary of Agriculture

December Board of Equalization Meeting Between 35 to 45 days before the start of session (around Christmas) Between 35 to 45 days before the start of session (around Christmas) Certify the amount of actual collections to certified funds in the previous fiscal year Certify the amount of actual collections to certified funds in the previous fiscal year Certify the legislative appropriations authority for the next fiscal year – 95% Certify the legislative appropriations authority for the next fiscal year – 95%

Board of Equalization Certified Funds Certified Funds are funds appropriated by the Legislature Certified Funds are funds appropriated by the Legislature 1. General Revenue Fund 2. C.L.E.E.T Fund 3. Commission of the Land Office Fund 4. Mineral Leasing Fund 5. OHSA Fund 6. Public Building Fund 7. OK Education Lottery Trust Fund

Additional Responsibilities Statutory: Preliminary Finding concerning SB685 – Individual Income Tax Trigger Preliminary Finding concerning SB685 – Individual Income Tax Trigger Remove Oklahoma’s Promise funding from the General Revenue Fund estimate Remove Oklahoma’s Promise funding from the General Revenue Fund estimateInformational: Rebuilding Oklahoma Access and Driver Safety Fund (ROADS Fund) Rebuilding Oklahoma Access and Driver Safety Fund (ROADS Fund)

Certification Packet Most estimates are based on data compiled by the Tax Commission, using actual collections, expected fiscal impacts, projections from the OSU Econometric Model, Global Insight projections, local and global energy market prices, as well as other benchmarking and trending data. Most estimates are based on data compiled by the Tax Commission, using actual collections, expected fiscal impacts, projections from the OSU Econometric Model, Global Insight projections, local and global energy market prices, as well as other benchmarking and trending data. Estimated General Revenue, certified and special funds collections are included in the packet as required by statute. Estimated General Revenue, certified and special funds collections are included in the packet as required by statute. Agencies submit estimates of revenue for any certified funds that they collect. Agencies submit estimates of revenue for any certified funds that they collect. BOE certifies the total estimated collections to certified funds and the appropriations authority. BOE certifies the total estimated collections to certified funds and the appropriations authority.

Executive Budget Book The total amount certified in the December meeting will be used as the basis for the Governor’s budget. The total amount certified in the December meeting will be used as the basis for the Governor’s budget.

February Board of Equalization Meeting Within 5 days of the monthly apportionment in February Within 5 days of the monthly apportionment in February Adjust estimates of revenue based on updated current collections and economic data Adjust estimates of revenue based on updated current collections and economic data “May” adjust the certification of funds available for appropriation “May” adjust the certification of funds available for appropriation Certify the limit on growth of appropriations Certify the limit on growth of appropriations

Additional Responsibilities OK Education Lottery Trust Fund Finding OK Education Lottery Trust Fund Finding Individual Income Tax Trigger Finding – (Preliminary in December) Individual Income Tax Trigger Finding – (Preliminary in December) Subtract OHLAP funding from GR for certification Subtract OHLAP funding from GR for certification

Legislative Budget The February certification will be used by the Legislature to develop and negotiate the final budget. The February certification will be used by the Legislature to develop and negotiate the final budget.

June Board of Equalization Meeting Only meeting to adjust the official estimate Only meeting to adjust the official estimate Adjust official estimate to reflect fiscal impacts from law changes passed during session Adjust official estimate to reflect fiscal impacts from law changes passed during session Re-certify the estimated revenue and the appropriations authority Re-certify the estimated revenue and the appropriations authority Final, official estimate for the coming fiscal year Final, official estimate for the coming fiscal year

Year End Actions Fulfill all appropriations and allocations Fulfill all appropriations and allocations Reconcile all General Revenue Reports Reconcile all General Revenue Reports Estimate monthly revenue for up-coming fiscal year based on BOE certification Estimate monthly revenue for up-coming fiscal year based on BOE certification Calculate and transfer Constitutional Reserve Fund (Rainy Day Fund) Deposit Calculate and transfer Constitutional Reserve Fund (Rainy Day Fund) Deposit Calculate and set up cash-flow reserve fund for up-coming fiscal year Calculate and set up cash-flow reserve fund for up-coming fiscal year

Constitutional Reserve Fund (Rainy Day Fund) Balanced Budget Act Balanced Budget Act Capped at 10% of certified GR from the previous fiscal year (Actual Collections to GR from the December BOE meeting) Capped at 10% of certified GR from the previous fiscal year (Actual Collections to GR from the December BOE meeting) Deposit any GR surplus over the estimate to reach the cap Deposit any GR surplus over the estimate to reach the cap  Cap this year - $596.6m  Deposit to the Fund - $25m

Constitutional Reserve Fund Deposit 100% Itemized Estimate – Year Ending “Rainy Day Fund” Deposit Actual Collections - Year Ending IF: Actual Collections are more than the 100% Itemized Estimate = Surplus Funds Constitutional Reserve Fund Deposit of Surplus Funds into the Fund UNTIL… …the amount of the Fund equals 10% of the General Revenue Fund certification for the prior fiscal year* *Certification amount is Actual Collections certified at the last December BOE meeting.

Constitutional Reserve Fund Expenditures Allowed Up to 3/8 if up-coming GR certification is less than preceding year’s GR Up to 3/8 if up-coming GR certification is less than preceding year’s GR Up to $10m to support retention of at-risk manufacturing establishments (under specified conditions) Up to $10m to support retention of at-risk manufacturing establishments (under specified conditions) Up to 3/8 for “revenue failure” Up to 3/8 for “revenue failure” Up to ¼ upon declaration of an emergency Up to ¼ upon declaration of an emergency - Governor and 2/3 of both legislative houses, or - ¾ of both houses

Cash Flow Reserve Fund Title 62, Section 10 To make June collections available for July allocations To make June collections available for July allocations Up to 10% of GR certified for up-coming fiscal year Up to 10% of GR certified for up-coming fiscal year Fund to withdraw money if: Fund to withdraw money if: Monthly collections to the General Revenue Fund are lower than the monthly allocations Monthly collections to the General Revenue Fund are lower than the monthly allocations State cannot make full monthly allocations State cannot make full monthly allocations Monthly allocations are 1/12 of total actual appropriations made to each state agency by the legislature Monthly allocations are 1/12 of total actual appropriations made to each state agency by the legislature Fund is closed at the end of the fiscal year - any amount remaining goes to current year GR Fund is closed at the end of the fiscal year - any amount remaining goes to current year GR

Cash Flow Reserve Fund June Collections from Prior Fiscal Year Cash Flow Reserve Fund AllocationsCollections July AugustJuly SeptemberAugust OctoberSeptember NovemberOctober DecemberNovember JanuaryDecember FebruaryJanuary MarchFebruary AprilMarch MayApril JuneMay Withdraw only if monthly collections are below allocations To make July allocations, the State will withdraw from the fund

The Revenue Process