Oklahoma state Treasurer Scott Meacham does not anticipate a special legislative session before year’s end, as mandated government budget cuts appear to be sufficient to avoid deficit spending.
While the state government seems to be working its way through the current crunch, Meacham said he believes it may be time for the state to examine closely where government taxes “come from, and why.”
That could lead to consideration of new tax structures because of over-reliance on the volatile gross production tax on oil and gas.
Meacham’s comments came during an interview with Tulsa Today.
Meacham announced last week that September tax revenues were enough to cover the reduced spending obligations Oklahoma state government faces. As a result, the five percent cut in allocations for all state agencies, started in August, continues.
In sum, the state’s first quarter collections are 25 to 30 percent below estimates used to set this year’s budget.
In September, payments of estimated taxes provided a small income boost to the state, but not nearly enough to offset the broader drop over prior projections. Meacham told Tulsa Today he sees “some hopefulness” in possible natural gas rice increases, and subsequent revenue boosts for the state.
However, the cautious treasurer concluded “If you look at the whole picture, the reality is we’re about where we were last month.”
Oklahoma fits into a national picture, as the country enters an economic recovery less robust than experienced in the aftermath of other post-World War II recessions.
Indiana Governor Mitch Daniels, speaking in August at the national meeting of CapitolBeat, the association of state government reporters and editors, said his fiscal analysts were anticipating that even the emerging economic recovery will not restore state government revenues to pre-recession levels. In fact, he said then and in a September 3 Wall Street Journal commentary, government revenue would likely remain below 2007 levels until 2011 or later.
As reported for Tulsa Today last month, and printed in The City Sentinel (Sept. 30), some Oklahoma state fiscal policy analysts have been reaching a similar if not quite identical conclusion about the Sooner State.
The analysis was also developed in an essay for this month’s issue of Perspective, the monthly magazine of the Oklahoma Council of Public Affairs (OCPA).
At least some agreement among “numbers crunchers” now centers on this point, with both the liberal-oriented Oklahoma Policy Institute and the conservative-oriented OCPA projecting years of depressed state tax revenues. The groups differ, of course, in possible policy responses flowing from that conclusion.
David Blatt of the Oklahoma Policy Institute, in an Oct. 15 article by Barbara Hoberock of the Tulsa World, “said it is likely that [state] revenues won’t return to the levels seen in 2008 until 2012 or 2013.”
In Monday’s interview with Tulsa Today, Treasurer Meacham responded to these analyses concluding that government revenues will remain below the 2008 levels for several years.
Reflecting on the matter, he said: “I don’t know about that. It depends on the price of natural gas this winter. If the winter is rough in the Northeast U.S., that price could go up and it would provide some revenue boost for Oklahoma. Any recovery in the price of natural gas could bring a revenue boost sooner than those analysts are projecting.”
Meacham and his boss, Gov. Brad Henry, met with legislative leaders on Monday. The treasurer told Tulsa Today, “I think we can hang in there until the regular session, and won’t have to access the Rainy Day Fund until then.”
Meacham said he hopes the current revenue crunch will trigger discussions on the state’s tax structure, including a focus on “our tax dependence on the gross production tax, a very volatile source of revenue.”
The regular legislative session will begin in early February, although Interim Studies on various topics are well under way at this writing, and the bill writing process has begun.