Legislation intended to reduce the state’s long-term fiscal burden and protect the viability of pension systems was approved by the Senate on Tuesday.
Senate Bill 1264, authored by Sen. Dan Newberry, will guarantee a percentage of spillover funding is dedicated toward paying the state’s pension liability debt.
The measure would take effect after the state’s Rainy Day Fund is full, ensuring that 30 percent of any spillover funding is applied to the reduction of pension liability debt. Once pension liability is funded at 80 percent, 30 percent of any spillover funding beyond that point would be dedicated to reducing the state’s bonded indebtedness. The remaining 70 percent, if appropriated by the Legislature, could only be used for one-time or nonrecurring expenditures.
“By passing this bill, we have taken a strong step to avoid the troubles faced by states that have failed to control their long-term debt and have seen capital flee as a result,” said Newberry, R-Tulsa. “In order to safeguard our future, the Legislature must establish the reduction of pension liability debt as a top priority. I’m confident this proposal places state government on a path to a more secure future.”
Newberry said SB 1264 ensures the state must address prior obligations before new spending is considered.
“As a direct result of unsustainable pension and debt policies, states such as Illinois have raised taxes to a point where job creators are fleeing the state,” Newberry said. “In our effort to build a more prosperous Oklahoma and sustain our momentum as one of the nation’s leaders in job creation, we must make debt reduction a priority. I’m pleased my colleagues understand the importance of this issue.”