Archive for 2013

Revenue forecast confirms need for continued caution

by | January 3rd, 2013 | Posted in Blog, Budget | Comments (1)

In late December, the Board of Equalization certified a preliminary estimate of the revenues available for next year’s budget. The numbers confirm that while the worst of the fiscal crisis is now far behind us, the state remains in the midst of a slow and incomplete recovery and will continue to struggle to restore services to adequate levels.

The preliminary FY 2014 estimates, developed by the Oklahoma Tax Commission and Office of State Finance, will form the basis for the Governor’s Executive Budget to be delivered in early February. As we see in the chart below, collections to the General Revenue (GR) fund are expected to continue to recover from their collapse during the recession of 2008-09. Next year’s GR is estimated at $5,938 million, which is 29 percent higher than in the depths of the recession in FY 2010.  Yet next year’s revenues are expected to remain slightly below their levels of six years ago (FY 2008), even as the cost of providing services rises due to inflation, population growth, and increased caseloads and school enrollment.

continue reading Revenue forecast confirms need for continued caution

State Question 766: Intangible property ballot measure would have tangible consequences

by | September 11th, 2012 | Posted in Blog, State Questions, Taxes | Comments (14)

This blog post was authored by Michelle Cantrell, a tax specialist residing in Tulsa

One of the six ballot measures facing voters this November is State Question 766, which asks Oklahomans whether the state should have the authority to tax intangible personal property.   While seemingly a simple question, SQ 766 has widespread implications that could drain tens of millions of dollars from schools, fire and police protection, and other vital services, while potentially boosting homeowners’ property taxes.

The state question was placed on the ballot in response to the Oklahoma Supreme Court decision in a case, Southwestern Bell Tel. Co. v. Okla. State Bd. of Equalization, that challenged the state’s method of determining property taxes.  Like most states, Oklahoma determines ad valorem taxation of certain entities, including public service companies, railroads, and airlines, at the state level instead of the local level.  To determine the value of these centrally-assessed companies, the Oklahoma Board of Equalization looks at the value of the entire company as a unit, subtracts certain non-taxable items, then determines Oklahoma’s portion of that value before applying tax rates.

continue reading State Question 766: Intangible property ballot measure would have tangible consequences

Update: Rainy Day Fund Basics

by | July 16th, 2012 | Posted in Blog, Budget | Comments (0)

This is a revised and updated version of a page from OK Policy’s Online Budget Guide authored by Paul Shinn.

[UPDATE: A previous version of this post incorrectly said that the maximum amount for the Rainy Day Fund is 15 percent of the current year’s revenue estimate. The maximum is actually 15 percent of the amount certified in the General Revenue Fund for the preceding year.]

Last week, State Finance Director Preston Doerflinger announced that the state was set to make a $307 million deposit into the Rainy Day Fund. This short primer explains how the Rainy Day Fund works and traces its rising and falling balances in recent years. A 1-page PDF version of this primer is available here.

continue reading Update: Rainy Day Fund Basics

Growing disconnect between budget politics and reality

by | December 29th, 2011 | Posted in Blog, Budget | Comments (0)

Last week we reported that next year’s revenues are expected to be 7 percent below their levels of six years ago (FY ’07), even though costs are higher due to inflation, population growth, and increased caseloads

Elsewhere, people seem to have read a different budget estimate than the one we saw. Two elements of the discussion show a growing disconnect between Oklahoma’s budgetary politics and reality.

First, Governor Mary Fallin and many others continue to advocate for reduction or elimination of the state income tax. A closer look at the budget shows that, of the $400 million forecast revenue growth from FY ’11 to FY ’13, fully  half comes from the income tax. Overall, the income tax is expected to provide $2.5 billion next year for General Revenue, the HB 1017 Education Reform Fund, and the ROADS Fund, which has helped restore the worst of our roads and bridges. Cutting this vital revenue support makes no budget sense. It also makes no economic sense.

continue reading Growing disconnect between budget politics and reality

Revenue forecast confirms need for caution

by | December 21st, 2011 | Posted in Blog, Budget | Comments (3)

On Tuesday, the Board of Equalization certified a preliminary estimate of the revenues available for next year’s budget. The numbers confirm that while the worst of the fiscal crisis is over, the state is experiencing a slow, incomplete recovery that will fall far short of restoring key services to pre-downturn levels.

