OKLAHOMA CITY (AP) - With the unprecedented possibility of a federal government default, state officials in Oklahoma acknowledge they have no contingency plan in place if the billions of dollars in federal funds flowing into the state were to suddenly stop.
As debate raged in Washington on raising the nation's debt limit before Tuesday's deadline, little information has been provided to states on how the government will decide which bills to pay if the borrowing limit isn't increased.
"We have a lot of concerns, because no one knows what the true impact of a default would mean," said State Treasurer Ken Miller, an economist who returned late last week from a trip to Washington. "One thing we know for certain is that the result would be bad."
Administration officials say without an increase in the debt limit, the government will not be able to pay all of its bills, and U.S. Treasury Secretary Timothy Geithner has warned that a federal default could be catastrophic for an economy still recovering from the worst recession in decade.
In Oklahoma, state officials say there are two general areas of concern: the estimated $4 billion in government-backed securities held by the state and the billions of federal dollars sent to the state every year in the form of social security or federal wages paid to individuals or funding for state agencies.
"At this point, we're still dependent on Washington for a solution to this crisis," Preston Doerflinger, director of the Office of State Finance, said in an e-mail to The Associated Press. "Oklahoma agency officials who have contacted their federal counterparts have gotten very little information on how states could deal with a potential cutoff of federal funding.
"We've tried to think of any contingency efforts to ease the disastrous effect of a sudden stoppage of federal payments to the state and our citizens, but it's not as if we have a large pot of money available to make a difference."
Officials with the Oklahoma Health Care Authority, which administers the state's Medicaid program, said they are preparing for the possible suspension of federal funds if Congress doesn't meet Tuesday's deadline. The authority, which uses about $57.5 million each week in federal funding, has only enough to make its next weekly payment cycle, said CEO Mike Fogarty.
"In the event the federal government's Aug. 2 deadline is not met, our agency may not be able to meet the high standards we maintain to quickly pay our claims," Fogarty said in a statement. "We hope this temporary problem will not affect our providers' decision to see our members. They can be assured we will be doing everything in our power to make sure SoonerCare members continue to receive the high quality services to which they are accustomed."
The Oklahoma Department of Transportation, which receives federal funding to pay for road and bridge improvements, would have to alter its eight-year plan for road improvements if there is any change in the amount of federal money it receives, said agency spokeswoman Terri Angier.
"All we know at this point is that all the decisions are having to be made at the national level," Angier said. "What we know is that if transportation funds are impacted in any way … yes, it will impact our long-term plan for transportation."
Angier said funding already is in place for any project for which contracts already have been let, but any future projects could be stalled.
Although Oklahoma's economy has been steadily improving since the recession, Miller said a decrease in federal funding could put an end to that.
"If 40 percent of that spending, or a large percent of that spending, is yanked back, that's going to have a significant impact on the recovery that we've been enjoying," he said. "We've been saying for a couple of months now that the biggest threat to Oklahoma's recovery would be Washington, and in my opinion, that's still the case."