General Revenue remains strong, sales taxes growth by double digits again

March collections to the General Revenue Fund indicate strong economic activity is ongoing in Oklahoma, with sales taxes climbing by double digits for the third month in a row.

“Consumer confidence in Oklahoma is still riding high,” said Preston Doerflinger, secretary of finance and revenue in Governor Mary Fallins cabinet.  “This string of unusually strong sales tax receipts is perhaps the best evidence of the state’s economic recovery from the national recession.”

Other signs include the rise in manufacturing jobs over a protracted period, rising wage levels and a relatively low unemployment rate, down to 6 percent, more than 2 percent below the national jobless rate.

“There is a real sense of optimism from Oklahomans who recognize and understand the governor’s efforts to cut taxes and modernize state government,” Doerflinger said. 

January sales tax receipts hit $165 million, a record for any month ever in Oklahoma.  In February, sales taxes came in strong at $145 million and in March the total was $150.9 million, which was 16.8 percent more than the same month in 2011, while beating the official estimate by 11.1 percent.

Total gross production taxes fell off in March because of legislation redirecting $92.6 million in “surplus” oil revenue from the General Revenue Fund to other areas.   Almost $34 million of oil revenue is being sent this month to the state Department of Education for health benefits.  Oil funds will also go to specified programs in May and June.

“Without this $34 million diversion, oil revenue would have largely offset continued weakness in natural gas receipts due to low prices, as has been the case throughout this fiscal year” Doerflinger said. 

“We are just now seeing the effects on state revenue of natural gas prices falling below $3 per million British thermal units a couple of months ago,” Doerflinger continued.  “We expect this slide will continue as gas prices have hovered below and just above $2 in recent weeks.

“On a positive note, the oil patch continues to generate economic benefits for the state as energy companies use enhanced recovery techniques to drill for high-profit oil.  Oklahoma’s rotary rig count rose above 200 this month, an increase of about 40 rigs from a year ago.”

Governor Mary Fallin welcomed the latest General Revenue Fund report, saying: “Oklahoma’s strong sales tax collections, low unemployment rate and sustained job growth show that our economy continues to recover and grow quickly.  While gross production revenue has fallen due to a variety of circumstances, it is clear the state is continuing on an upward trend.  Moving forward, it’s important to build on that momentum by continuing to pursue smart policies that will help to create jobs, including tax reduction.” 

Secretary Doerflinger said he is optimistic the state will continue to trend upward economically and that collections in other areas will counter balance losses to the GRF from depressed natural gas prices, which were set up by an abnormally warm winter.

“We don’t want to minimize the possibility that our economy will be adversely affected if natural gas prices continue to be abnormally low well into the next fiscal year because of oversupply, Doerflinger said.  “We can’t predict the future.  All we can do is to pursue sound economic policies and hope that events nationally and internationally do not hamper our progress in Oklahoma.”

Total collections to the General Revenue Fund through the first three quarters of FY-2012 were $3.9 billion. This amount was $400.4 million and 11.3 percent above collections for the first nine months of FY-2011 and $340.7 million, or 9.5 percent above the total estimate for the same period of FY-2012.  If the $34 million in redirected oil taxes had been included, year-to-date collections would be 12.3 percent above the prior year and 10.4 percent higher than the estimate.

In March, total collections for the General Revenue Fund without the diverted oil revenue were $434.4 million, a decrease of $4.1 million and 0.9 percent from a year ago.  The amount collected for the month was $6.4 million and 1.5 percent less than projected.  

If oil revenue was included, totals for the month would be 29.9 million or 6.8 percent above last year and $27.5 million or 6.2 percent above the estimate.

Major tax categories in March (not including oil revenue) contributed the following amounts to the General Revenue Fund:

Income taxes – The total collected from individual and corporate income taxes in the month of March was $177.2 million for the FY-2012 General Revenue Fund, which was $14.6 million or 9 percent more than prior year collections and $36.7 million or 26.1 percent above the estimate. 

Individual income tax receipts of $114.4 million were $19.2 million and 20.2 percent above the prior year and $19.1 million or 20.1% above the estimate.

Corporate tax collections contributed $62.8 million to the General Revenue Fund for the month, which was $4.6 million or 6.9 percent below March 2011 collections and $17.5 million or 38.8 percent above the estimate.  

Sales tax — Sales tax collections in March produced $150.9 million for General Revenue Fund, which was $21.7 million or 16.8 percent more than the prior year and $15.1 million or 11.1 percent above the estimate.  Total collections for this source over the first three quarters have exceeded the prior year by 9.8 percent and the estimate by 4.1 percent.
Gross production tax – Because all oil collections were diverted this month, the only gross production tax collections to the General Revenue Fund in March were from natural gas.  The total collected from that source was $17.7 million.  This total was $51 million and 74.3 percent below combined oil and gas collections for the same month of the prior year and $59.8 million or 77.2 percent below the estimate.  

Even with this month’s oil revenue being redirected, the total gross production collections for the first three quarters of fiscal year 2012 have exceeded the prior year by $42.3 million or 12.9 percent and have outpaced the estimate by $38 million or 11.4 percent.

March tax collections from natural gas were down 37.2 percent from gas collections a year ago and missed the estimate by 44.4 percent. 

Motor vehicle taxes — This tax source produced $19.7 million from March collections, which was $2.2 million or 10 percent below the prior year and $3.2 million or 13.9 percent below the estimate after exceeding both the prior year and estimate last month.  Total motor vehicle tax collections for the first three quarters of the fiscal year have exceeded the prior year by 14.3 percent and the estimate by 2.4 percent.

Other Revenue — Other revenue produced $69 million in March. This was $12.8 million or 22.8 percent above the prior year and $4.8 million or 7.4 percent above the estimate.