Oklahoma saw its economy steadily slowing through 2019, according to Treasurer Randy McDaniel.
“Recent economic trends appear to be primarily related to low oil and gas prices,” McDaniel said. “We are seeing both a direct and spillover effect on some tax collections due to suppressed energy prices.”
Combined sales and use tax collections, including remittances on behalf of cities and counties, fell 5.4% to $468.5 million in December over the same month last year, McDaniel reported.
Sales tax collections in December fell 4.9% to $407.3 million, a drop of $20.9 million, or 4.9% from the same month of the prior year. Use tax receipts, collected on out-of-state purchases including online sales, generated $61.3 million, a decrease of $5.9 million, or 8.8%, over the year.
Gross production taxes on oil and natural gas generated $74.3 million in December, a decrease of $44.1 million, or 37.3%, from last December.
Compared to November 2019 reports, gross production collections are down by $7.9 million, or 9.7%.
Motor vehicle taxes produced $70 million, up by $8.6 million, or 14%, from the same month of 2018.
McDaniel said the slowdown becomes more noticeable on a quarterly basis. Growth in collections during the first two quarters of 2019 grew almost 10%. Third quarter growth fell to 4.2%, while fourth quarter receipts contracted by 0.5% when compared to the fourth quarter of 2018.
Tax collections on oil and gas production have been significantly below the prior year for four consecutive months. Sales tax receipts have shown contraction for six of the past seven months. In December, use tax collections on out-of-state purchases dropped below those of the prior year for the first time in more than three years, McDaniel said.
Tax records show the downturn in sales and use taxes are reflecting the spillover effect of reduced oil field activity due to a drop off in the buying of drilling equipment and related purchases. Drilling activity has fallen more than 60% in the past year. Natural gas prices are down by almost 30% and oil prices are off by almost 25% since this time last year.
The Oklahoma Business Conditions Index for December rose slightly to 48.4 compared to 47.8 in November. Numbers less than 50 are considered below growth neutral. The index has been below 50 four times in the past five months, indicating expected economic slowing through the middle of 2020.
The seasonally adjusted jobless rate for Oklahoma increased to 3.4% in November, one-tenth of a percentage point above October’s rate. The U.S. unemployment rate decreased to 3.5% in November, down from 3.6% in October, according to figures released by the Oklahoma Employment Security Commission.
Despite the slowdown, December gross collections still grew 1.7% to $1.16 billion from December 2018.
Gross income tax collections, a combination of individual and corporate income taxes, generated $428 million, an increase of $77.7 million, or 22.2%, from the previous December.
Individual income tax collections for the month are $318.8 million, up by $25.3 million, or 8.6%, from the prior year. Corporate collections are $109.2 million, an increase of $52.4 million, or 92.3%. Wide monthly variances are not unusual for corporate income tax collections.
Gross sales tax receipts total $4.87 billion, up by $27.3 million, or 0.6%, during the year. Use tax collections generated $715 million, an increase of $122.2 million, or 20.6%, over the previous year.
Oil and gas gross production tax collections brought in $1.03 billion during the calendar year, up by $38 million, or 3.8%, from the previous year.
Motor vehicle collections total $794.5 million for the year, an increase of $10.2 million, or 1.3%, from 2018.
