DALLAS - Oklahoma ended fiscal 2008 with a significant surplus due to higher-than-expected collections from the state severance tax on oil and natural gas production.
Total general fund revenues were $5.95 billion for fiscal 2008, $107.8 million above earlier estimates and $18.4 million more than was collected in fiscal 2007, according to preliminary figures for the fiscal year that ended July 1.
Treasurer Scott Meacham said the state would have a surplus of $82.8 million after putting $25 million into the state's budget stabilization fund, which will fill it to the constitutional limit.
"This is the fourth year in a row that we've put money into the rainy-day fund, and these are the only four years in the fund's history that it has been filled to the constitutional limit," he said.
"In previous years, Oklahoma lawmakers found ways to dip into the rainy-day fund for their pet projects but now we have a pretty good cushion," Meacham said. "That makes us feel better as we go into fiscal 2009."
The state constitution limits the maximum balance of the rainy-day fund to 10% of the previous year's certified general revenue fund collections. That figure was $596.6 million in fiscal 2007. Last year's fund balance was $571.6 million, allowing a maximum deposit this year of $25 million.
Meacham credited oil and gas severance taxes with pushing revenues above the official estimate, and making up for weaknesses in other sectors.
"High energy prices really drove collections, particularly in the last few months of the fiscal year," he said. "Higher-than-expected collections in gross production taxes is the key reason the rainy-day fund is full with money to spare. Stronger-than-expected gross production collections offset weaker-than-expected income tax and motor vehicle tax collections."
Gross production taxes on oil and natural gas generated $825.2 million in fiscal 2008, $185.7 million, or 29%, above fiscal 2007 collections and $171 million above the estimate.
Personal income tax collections totaled $2.24 billion, more than $98 million higher than in fiscal 2007, but corporate income taxes were down almost 36% to $279.1 million.
The decline in corporate income tax revenue is a function of the national economy, Meacham said, but the Oklahoma economy is healthy.
"Anytime you have oil at more than $100 a barrel and natural gas above $10 per thousand square feet, Oklahoma is going to do well," he said. "Because of that, we're pretty well insulated from the national economy. The economy in this state is strong, and should remain strong unless we have some unforeseen developments in commodity or energy prices."
Motor vehicle taxes, which include vehicle registration and licensing fees but not fuel taxes, showed a slight decline of 3% from fiscal 2007 for total collections of $251.7 million. However, vehicle taxes in June fell 30% from June 2007 and were down 26% from the official estimate.
"That was not totally unanticipated," Meacham said. "When gasoline hit $4 a gallon, people stopped buying cars."
Mike Patterson, chief financial officer at the Oklahoma Department of Transportation, said the decline in motor vehicle tax collections would have little effect on the ODOT's operations.
"Unlike some states, where the highway department gets up to 100% of vehicle taxes, we get less than 3/10 of 1% of those collections," he said. "Of the $600 million appropriated by the state for this department in fiscal 2008, $1.8 million was from vehicle taxes."
ODOT is primarily financed through the state's gasoline and diesel fuel taxes, Patterson said, which are down from last year.
"We were expecting a 5% decline, and we haven't seen any change in our estimate," he said.
Oklahoma's GO debt is rated Aa3 by Moody's Investors Service and AA by Standard & Poor's.