OKLAHOMA CITY (AP) — Oklahoma’s economy is showing positive signs, but declining revenue from oil and natural gas production continues to place a drag on revenue flowing into state coffers, Treasurer Ken Miller said on Thursday.
The latest figures on gross receipts show collections of taxes on oil and gas production in June dropped more than 42 percent compared with June 2011. It was the seventh consecutive month that gross production tax collections fell compared with the same month of the previous year. When combined with a 5.4 percent drop in personal income tax collections in June, the overall collections were down about 0.6 percent, Miller noted.
“Reductions in gross production and personal income tax collections combined to set our monthly number back, but other economic indicators such as sales receipts, a low unemployment and solid corporate profits continue to show that we are looking forward to expansion in the coming months,” Miller said. “While the current price environment reflecting Oklahoma’s energy industry is less than optimal, I think we can see from these numbers that there are still very many reasons to remain optimistic about our state’s economy.”
While personal income tax collections were down, overall gross income tax collections were up slightly in June, about 0.7 percent, as a result of corporate income tax collections jumping nearly 20 percent, compared with the same month last year.
Motor vehicle tax taxes produced a 2.5 percent boost over June 2011, and sales tax collections jumped more than 12.5 percent, or $40 million, “showing that Oklahomans are generally upbeat about the economy and they’re increasing their purchases,” Miller said.
Low natural gas prices have consistently resulted in lower-than-expected state revenue collections this year, but those have been offset by collections from oil production. As Miller noted, a year ago Oklahoma had 43 active oil drilling rigs and 130 natural gas rigs. Last week, of the 200 active rigs in Oklahoma, 154 were oil rigs and 46 were natural gas.
“That’s a dramatic shift away from natural gas into oil, and now oil prices are coming down a bit,” Miller said.
The budget for the fiscal year that began July 1 is based on estimates that project oil at $96.62 per barrel and natural gas at $3.64 per 1,000 cubic feet, or mcf, according to the Office of State Finance.
Benchmark U.S. crude lost 44 cents on Thursday to end the day at $87.22 per barrel in New York — a slight drop following a jump of nearly $10 a barrel in less than a week. Natural gas rose by 4.6 cents to finish at $2.9450 per 1,000 cubic feet.
Meanwhile, state finance officials still are projecting a significant deposit into the state’s constitutional reserve, or Rainy Day Fund, this month. Oklahoma already has $249.2 million in the account and is expected to add $340 million if revenue estimates hold.
Jill Geiger, the Office of State Finance’s state budget director, said the exact amount of the deposit into the reserve fund won’t be determined until the final revenue figures from the 2012 fiscal year are reconciled later this month.
To access the fund, the State Board of Equalization would have to first anticipate a budget shortfall for the entire year and declare a revenue failure. In that case, lawmakers could tap up to 3/8 of the fund. Another option is if the governor and two-thirds of both legislative houses declare an emergency, allowing them to tap up to one-quarter of the Rainy Day Fund.
Oklahoma voters in 2010 approved a constitutional amendment to increase from 10 percent to 15 percent the amount of surplus revenue that goes into the fund.