Oil revenue is coming in at a faster pace than last year, providing an unexpected boost to General Revenue Fund collections, Office of State Finance (OSF) Director Preston Doerflinger said Tuesday (November 15) as he released the monthly revenue report from his office.
“We saw increases in all major sources of revenue in October and the General Revenue Fund received a deposit from gross production oil taxes two months earlier than occurred in 2010,” Doerflinger said. “Increased production in the oil patch, combined with the addition of thousands of manufacturing jobs in the last several months, are among the main reasons our economy is performing stronger than most other states.”
The state’s unemployment rate stood at 5.9 percent in September, compared with a national rate of 9.1 percent. Heightened activity in the oilfields is illustrated by the fact that, during the first four months of the 2012 fiscal year, the state had 48 to 64 more rigs operating compared with the same four months of 2011.
Total collections to the General Revenue Fund (GRF) through the first four months of Fiscal Year 2012 were $1,731.8 million. This amount was $167.4 million and 10.7 percent above first four months collections for FY 2011 and $97.1 million, or 5.9 percent above the total estimate for the same period of FY 2012.
Total collections for the General Revenue Fund in October were $408.1 million. This amount was $24.3 million and 6.3 percent above collections for the same month in 2010 and $9.3 million or 2.3 percent above the monthly estimate for 2011.
The GRF received a $7.6 million deposit from oil gross production taxes in October after the cap of $150 million was reached for funds earmarked principally to education.
After the cap is hit, 81.4 percent of oil taxes go into the GRF. A year ago, a dramatic rise in oil prices led to the cap being reached in December, earlier than expected. This year, the cap was reached four months earlier than anticipated.
“You can’t overestimate the impact of a boon in oil drilling as it leads to increases in income, sales and motor vehicle tax collections, as well as severance taxes,” said Doerflinger, who runs OSF and is also Cabinet Secretary of Finance. “But it’s important to remember that pending energy industry tax rebates and credits this fiscal year will substantially reduce the amount of money that would normally flow into the General Revenue Fund.
“Overall, we are expecting that Fiscal Year 2013 budget will be relatively flat, which is an improvement over the recent series of revenue shortfalls linked to the national recession. If oil revenue collections remain strong and natural gas receipts pick up, our budget outlook could improve. We’ll just have to wait and see.”
In comments sent to CapitolBeatOK, Governor Mary Fallin said, “Oklahoma’s economy and tax revenues have both been growing steadily, and that’s great news for the state. The pro-business, pro-growth policies we have been pursuing are paying off. Additionally, the energy sector in Oklahoma continues to thrive, creating private-sector jobs while boosting revenues for the state. Moving forward, the Oklahoma First Energy Plan will continue to help build that momentum.
“Despite the recent growth and upwards trends, however, we’re still feeling the effects of the recession. Revenue continues to be below 2008 pre-recession levels, and one-time funding sources that previously have been used to balance the budget are no longer available. That means agencies will have to continue to work on maximizing efficiency and doing more with less.”
General Revenue Fund collections for the major tax categories in October were:
Income taxes – The total collected from individual and corporate income taxes in the month of October was $166.7 million for the FY-2012 General Revenue Fund, which was $9.5 million or 6.1 percent more than prior year collections and $20.4 million or 13.9 percent above the estimate.
Individual income tax receipts of $154.2 million were $2.3 million and 1.5 percent above the prior year and $13.6 million or 9.7 percent above the estimate.
Corporate tax collections for October were $12.5 million, which was $7.2 million and 136.5 percent above the prior year, as well as $6.8 million and 118.8 percent above the estimates.
Sales tax — Sales tax collections produced $147 million for the General Revenue Fund, $12.8 million or 9.5 percent more than the prior year and $7.5 million or 5.4 percent above the estimate.
Gross production tax – Total gross production tax collections from natural gas and oil for the month were $32 million. This total was $10 million and 45.6 percent above collections for October of the prior year and $1.1 million and 3.5 percent above the estimate.
October taxes on natural gas accounted for $24.4 million in General Revenue Fund receipts, which was $2.4 million or 10.9 percent above the prior year and $6.5 million or 21.1 percent below the estimate.
Gross production oil tax collections to the General Revenue Fund for October were $7.6 million. No collections were deposited into the General Revenue Fund from this source in October of last year and none were estimated to be received in the current fiscal year until February. Overall, gross production oil collections to all funds for July through October are up $58.1 million or 42.8 percent over collections from the same time period of the prior year.
Motor vehicle taxes — This tax source produced $17.1 million, which was $4.1 million or 31 percent above the prior year and $820,000 or 5 percent above the estimate.
Other Revenue — Other revenue produced $45.3 million in October. This was $12.1 million or 21.1 percent below the prior year and $20.5 million or 31.1 percent below the estimate.