CapitolBeatOK Staff Report
Oklahoma consumers punched it up a notch in late December and early January, as the state set an all-time monthly record for state sales tax collections, Finance Director Preston Doerflinger announced Tuesday (February 14).
Sales tax collections to the state’s General Revenue Fund (GRF), the main source of state funding, totaled $165 million in January, Doerflinger said as he released February’s GRF report.
“This is the largest amount of money we have ever collected from sales taxes in any month of any year ever in Oklahoma,” Doerflinger said. “Consumer confidence appears to be high early in the second half of the 2012 fiscal year.”
Total collections to the General Revenue Fund through the first seven months of FY-2012 were $3,223.1 million. This amount was $368 million and 12.9 percent above the first seven months’ collections for FY-2011 and $304 million, or 10.4 percent above the total estimate for the same period of FY-2012.
State sales tax collections recorded for January were almost 12 percent higher than they were for the same month a year ago.
“Economists always look keenly at sales taxes in gauging economic growth, so this is encouraging,” said Doerflinger, who noted the record collections included spending in the days just before and after Christmas.
Doerflinger continued, “Our economic recovery from the recession has not missed a beat in the first half of the fiscal year and is off to a good start in the second half. Total collections for the first seven months exceeded the estimate by double-digits.
“So this seems like the perfect time to implement the governor’s tax-cut plan, which will generate more economic activity because the vast majority of Oklahomans will have more money to spend and the state has another arrow in its quiver to get the attention of company executives looking for site locations.”
Governor Mary Fallin said of the GRF report: “It is great news that sales tax receipts reached an all-time high and our economy is continuing to grow. I am encouraging legislators to see this as an opportunity, not to grow government or to spend more on government bureaucracy, but to pursue a bold plan to cut taxes and allow Oklahomans to keep more of their hard earned money.
“By passing the tax reduction plan I outlined last week, Oklahoma can continue to build on our recent economic successes by creating a tax climate more conducive to business growth, job creation and statewide prosperity. Moving forward, we must also continue to right-size state agencies and to carefully prioritize spending.”
Doerflinger said while the state economy is coming back stoutly, he has one area of concern—natural gas prices.
“While we have had reports of companies reducing gas wells because of low prices, this is being offset to some degree by high oil prices. In fact, the total rig count in the Oklahoma oil patch was much higher in January than the same month a year ago as producers employ enhanced drilling techniques to gather oil, liquefied gas and other profitable forms of energy.”
Severance tax collections from oil continue to pour money into the General Revenue Fund and most experts believe crude prices will remain strong through the 2012 and 2013 calendar years. Oil helped total gross production taxes to exceed the estimate by 124.8 percent in January, even though gas prices were depressed, partly due to unseasonably warm weather.
According to Baker-Hughes, the average rig count in Oklahoma was 195 in January as oil had an average price of $96.32 per barrel. Energy companies had 121 oil rigs in operation in January, while the gas rig count dropped to 74 from 94 in December. That’s just the opposite of the situation a year ago, when there was colder weather and 111 gas wells and 54 oil wells were operating.
“I think it would be prudent to lower the initial projection for natural gas when the Equalization Board meets February 21 to make the final estimate the governor and Legislature will have for formulating the Fiscal Year 2013 budget,” Doerflinger said.
“The good news is I think that because of the over-all strength in the Oklahoma economy, the Equalization Board will up the ante on revenues available for the Legislature to appropriate,” the secretary of finance added.
In January, total collections for the General Revenue Fund were $524.9 million, an increase of $34.6 million and 7.1 percent from a year ago. The amount collected in January was $64.9 million and 14.1 percent more than projected.
Major tax categories in January contributed the following amounts to the General Revenue Fund:
Income taxes - The total collected from individual and corporate income taxes in the month of January was $235.4 million for the FY-2012 General Revenue Fund, which was $26.6 million or 12.7 percent more than prior year collections and $36.3 million or 18.3 percent above the estimate.
Individual income tax receipts of $212.9 million were $19.1 million and 9.9 percent above the prior year and $23.6 million or 12.4 percent above the estimate.
Corporate tax collections contributed $22.5 million to the General Revenue Fund for the month, which was $7.5 million or 49.9 percent above January 2011 collections and $12.8 million or 131.6 percent above the estimate.
Sales tax - Sales tax collections in January produced the largest deposit to the General Revenue Fund, as well as the largest total collections amount, ever recorded from this tax type. $165 million was deposited into the General Revenue Fund, which was $17.2 million or 11.7 percent more than the prior year and $11.3 million or 7.3 percent above the estimate.
Gross production tax - Total gross production tax collections from natural gas and oil for the month were $53.2 million. This total was $3.8 million and 6.6 percent below collections for January of the prior year and $29.5 million and 124.8 percent above the estimate. Total gross production collections for the first seven months of fiscal year 2012 have exceeded the prior year by $92 million or 44.4 percent and have outpaced the estimate by $91.1 million or 43.8 percent.
January tax collections from natural gas accounted for $19.8 million in General Revenue Fund receipts, which was $5.5 million or 21.6 percent below the prior year and $3.9 million or 16.3 percent below the estimate.
Gross production oil tax collections to the General Revenue Fund for January were $33.4 million. This amount is $1.7 million or 5.4 percent above prior year collections for the month. No collections were expected to be deposited into the General Revenue Fund for the month of January.
The first $150 million in oil revenue is earmarked -- primarily to three education funds. Collections hit that benchmark earlier than expected, allowing gross production oil tax revenue to flow into the General Revenue Fund.
Motor vehicle taxes -- This tax source produced $17.8 million, which was $0.5 million or 2.9 percent above the prior year and $3.4 million or 23.3 percent above the estimate.
Other Revenue -- Other revenue produced $53.5 million in January. This was $5.9 million or 10 percent below the prior year and $15.6 million or 22.6 percent below the estimate.