May general revenue climbs, Rainy Day Fund may reach pre-Recession level
Published: June 12th, 2012
May collections to the General Revenue Fund showed strength in key areas, increasing the likelihood that Oklahoma’s Rainy Day Fund will approach the record of almost $600 million hit in Fiscal Year 2009, Secretary of Finance Preston L. Doerflinger announced Tuesday.
“We now have 11 months of revenue in the bank, with almost 10 percent growth while exceeding the official estimate for that period by nearly $347 million,” Doerflinger said. “We are on the cusp of returning to pre-recession levels in our Rainy Day Fund.”
Doerflinger was particularly pleased the General Revenue Fund report showed sales tax receipts climbed by 6.8 percent in May over the same month a year ago, while motor vehicle tax collections were up 10.3 percent for the same period.
“Our recovery has been a broad one, fueled by oilfield activity and growth in manufacturing and other areas, leading to an unemployment rate almost three percentage points lower than the national jobless rate,” Doerflinger said. “Unlike many areas of the country, Oklahomans are making more money and plugging it back into the economy.”
The finance secretary continued, “The turnaround in the Rainy Day Fund picture has been the most remarkable revenue accomplishment since Gov. Mary Fallin took office in January, 2011. We had only about $2 in the RDF then, but were able to deposit $249.2 million into the fund last July. This year’s deposit will dwarf that figure.
“In fact, if June collections surpass the official estimate for that month, we will topple the $596.6 Rainy Day Fund Record set at the beginning of Fiscal Year 2009 before the full force of the national recession began being felt.”
Governor Mary Fallin said, “Eleven consecutive months of increased revenue shows that Oklahoma’s economy is on the right track. Our pro-business policies are leading to sustained economic growth. With a continued focus on policies that create a great business climate, we’ll ensure the private sector continues to grow and expand. It’s also gratifying to see our fiscal stewardship is allowing us to place hundreds of millions of dollars in the state’s Rainy Day Fund that can provide relief should the state experience an economic crisis.”
Total collections to the General Revenue Fund through May were $4.982 billion. This amount was $450.2 million and 9.9 percent above collections for the first eleven months of FY-2011 and $346.7 million, or 7.5 percent above the total estimate for the same period of FY-2012.
Income tax collections also increased in May over the previous year, while gross production taxes on energy were the only major tax category down from a year ago.
“Digging into corporate income tax figures over 11 months, I’m happy to report we have collected almost $265 million in that area, beating the estimate by an astounding 61.5 percent, while beefing up general revenues by more than $100 million,” Doerflinger said.
“Business is doing more than all right in Oklahoma and this is weighty evidence business leaders are in tune with Governor Fallin’s pro-growth policies in several areas, including lower taxes and making government run more efficiently,” the finance secretary said.
“We have major government modernization efforts under way that will benefit all Oklahomans through better delivery of services at a lower cost to taxpayers,” Doerflinger added. “We believe our efforts are creating an optimistic view of the future among both businesses and individuals.’’
Gross production taxes on energy were down in May, partly due to low natural gas prices and partly due to the diversion of $24.9 million to the State Emergency Fund. In all, $92.6 million in gross production surplus taxes were diverted this year as part of supplemental appropriations to meet critical needs.
If the $24.9 million in redirected oil taxes had been counted for this month, year-to-date collections would be 10.5 percent above the prior year and 8 percent higher than the estimate. Totals for the month of May would be $40.5 million or 9.8 percent above last year and $18 million or 4.1 percent above the estimate.
“For purposes of measuring economic activity, it is essential to account for the amount of oil taxes that came in each month before those dollars were redirected,” Doerflinger said. “Otherwise you get a distorted view of total gross production tax figures.”
In May, total collections for the General Revenue Fund, minus the diverted oil revenue, were $430.3 million, an increase of $15.6 million and 3.8 percent from a year ago. The amount collected for the month was $6.9 million and 1.6 percent less than projected.
Additionally, the final payment of $4.680 million was made to the OHLAP fund (otherwise known as the Oklahoma’s Promise Scholarship program), which is not included in monthly revenue totals. This final payment fulfills their total request for the fiscal year of $63.2 million.
Major tax categories in May (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 May was $173.3 million for the FY-2012 General Revenue Fund, which was $30.5 million or 21.3 percent more than prior year collections and $29.1 million or 20.1 percent above the estimate.
Individual income tax receipts of $169 million were $28.6 million and 20.4 percent above the prior year and $30.3 million or 21.9% above the estimate.
Corporate tax collections contributed $4.3 million to the General Revenue Fund for the month, which was $1.9 million or 74.6 percent above May 2011 collections and $1.3 million or 22.5 percent below the estimate.
Sales tax — Sales tax collections in May produced $153.2 million for General Revenue Fund, which was $9.8 million or 6.8 percent more than the prior year and $4.9 million or 3.3 percent above the estimate. Total collections for this source over the first eleven months have exceeded the prior year by 9.3 percent and the estimate by 4.4 percent.
Gross production tax – Because oil collections were diverted this month, gross production tax collections to the General Revenue Fund in May were reduced by the final payment to the State Emergency Fund of $24,880,006.79.
The total collected from gross production oil and gas, excluding the diverted $24.9 million, was $12 million which was $35 million and 74.5 percent below combined oil and gas collections for the same month of the prior year and $47.5 million or 79.8 percent below the estimate.
May tax collections from natural gas contributed $3.2 million to the General Revenue Fund. This amount was down $23.3 million and 88 percent from gas collections a year ago and missed the estimate for the month by $21.2 million or 87 percent.
Excluding the redirected oil revenue, monthly tax collections from gross production oil taxes totaled $8.9 million, were down $12 million or 57.4 percent from collections a year ago and missed the estimate by $26.3 million or 74.8 percent. If the redirected $24.9 million had been included, monthly collections would have been $12.9 million or 62 percent above the prior year and $1.4 million or 4 percent below the estimate.
Without the redirected revenue, the total gross production collections for the first eleven months of fiscal year 2012 have, for the first time this fiscal year, fallen below the same time period of the prior year by $9 million or 2.2 percent and were below the estimate by $46 million or 10.4 percent. When the redirected revenue is included, totals through May remained $15.9 million and 3.9 percent above the prior year but fell below the estimate by $21.1 million or 4.8 percent.
Motor vehicle taxes — This tax source produced $20.2 million from May collections, which was $1.9 million or 10.3 percent above the prior year and $0.9 million or 4.8 percent above the estimate. Total motor vehicle tax collections for the first eleven months of the fiscal year have exceeded the prior year by 14.2 percent and the estimate by 2.2 percent.
Other Revenue — Other revenue produced $71.5 million in May. This was $8.7 million or 13.9 percent above the prior year and $5.8 million or 8.8 percent above the estimate.