DALLAS -- For the first time in nearly two years, Oklahoma's tax collections from the production of oil and natural gas in October surpassed those from the same month the previous year, State Treasurer Ken Miller reported.
Although Oklahoma's total receipts of $886.2 million were down $32 million, or 3.5%, the increase in tax revenue on oil and gas production provide signs of hope that the state's recession could be turning around, Miller said.
"It's not yet time to sing 'Happy Days Are Here Again,' but this month's gross production number is welcome news," Miller said. "Since April, we've seen monthly gross production collections generally rise along with crude oil prices. Passing the prior year threshold this month is encouraging."
October gross production collections of $35.1 million were above October 2015 collections by $2.9 million, or 8.9%, Miller said. The last time monthly gross production collections topped those of the prior year was in December 2014, when receipts totaled $72.1 million.
Oil prices began falling from their peak above $100 per barrel in mid-2014 and have gradually risen from their 2016 lows this year. In trading Tuesday, futures for West Texas Intermediate crude were priced just below $45 per barrel.
Miller said the bottom of the trough for oil prices was apparently set in February with WTI crude at $30.32 per barrel. In that month, Oklahoma's collections on production taxes fell to a 17-year low of $20.8 million.
To balance its books, Oklahoma's legislature had to overcome a $1.3 billion revenue shortfall in the current fiscal year.
On April 6, S&P Global Ratings placed a negative outlook on Oklahoma's AA-plus rating. Moody's also has a negative outlook on its Aa2 rating for the state.
For combined revenues, October represented the 20th straight month of declines compared to the same month in the previous year. The last time October collections were lower was in 2011, Miller said. Collections during the past 12 months, at $10.9 billion, are the lowest for a 12-month period since March 2012.
Gross income tax collections, a combination of individual and corporate income taxes, generated $310.2 million, a reduction of $9.9 million, or 3.1%, from the previous October, Miller said.
Individual income tax collections for the month were $290.1 million, down by $13.4 million, or 4.4%, from the prior year. Corporate collections are $20.1 million, up by $3.5 million, or 20.8%.
"Wide variances in monthly corporate collections are not uncommon," Miller noted.
A 3.5% decline in sales tax collections to $343.5 million indicates general weakness in the state's economy.
For a third consecutive month, Oklahoma's unemployment rate in September was higher than the national jobless number. The U.S. rate was set at 5%, while the state's rate was reported at 5.2%. Prior to July, the state's monthly jobless rate had been consistently below the U.S. rate for about 26 years.
The Oklahoma Business Conditions Index, predicting economic activity for the next three to six months, was set at 38.8 in October. It is the fifth consecutive month the state has had numbers below 50, which indicate continued economic slowing, Miller said.
