DALLAS – A weakening in state revenue growth indicates a slackened pace for Oklahoma’s economic recovery in 2012, State Treasurer Ken Miller said in Thursday’s year-end review.
Total collections for the year were up 3.8% from 2011, Miller said, but 2011 revenues posted a 10% gain from 2010.
“Oklahoma’s recovery has been stronger than in most other states, but we need our country to do well so we can continue our economic gains,” he said.
December revenues were up 1.5% from December 2011, he said, but that comes after last year’s 11% year-to-year growth.
December collections of $974.8 million were $14 million more than December 2011, Miller said, Total collections for the year of $11.1 billion were $405.4 million than in 2011.
The recent extension of most of the federal income tax reductions is helpful, Miller said, but Oklahoma’s near-term weak economy is threatened by the potential defense cuts due to the unresolved sequestration deadline.
“Studies show Oklahoma could lose up to 20,000 jobs, including 4,000 military positions, if sequestration is triggered,” he said. “This would be devastating to Oklahoma.”
The Board of Equalization adopted an outlook for fiscal 2014 of $7.05 billion of available revenues, but that estimate will be lowered due to the lower-than-expected federal income tax rate.
The state was expecting an additional $121 million from its income tax next fiscal year. The growth will be revised down by as much as $40 million by the congressional action to keep the lower rates.
John Estus, a spokesman for the Office of Management and Enterprise Services, said the revenue drop should be minimal. The original prediction was based on all the federal tax cuts expiring, he said, but most were made permanent.
“State income tax collections will most likely be lower because the state income tax code is tied in part to the federal income tax code,” he said.
State revenues have not recovered from the recession but the obligations continue to increase, said David Blatt, director of the Oklahoma Policy Institute.
State employees have not had a salary increase in six years, Blatt said, and the per-student funding for local education has been slashed.
“Next year’s budget would still fall short of a full return to pre-downturn heights, without taking into account inflation, population growth, and increased caseloads and enrollment in the intervening years,” he said.
State revenues hit a record $7.125 billion in fiscal 2009, Miller said, but fell to a recent low of $6.8 billion in fiscal 2011.
“Twelve-month collections now stand more than $1.7 billion higher than in February 2010,” he said. “Since we hit the trough almost three years ago, almost 90% of the revenue lost from our peak in December 2008 has been recovered.”
Revenue in 2012 includes $728 million in oil and gas production taxes, a drop of more than $300 million from 2011 totals.
The sales tax generated $4.2 billion in 2012, with the income tax bringing in $4 billion.