DALLAS — Oklahoma tax revenue collections were up more than 9% in November over last year, Treasurer Scott Meacham said last week, as the state's economy continues to rebound from the deepest recession since World War II.
Reflecting the steady growth in year-to-year collections, the State Board of Equalization later adopted a preliminary official revenue estimate that will likely trigger an automatic reduction in state income tax rates on Jan. 1, 2012.
The board found that total revenues for fiscal 2012 would be 4.4% higher than in fiscal 2011. If that increase is maintained in February's official revenue estimate, the top income tax rate will fall to 5.25% from the current 5.5%.
State law provides that the rate must be lowered whenever revenue is up by more than 4% from the previous fiscal year.
The revenue board will meet in February, after newly elected statewide officers are sworn in, to develop the official revenue estimate that the governor and Legislature will use to develop next year's budget.
The preliminary fiscal 2012 revenue estimate of $5.2 billion would provide $4.8 billion of general fund revenues for appropriations in the fiscal 2012 state budget. Appropriations are constitutionally limited to 95% of estimated revenues.
Meacham said the preliminary revenue estimate will require a $226 million reduction in state general fund spending next year despite early projections that state revenues will rise by $276.1 million, or 5.7%, from fiscal 2011.
"It appears the budget hole would be caused by a number of reasons," Meacham said. "Among the causes are loss of federal stimulus funds, an empty rainy-day fund, an expected state income tax reduction, and the recent extension of the Bush tax cuts."
The current state budget contains $592 million of federal stimulus funds that will not be available in fiscal 2012. The reduction in the state income tax rate will cut revenues by $61.5 million next year, Meacham said. The extension of the federal income tax cuts is expected to lower state income tax revenue by $67.8 million in fiscal 2012.
"Barring unexpected changes in revenue estimates or subsequent action by the Legislature, the board's finding in February will enact the tax cut," Meacham said.
State general fund revenues totaled $345.9 million in November, Meacham said, which is $29.5 million more than in November 2009 but $9.7 million less than expected.
"We are in much better shape than this time last year, when collections were falling for an 11th consecutive month and budgets were being slashed across the board," Meacham said. "But we continue to see evidence the state's economic recovery still has a ways to go."
Fiscal year-to-date collections total $1.9 billion. That is $113.7 million more than the same period of fiscal 2010 and $49.3 million above the estimate.
November collections showed increases over last year in three of the four major revenue categories, Meacham said.
"Income tax collections, after showing strength in October, dropped below the prior year and estimate," Meacham said. "We see good news, however, in sales tax collections that continue to exceed the prior year and the estimate."
The state sales tax generated $134.8 million in November, which was $11.6 million above last year and $4.8 million above the estimate.