OKLAHOMA CITY (AP) — Gov. Mary Fallin said Monday that state agency heads should be looking for ways to save money in next year's budget, given reports of lackluster tax collections to Oklahoma's general revenue fund and the more than $60 million increase in mandatory health care spending the state will bear next year.

Oklahoma's share of funding for Medicaid is increasing as a result of an overall increase in the state's per-capita income, and state health officials also predict a sharp increase in Medicaid enrollees under mandates for coverage under the federal health care law. Fallin said additional state revenue also will need to be dedicated to the Department of Human Services to comply with a settlement agreement that required improvements to the state's child welfare services.

"Those are three areas that we know we will have some mandatory cost increases that will affect our budget," Fallin said. "We are warning our state agencies to not expect a big budget increase, because we have a lot of obligations that are already occurring either because of federal law or changes in formulas, and we need to continue to be diligent on saving money, on finding ways to be efficient and effective."

Oklahoma's economy continues to grow, but collections to the state's general revenue fund that's used to fund state government suggest a relatively flat budget for the next fiscal year that begins July 1. That's partly because of massive tax rebates to the oil and gas industry that the state is paying for various drilling exemptions, and about $60 million in income tax collections next fiscal year that will be diverted to pay for renovations to the state Capitol.

A report on November collections to the state's general revenue fund won't be released until next week, but collections for the first four months of the current fiscal year trail both the official estimate and collections from the same time in the previous year.

"The revenues have been coming in good and strong, and we're certainly seeing growth in our economy, but yet there are a lot of new expenses to the state budget," Fallin said.

Fallin said that while education and public safety both remain a priority for her administration, she said it is too early to tell if additional funding will be available to spend on public schools or overcrowded prisons.

"There are a lot of revenue requests coming in from agencies, whether it's education or public safety entities, and those are certainly areas that we're going to look at and consider, but it all depends on what type of revenues we have coming in to our state," Fallin said.

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Sean Murphy can be reached at https://twitter.com/apseanmurphy

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