Tax revenues grow, but appropriated funds may tighten
Published: November 7th, 2013
OKLAHOMA CITY – Seemingly conflicting messages are coming from key officials as they prepare for state budgeting decisions in the 2014 legislative session that starts in February, yet each of them is drawing from the same mosaic of economic data.
In his regular monthly briefing for Capitol reporters, State Treasurer Ken Miller said last month’s gross tax receipts demonstrate the state economy is still strong, but Senate President Pro Temp Brian Bingman, R-Sapulpa is fretting over a possible spending pinch.
Meanwhile, Speaker of the House T.W. Shannon, R-Lawton, contends that a modest income tax cut scheduled for 2015 should have been implemented this year – and believes that might have triggered a supply-side positive in higher total revenues for the government.
Depending on the way one crunches the numbers, they are all telling the truth.
In Miller’s area of governance, the monthly “gross receipts to the state treasury” report found year-over-year growth of seven percent in October. That was third highest monthly boost in the past year. For context: the past year has seen the largest growth in government revenue since 2008 and the start of the Great Recession.
Miller said, in his customary memo to Oklahoma Watchdog and other news organizations, “Oklahoma’s economy appears resilient and is not yet showing negative effects of the 16-day shutdown of the federal government and the last-minute avoidance of a debt ceiling crisis. All major tax categories showed growth, indicating the state economy is continuing to expand.”
The gross production tax on oil and natural gas brought in 16 percent more last month than was the case a year ago – the sixth straight month the often-volatile revenue stream increased.
All categories of state tax collections increased, except for the corporate income levy. That dropped off due to amended tax returns for past years, leading to an $11 million payout in refunds.
An economist by avocation who still teaches at Oklahoma Christian University, Treasurer Miller said he is worried about several issues, most of them related to national policy. In the walk-up to full implementation of “ObamaCare,” families and small businesses are getting notices of lapsed health insurance coverage, and Miller predicts that health care turmoil will impact economic data immediately in the New Year.
He pointed out that the closely-watched state Business Conditions Index slipped “further below growth neutral” last month, with the survey finding corporate managers expect lower production, sales, inventories and employment in the near-term.
Analysts are anticipating adjusted unemployment data on Nov. 22, from the Oklahoma Employment Security Commission. The Sooner State has enjoyed one of the nation’s lowest unemployment rates for several years.
As money the Legislature actually spends and directs through appropriations, Sen. Bingman points out that general revenue (GR) fund allocations for the first quarter of the current fiscal year are 8 percent below projections, and four percent under last year’s pace.
For the first quarter, GR funds are down about $113 million.
Still, in a Tulsa speech, Bingman said those revenues streams may rally this winter and spring.
Speaker Shannon had a different take on the GR fund, saying, “The tax cut we passed — we delayed it a year. I am confident if we had not done that we would have seen an increase in revenue.”
The two legislative leaders spoke Wednesday at a luncheon hosted by the Tulsa Regional Chamber of Commerce.
The framework for spending decisions will come early in the 2014 legislative session, when the governor’s staff submits an executive budget.
In the first three years of Mary Fallin’s tenure in the executive office, state spending has increased around $800 million. Some analysts project her first four years in the governor’s mansion will yield over $1 billion in increased spending.
You may contact Pat at Patrick@capitolbeatok.com