In 2004, Oklahoma voters approved a series of measures intended to raise new revenues for education and health care through a state lottery (SQ 705 and 706), gaming compacts (SQ 712), and increased tobacco taxes (SQ 713).  OK Policy has now released a set of newly updated fact sheets that explains how these revenue sources operate, how much revenue each generates, and where the dollars are allocated. You can access all three 1-page fact sheets as a single document, or you can download the PDF separately for the lottery, gaming and tobacco.

During the most recently completed budget year, FY ’11, Oklahoma collected $346.2 million from these three revenue sources. This is an increase of $10.8 million, or 3.2 percent, from FY ’10. While the rate of revenue growth for the three “sin taxes” has clearly slowed compared to the first years following their enactment, their steady and uninterrupted growth over recent years stands in marked contrast to most other revenue sources, which were strongly affected by the economic downturn of 2008-09.  General sales tax revenue, for example, declined 8 percent in FY ’10, before recovering in FY ’11. Read the rest of this entry »

In 2004, Oklahoma voters approved a series of measures intended to raise new revenues for education and health care through a state lottery (SQ 705 and 706), gaming compacts (SQ 712), and increased tobacco taxes (SQ 713).  OK Policy has now released a set of newly updated fact sheets that explains how these revenue sources operate and sets out out how much revenue each generates and where the dollars are allocated. You can access all three 1-page fact sheets as a single document, or you can download the PDF separately for the lottery, gaming and tobacco.

We found that during the most recently completed budget year, FY ’10, Oklahoma collected $335.4 million from these three revenue sources. This is an increase of $12.2 million, or 3.8 percent, from FY ’09, reflecting a clear slowdown in revenue growth from these sources compared to prior years. Some key findings:

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Five years after voters approved a State Question increasing the tax on tobacco, there is good news to report: over the course of the recently completed fiscal year (FY ’09), tobacco sales in Oklahoma declined by 7.2 percent over the prior year, while revenues from those sales increased 8.9 percent. In essence, it seems that fewer Oklahomans were smoking but the state was still to able to collect increased revenues. Over the next few years, however, if smoking continues to decline, we are likely to see less  funds available for important health programs funded with tobacco revenues.

Last year, though, less cigarette sales yielded more revenue. The explanation for this apparent trick lies with tribal tobacco tax compacts.  Back when Oklahoma voters approved SQ 713, which raised the tobacco tax by $0.80 per pack, the state negotiated new compacts that increased taxes on sales by compacting tribes. The problem was that only some tribes were subject to the highest tax rate under the new compact ($0.86 per pack). Some tribes remained subject to the original tribal compact rate of $0.26 per pack, while others, based on their proximity to non-compacting tribes, were granted an “exception rate” of just $0.06 per pack.  As the new law took effect, there was a massive shift in sales to cigarettes sold under the exception rate: in the first two years, a full two-thirds of all tribal cigarette sales were made under the  exception rate.  As a result, revenues from the tobacco tax increase fell far short of the initial projections of increased revenues dedicated to various health care projects and programs (for more details, see OK Policy’s fact sheet). Read the rest of this entry »

There has been some discussion in recent days about the performance of the Oklahoma State Lottery, including this editorial from The Oklahoman, after the Lottery Commission adopted a budget for FY ’10 that projects $66.6 million in revenues for education for the upcoming fiscal year. This is a slight reduction from previous years, when lottery proceeds have ranged from $69 to $78 million.

Those wishing to understand how lottery proceeds are allocated, track annual revenue collections, and see how lottery revenues have been appropriated in recent budgets, may wish to check out this OK Policy fact sheet [PDF] from last November. It was part of three short briefs [PDF] we produced looking at the new “sin taxes” – the lottery, gaming compacts, and increased tobacco taxes – that Oklahoma voters approved in 2004. The briefs revealed that these three revenue sources raised $286.9 million in FY ’08 for the state dedicated to education and health care: $71.6 million from the lottery, $92.2 million from gaming, and $123.1 million from increased tobacco taxes.

We hope to put out an updated publication once final FY ’09 numbers have been reported.