DALLAS – Oklahoma revenues have fallen for five years straight, leaving the Legislature facing another stiff budget challenge.
Figures presented to the state Board of Equalization in December show an almost $900 million gap between what was appropriated last year and what is expected to be available for the next legislative session beginning Feb. 6.
Last year's downturn of $1.3 billion was blamed primarily on the impact of a prolonged downturn in the energy industry, but this year's shortfall appears to be primarily caused by the use of nonrecurring revenue in the current year budget, state Treasurer Ken Miller said in a Jan. 4 report.
Money in the Special Cash Fund, where nonrecurring revenues are often funneled, is estimated to be down by $614.1 million, or 99.8%, Miller said.
For the calendar year 2016, annual gross receipts to the Treasury shrank by 7.4% compared to 2015, Miller reported. The year's revenue total of $10.78 billion is the lowest 12-month total since January 2012. During the 2015 calendar year, gross receipts fell by 3%.
"Gross Receipts to the Treasury show the ongoing impact of the prolonged downturn in the energy industry on all four major revenue streams," Miller said. "However, the overall rate of decline has slowed during each of the past three months as oil and gas gross production collections have shown moderate increases."
Gross Receipts to the Treasury for December were $901.8 million, down by more than $47 million, or 5%, from December 2015, Miller said. That was the smallest December bottom line since 2010.
The December figures offered hope that the long downturn in oil and gas may be over.
Following almost two years of steady decline, collections from oil and natural gas gross production taxes in December were higher than the same month of the prior year for a third consecutive month. December gross production receipts total $39.4 million, up by $1.7 million, or 4.4%, from December 2015.
Monthly receipts are based on production activity from October when the average price of benchmark West Texas Intermediate crude oil was $49.78 per barrel.
However, the three other major revenue streams – income, sales, and motor vehicle taxes – show collections less than the same month of the prior year, Miller said.
For a fifth consecutive month, Oklahoma's unemployment rate in November was higher than the national jobless number. The state's rate was reported at 5.1%, while the U.S. rate was set at 4.6%.
The Oklahoma Business Conditions Index, predicting economic activity for the next three to six months, was set at 48.8 in December. It is the seventh consecutive month the state has had numbers below 50, which indicate continued economic slowing.
Miller said he expects Gov. Mary Fallin to propose a number of ways to raise additional revenue, likely including an increase in the tobacco tax and elimination of some sales tax exemptions.
"Her proposals should be given serious consideration," he said.
