Oklahoma officials encouraged by September tax data
Oklahoma revenue slipped less than 1% in September, providing some encouragement for a recovering economy, state Treasurer Randy McDaniel said.
“Considering the major challenges the state faces, Oklahoma’s economy has been weathering the pandemic-driven downturn relatively well,” McDaniel said this week. “We still have reasons for concern in the months ahead, but the perseverance reflected in the September report is encouraging.”
September receipts from all sources totaled $1.15 billion, down by almost $8 million from September of last year. Over the past year, gross receipts came to $13.26 billion, down by some $468 million, or 3.4%, compared to the previous 12-months.
Gross receipts from combined sales and use tax, oil and gas production, and motor vehicle taxes are down by $40.2 million, McDaniel said. The extraction tax on oil and gas accounts for the lion’s share with a $27.4 million reduction.
The gross production tax, the state’s severance tax on oil and natural gas, is well below collections from the prior year for a thirteenth consecutive month, he said. Oil and gas prices remain depressed, while drilling activity and oil field employment levels are at historic lows.
Combined individual and corporate income tax receipts are the lone bright spot, up by $21.9 million, or 5.1%, for the month. However, the influx of withholding taxes from unemployment payments appears to be having a noteworthy impact on the bottom line, McDaniel said.
The Oklahoma Business Conditions Index in September remained above growth neutral for a fourth month, following three months of numbers indicating economic contraction. The September index was set at 58.6, down from 61.8 in August. Numbers above 50 indicate economic expansion is expected during the next three to six months.
The unemployment rate in Oklahoma was reported as 5.7% in August, down from 7.1% in July. The seasonally adjusted number of Oklahomans listed as jobless was reported as 104,800, according to figures released by the U.S. Bureau of Labor Statistics. The U.S. unemployment rate was listed at 8.4 percent in August.
In an Oct. 2 report affirming the state’s AA issuer credit, Fitch Ratings noted that Oklahoma had recovered 45% of non-farm payrolls since April and that the state’s unemployment rate was considerably better than the nation’s 8.5% rate.
“Fitch expects Oklahoma's revenues, which are supported by broad-based sources, to continue to reflect economic volatility tied to its extensive natural resources sector,” analysts said. “Revenue gains in the years leading up to the coronavirus pandemic followed significant losses due to a downturn in energy markets in 2014 through 2016. The state has complete control over its revenues, with an unlimited independent legal ability to raise operating revenues as needed.”