DALLAS — Oklahoma revenue growth will continue in fiscal 2014 despite the fall expected with the extension of federal income tax cuts that avoided last month’s “fiscal cliff,” the state’s top finance official said Feb. 14.
State income tax collections would have been $60 million higher in fiscal 2014 if the Bush-era tax cuts had expired Jan. 1, but Oklahoma will make up most of that money through increased economic activity, finance secretary Preston Doerflinger said last week.
The Oklahoma Tax Commission on Thursday certified a revenue estimate that will give lawmakers an additional $206 million to allocate in fiscal 2014, up from December’s outlook for $178 million of new money.
The state Board of Equalization will meet Tuesday to adopt the final official revenue estimate for the fiscal 2014 budget. The December estimate was the basis of the budget outlined by Gov. Mary Fallin in her State of the State address to the Legislature earlier this month.
“We’re confident that Tuesday’s certification will bring markedly more growth revenue for next year’s budget than the $178 million in growth we used to build the governor’s budget,” said Doerflinger. “The big picture continues to look strong as overall revenues have continued to grow.”
The December estimate was $215 million more than was available for the fiscal 2013 budget. Lawmakers can appropriate up to 95% of general fund revenues.
February’s higher estimate is due to strong growth in the state income and sales taxes, Doerflinger said, which means more Oklahomans are working.
“Income tax collections are outperforming expectations by double digits through the first seven months of Fiscal 2013,” Doerflinger said. “These figures are evidence of continued economic expansion.”
Most Oklahomans filers would have faced a higher state income tax bill if the federal tax cuts had not been extended, he said.
Gov. Mary Fallin said the higher estimate strengthens her resolve to cut the state’s top income tax rate to 5% from the current 5.25%. State collections hit a historic high of more than $1 billion in January.
“Another month of double-digit revenue growth is a great sign that Oklahoma’s economy is headed in the right direction,” Fallin said. “To make sure it stays on track, I will continue to pursue pro-growth policies with the Legislature, including a measured, responsible tax cut in 2013.”
Higher-than-expected revenues in fiscal 2013 will provide a year-end $77.4 million deposit into the state’s rainy day fund, Doerflinger said, up from an earlier estimate of $66.4 million.
The July deposit will bring the emergency budget fund to more than $600 million for the first time, he said. The rainy day fund totaled $577.5 million at the end of fiscal 2012.
The budget fund peaked at $596.6 million in January 2010, but fell to a low of $2.03 a year later.