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Oklahoma AG says rainy day fund borrowing OK

State finance officials can borrow money from Oklahoma's Constitutional Reserve Fund, Attorney General Mike Hunter wrote in an opinion released Monday.

So far this budget year, Finance Secretary Preston Doerflinger has borrowed the entire $240.7 million balance from the account, also called the rainy day fund, and used the money to pay the state's expenses. That included monthly disbursements to state agencies that lawmakers approved during last year's appropriation process.

Doerflinger asked Hunter to opine on whether the action is legal, considering the Oklahoma Constitution gives the finance secretary power to transfer money from state funds to cover expenses when revenue is down.

Hunter wrote that the transfers are OK if they are truly temporary; the Constitution requires all the money to be paid back at the end of the fiscal year. 

However, the attorney general also wrote that money can't be withdrawn from the fund to avoid a revenue failure declaration.

"Such temporary transfers are not made to avoid declaring a revenue failure and reducing appropriations as a result of a revenue failure, but instead such transfers are made based on a reasonable estimate that increased revenues later in the fiscal year will be available to both satisfy monthly allocations without reductions and repay the Constitutional Reserve Fund [...]"

- Oklahoma Attorney General Mike Hunter

Hunter also warned that borrowing cannot interfere with the Legislature's ability to appropriate money from the rainy day fund. During the 2017 session, lawmakers authorized two supplemental appropriations that had to wait until money was returned to the fund. Even then, it appears Doerflinger's actions did not stray beyond the boundary now set by the attorney general.

Doerflinger said he expects to refill the $176,352,678 remaining balance owed to the fund with June tax revenue.

"Hopefully this opinion helps settle the issue and will help leaders focus on the state’s revenue problem that forced us to borrow from the rainy day fund to make allocations to state agencies," Doerflinger wrote in an emailed response. "An over-reliance on one-time funding sources and the absence of significant structural budget reform promise to make the upcoming fiscal year another challenge."

Dale Denwalt

Dale Denwalt has closely followed state policy and politics since his first internship as an Oklahoma Capitol reporter in 2006. He graduated from Northeastern State University in his hometown of Tahlequah. Denwalt worked as a news reporter in... Read more ›