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Energy-Dependent States Debate Last-Minute Budget Deals

Several natural resource-dependent states are still debating spending plans for the 2016-17 school year. Last week, legislatures in Alaska, Louisiana, Oklahoma and West Virginia all agreed on budgets that will pull millions from their rainy day funds but wouldn't raise taxes.  It remains to be seen whether all of the budgets will be signed into law by the states' governors.  

I wrote in January about how oil industry woes have impacted these states' budgets this year. 

Politicians were faced with either raising income or sales taxes, closing tax loopholes, making dramatic cuts to state agencies' budgets, or pulling from their rainy day fund. With the hopes that oil revenue will make a rebound in the coming years, most of the states avoided tax increases.  

In Louisiana, which faced a $600 million shortfall because of a loss in oil revenue and a series of untimely tax cuts, legislators will send to Democratic Gov. John Bel Edwards a $26 billion budget that results in $44 million in cuts to the state's K-12 school system. (The state spends around $3.4 billion a year on K-12 schools.) That could mean teacher layoffs, cuts to programs, and cuts to the state's department of education, several education leaders there predict.  An effort to shutter the state's education department to spare the state's schools failed early on this session. Edwards released a statement Sunday saying he wasn't pleased with the budget and called for a second special session.  

In Oklahoma, legislators managed to avoid any major cuts to the state's school system by pulling more than $140 million from its rainy day fund and $335 million from other bond accounts.  They tossed an initiative from Republican Gov. Mary Fallin to institute a cigarette tax to pay for $3,000 teacher raises. The state faces a large teacher shortage, and several education organizations are leading an initiative to raise taxes by a penny to provide teachers with a $3,000 raise. The state spends around $1.8 billion a year on K-12 schools. Fallin, who said she was disappointed with some aspects of the budget, is expected to sign it into law.  

Alaska legislators passed a budget that pulls more than $3.2 billion from its rainy-day fund to keep education spending flat. That means the state shelved an Democratic initiative to increase per-pupil spending. Alaska Republican Gov. Bill Walker has not indicated whether he will sign the budget proposal.  

Finally, West Virginia's Democratic Gov. Earl Ray Tomblin  said he will veto that state legislature's $4 billion spending plan that would pull more than $182 million out of its rainy-day fund to fill a $270 million budget gap caused by the collapse of the state's coal-mining industry. The state's K-12 system, which in recent years has undergone a decline in enrollment, would have taken a 2 percent hit to its $1.1 billion spending plan.   


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