Oklahoma Revenues Miss Estimate For First Three Quarters of FY '09

DALLAS - For the first time since 2003, Oklahoma state revenues have failed to meet the official estimate for the first three quarters of the fiscal year, as tax collections fell in March for all major categories.

Preliminary reports put general revenue fund collections through the third quarter of fiscal 2009 at $4.21 billion, approximately $33 million above the same period of fiscal 2008 and $34.5 million less than expectations.

Revenue rose 7% in the first quarter of 2009 and 10% in the second quarter from the same periods in fiscal 2008, but fell 15% in the third quarter.

General revenue fund collections in March totaled $394.9 million, some $93 million below March 2008 revenues and $81.8 million below the estimate. March revenues were 17.2% less than expected and 19.1% less than last year.

State Treasurer Scott Meacham said revenues are consistent with projections by the Oklahoma Tax Commission in February that revenue for the remainder of the fiscal year would be 96% of the level expected when the fiscal 2009 budget was developed.

At current collection levels, the state will not have to revise its budget for the current fiscal year, which ends June 30. The state constitution limits the Legislature to appropriations of no more than 95% of the official estimate.

"Current projections have anticipated this dip below the official estimate," Meacham said. "This drop is in line with the Tax Commission's revised February projections and we remain hopeful we will finish the fiscal year in June without needing to make any cuts.

"We expect collections for the next three months to also fall below original estimates, but they are not forecasted to fall enough to require cuts between now and the end of June."

However, Meacham said, the latest revenue report means that budget cuts in fiscal 2010 will be necessary.

"The next state budget year that begins July 1 of this year will definitely require cuts," he said. "While federal stimulus money will help offset some of those reductions, we will most certainly have to cut spending."

Meacham said reductions in funding will be required in the budget for fiscal 2010, but if the picture worsens, more severe cuts could be needed.

"If we were to experience a revenue shortfall in the current year, we would be required to make across-the-board cuts," he said.

One of the most severe revenue drop-offs in March came in state taxes on oil and gas production, which is based on the value of those commodities.

The energy production taxes generated $46.6 million in March, which is 40.7%, or $32 million, less than in March 2008, and 38.6%, or $29.3 million, less than expected.

However, energy taxes have done well overall, bringing in $645.8 million through March. The year-to-date collections are $121.2 million more than in the first three quarters of fiscal 2008 and $105.4 million, or almost 20%, higher than the official estimate.

Sales tax collections for March totaled $125 million, $4.4 million below March 2008 and $11.3 million, or 8.3%, below the estimate. Collections for the fiscal year total $1.27 billion.

The last time Oklahoma's year-to-date revenue collections failed to meet official estimates was in June 2003, the end of fiscal 2003. That marked the end of a period beginning in August 2001 that saw the state's revenue fall in 21 of the 22 months before beginning a steady increase in July 2003.

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