How oil and gas slowed Oklahoma tax revenue growth
Oklahoma’s economic expansion appears to be slowing, based on August revenues, state Treasurer Randy McDaniel said.
Gross receipts to the Treasury of $1.03 billion grew 3.2% over collections from the same month of last year, curtailed by a slowing of oil and gas tax receipts and a slight drop in income tax collections, McDaniel said.
Gross collections from the past 12 month exceeded $13.7 billion, and are $1.3 billion, or 10.8%, higher than during the previous 12-month period.
“Oklahoma’s economy is still expanding,” McDaniel said. “While we continue to see economic growth, it’s not as robust as in previous months.”
The growth rate in total August gross receipts is the lowest in more than two years, McDaniel said, and is driven by reduced collections from oil and gas production. In the past year, crude oil prices have fallen by almost 20% and rig counts are off by more than 40%.
Receipts from the gross production tax on oil and gas have dropped by more than a third since collections peaked in November 2018, McDaniel said.
A slight decline from the prior year in income tax collections was attributed to non-economic reasons. Tax officials said there were fewer reporting deadlines for remittance of withholding taxes this August compared to last.
Sales tax receipts rebounded slightly, growing by 3.1% compared to August 2018 after falling below prior year collections for two consecutive months.
In August, the gross production incentive tax rate increase approved in House Bill 1010 during special session last year added $26.5 million to monthly collections, 2.6% of all August gross receipts.
August was the last month in which comparison to the same month of the prior year was affected by any of the tax hikes in HB 1010.
Increased revenue from higher rates on gasoline and diesel fuel, along with a $1 per pack increase on cigarettes, was first collected in August 2018 and is included in the monthly bottom line comparison this month.
The increase in the incentive tax rate on the gross production of oil and natural gas was first collected in September 2018 and will not provide a straight-line comparison with the prior year until next month’s report, McDaniel said.
The Oklahoma Business Conditions index for August dipped into negative territory after two months above growth neutral. August’s rate of 49.6 is down from July’s rate of 52.8. The index was also below growth neutral in April and May. Numbers below 50 indicate anticipated economic contraction during the next three to six months.
Oklahoma’s seasonally adjusted unemployment rate of 3.2% and the U.S. jobless rate of 3.7% were both unchanged in July from the previous month, according to figures released by the Oklahoma Employment Security Commission.