Senator Gumm Files Legislation to Increase State Emergency Fund

November 13th, 2009

 OKLAHOMA CITY – State Sen. Jay Paul Gumm has filed legislation that would allow Oklahoma voters to increase the state’s emergency fund, also known as the Rainy day Fund.

 

Currently, the maximum amount that can be deposited is equal to 10 percent of the previous year’s collections.  Under Senate Joint Resolution 45, voters would be able to increase that amount to 15 percent.

 

“People need to remember that we didn’t always have a Rainy Day Fund—the folly of failing to save money during good times was one of the many hard lessons we learned from the oil bust in the 1980’s,” explained Gumm, a Democrat from Durant.

 

“During this crisis, we are seeing that a 10 percent cap is too low.  Having a larger emergency fund would offer greater protection for the services millions of Oklahomans need.”

 

The Rainy Day Fund was approved in 1985, but in subsequent years, it was regularly tapped to fund what many critics contended were non-emergency budget items.  In 2003, Oklahoma faced what was then called the worst economic crisis since statehood, and faced a shortfall of approximately $700 million.

 

At the time the Rainy Day Fund had a balance of about $70 million.  Lawmakers and the governor used all but $100,000 to balance the budget.

 

In 2004, citizens approved measure to strengthen guidelines on how the emergency fund could be used.  The fund has not been tapped since then, but under current law, the special savings account could not exceed the $600 million level.

 

“The hard truth is this current recession far exceeds what the nation experienced in 2003.  Even if Oklahoma used the entire emergency fund, it would not be enough to prevent cuts in critical services.  Increasing the cap would enable us to have more funds set aside for difficult economic times.”

 

Gumm said he was hopeful both parties would work together to approve SJR 45 and allow voters to decide whether to raise the Rainy Day cap in 2010.

 

“If we don’t learn from the past, we’re doomed to repeat it.  If anything good came out of the oil bust, I’d say creating the Rainy Day Fund was one of the very best ideas to take shape,” Gumm said.

 

“Even in the midst of this recession, we have an opportunity to make decisions that will help us to emerge even stronger than before.  I believe raising the cap on the Rainy Day Fund will help ensure Oklahoma is even better prepared for the inevitable ups and downs in our economy.”

 

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