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Oklahoma budget shortfall nearly $900 million: report

(Reuters) - Oklahoma’s budget deficit will be $868 million next year, higher than recent estimates as sustained low oil prices, tax cuts and corporate tax credits continue to weigh on the state’s finances, the Oklahoman newspaper reported on Tuesday.

Governor Mary Fallin estimated just days ago that the state would face a $600 million gap for the 2018 fiscal budget year, but Finance Secretary Preston Doerflinger told reporters at a news conference on Tuesday that the hole will be deeper.

A $900 million budget shortfall would represent nearly 15 percent of its expected $6 billion in spending power.

With less money to spend, state lawmakers could choose to make cuts to government services like education and health care or raise taxes.

“I think it’s important for everybody to realize you’re not cutting your way out of this situation,” Doerflinger said. “We have to have a serious conversation about revenue.”

A representative for Doerflinger could not be reached for comment.

The state’s Board of Equalization, which is responsible for tax administration, will meet Wednesday to provide lawmakers with figures about how much the state will have to spend next year.

Like other states including Alaska and Louisiana that rely on the oil and gas sector for employment and tax revenues, Oklahoma is facing fiscal pressures that defy quick fixes.

In 2014, the collapse of oil prices contributed to a massive $1.3 billion budget deficit, which led the state to declare “revenue failure” in 2015, which triggered automatic across the board spending cuts.

The Republican-controlled state legislature earlier this year passed a series of Fallin-backed reforms to its bulging prison system aimed at reducing costs but balked at her proposal to approve a new tobacco tax and other revenue-raising proposals.

Reporting by Rory Carroll in San Francisco; Editing by Lisa Shumaker