OK General Revenue Fund: In May, after refunds, corporate income tax yields no $$
Published: June 11th, 2014
OKLAHOMA CITY — General Revenue Fund (GRF) collections in May fell 5.3 percent short of the official estimate after another month of lower than projected corporate income tax collections.
As state government’s main operating fund, the GRF is the key indicator of state government’s fiscal status and the predominant funding source for the annual state budget. Made up of nearly 70 revenue sources, the GRF is where all taxes flow except those dedicated to specific programs.
May GRF collections of $449.5 million were $5.9 million, or 1.3 percent, below prior year collections and $25.3 million, or 5.3 percent, below the official estimate upon which the Fiscal Year 2014 appropriated state budget is based. FY 14 year-to-date GRF collections total $5 billion, which is $9.1 million, or 0.2 percent, below prior year collections and $251.8 million, or 4.8 percent, below the estimate.
May’s decline was driven by continued shortfalls in corporate income tax collections to the GRF. Oklahoma collected $9.1 million in corporate income taxes in May, but none of it reached the GRF because refunds totaled $15.4 million. As a result, May became the third month this fiscal year during which the GRF received no corporate income tax revenue.
“It’s been a wild year for the corporate category,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger. “Corporate is always volatile, so no one should rush to conclusions or point fingers at businesses for following tax law. The net annual growth in every other major category shows our economy is still strong and further underscores the noneconomic nature of the isolated revenue issues seen elsewhere.”
With one month remaining in FY 14, combined sales, gross production and motor vehicle tax collections to the GRF are above prior year collections by $183.7 million. However, those gains have been largely offset by corporate income tax declines. YTD corporate income tax collections to the GRF total $246.4 million, which is $135.4 million, or 35.5 percent, below prior year collections and $151 million, or 38 percent, below the estimate.
“Other states are reporting similar corporate declines and many of our colleagues in those states share cautious optimism that at least part of this is temporary,” Doerflinger said. “States are seeing inflated effects of federal tax law changes that should even out over time. On top of that, Oklahoma may be seeing some level of natural correction in corporate collections this year after having our strongest year of the millennium for corporate collections last year. A lot of factors are hitting at once, so we should be cautious in our assessments.”
At February’s Board of Equalization meeting, Gov. Mary Fallin asked Doerflinger and Treasurer Ken Miller to develop recommendations to improve state revenue forecasting. The recommendations will be presented to the board at its next meeting June 16.
“The state’s revenue forecast was way off this year and I believe we’ve identified some practical ways to remedy that in the near future,” Doerflinger said.
Doerflinger is director of the Office of Management and Enterprise Services, which issues the monthly GRF reports.
Major tax categories in May contributed the following amounts to the GRF:
•Total income tax collections of $132.4 million were $49.1 million, or 27 percent, less than prior year collections and $55.5 million, or 29.5 percent, below the estimate. The entire GRF contribution was from individual income tax collections, which were $43.9 million, or 24.9 percent, less than prior year collections and $49.8 million, or 27.3 percent, below the estimate. Corporate income tax collections were entirely paid out in refunds.
•Sales tax collections of $170.1 million were $12.4 million, or 7.9 percent, more than prior year collections and $1.1 million, or 0.7 percent, above the estimate.
•Gross production tax collections of $55.2 million were $25.7 million, or 87.4 percent, more than prior year collections and $31 million, or 128.5 percent, above the estimate. Natural gas collections of $18.1 million were $16.8 million, or 1,222.9 percent, above the estimate. No natural gas collections were deposited into the GRF for May of 2013. Oil collections of $37 million were $7.6 million, or 25.8 percent, more than prior year collections and $14.3 million, or 62.6 percent, above the estimate.
•Motor vehicle tax collections of $18.4 million were $1.6 million, or 9.2 percent, more than prior year collections and $0.7 million, or 3.7 percent, below the estimate.
•Other revenue collections of $73.5 million were $3.5 million, or 5.1 percent, more than prior year collections and $1.2 million, or 1.6 percent, below the estimate.