The preliminary FY ’13 estimates, developed by the Oklahoma Tax Commission and Office of State Finance, will form the basis for the Governor’s Executive Budget that will be delivered in early February; the Board will meet again in mid-February to provide revised estimates that will be binding on the 2012 Legislature. As we see in the chart below, collections to the General Revenue (GR) fund are expected to continue their recovery next year from their collapse during the recession of 2008-09. Next year’s GR is estimated at $5,540 million, which is 19.9 percent greater than FY ’10.  Yet next year’s revenues are expected to remain 7 percent below their levels of six years ago (FY ’07), even as the cost of providing services rises due to inflation, population growth, and increased caseloads.

continue reading Revenue forecast confirms need for caution

Fearlessly forecasting–into the past

by | September 1st, 2011 | Posted in Blog, Budget | Comments (2)

Once again, OK Policy is getting in touch with its inner dweeb (as if the outer dweeb wasn’t scary enough) and beginning work to develop new four-year forecasts of revenue and budgets for the state of Oklahoma. We’ve written elsewhere of our concerns (and others’) about Oklahoma’s official revenue forecasting and how we’ve designed fiscal policy to depend on poor forecasting. We won’t repeat those arguments now, though we certainly reserve the right to do so later.

Good forecasting starts with a sober look back at previous efforts. We first undertook the forecasting project in 2009, in response to rapidly falling state revenues. Our first forecast brief, released in November of that year, used six different models to forecast state General Revenue Fund (GRF) revenues for four years (here’s a summary of how those forecasts are developed). With the books now complete on FY ’11, we can look back to judge how we did and compare our performance with the official projections certified by the Board of Equalization.

continue reading Fearlessly forecasting–into the past

How the Rainy Day formula requires us to make mistakes

by | July 18th, 2011 | Posted in Blog, Budget | Comments (3)

Last Monday, State Finance Director Preston Doerflinger announced that the state would be depositing $219 million in the Constitutional Reserve Fund (commonly referred to as the “Rainy Day Fund”) this year. Seen alongside news that lawmakers had to overcome a $500 million budget shortfall, with resulting severe cuts to child care subsidies and teacher training, among others, it may seem strange that we are setting aside so much money that could otherwise be used to protect these important programs.

The reason is an artifact of how the Rainy Day Fund is implemented. The trigger for making deposits into the fund depends not on budget needs, but on how good we are at forecasting revenues. Each year, the State Board of Equalization estimates how much tax revenue the state will receive in the coming fiscal year. If General Revenue (GR) collections come in above projection, the Rainy Day Fund gets the surplus, until the fund is at 15 percent of the previous year’s GR certification.

continue reading How the Rainy Day formula requires us to make mistakes

Oil strikes back

by | March 1st, 2011 | Posted in Blog, Budget | Comments (3)

When the Board of Equalization met last week and certified more revenue for the upcoming fiscal year, there was one word on everyone’s mind: Oil. Of the total $106 million increase in the February estimate compared to the Board’s initial estimate in late December, $64.3 million was attributable to expectations of higher oil revenues.  Higher revenue projections were based on the assumption of rising oil prices – the Tax Commission is forecasting an average FY ’12 price of $90.77 per barrel –  and increased production.

If these assumptions prove true, they will continue a rather dramatic shift in Oklahoma’s since 2008 as oil production has caught up to or surpassed natural gas production as an engine of growth in the energy sector.  After peaking in mid-2008, the price of both oil and natural gas plummeted in late 2008 and early 2009. Since then, the price paths of the two commodities, which usually move closely in sync, have diverged sharply, with oil reaching just under $90 per barrel in January 2011 while natural gas remains stuck at close to $4.00 per MCF.

continue reading Oil strikes back

The Weekly Wonk – February 21-25, 2011

by | February 25th, 2011 | Posted in Blog, OK Policy | Comments (0)

What’s up this week at Oklahoma Policy Institute? The Weekly Wonk is dedicated to this week’s events, publications, and blog posts.

Our series on marriage promotion continued Monday with two perspectives from new staff, Kate Richey and Gene Perry.  The OK Policy Roundtable, Should Oklahoma be promoting marriage? continues the conversation started this month by Scott Stanley, guest blogger and research professor at the University of Denver, who reported on the success of Oklahoma’s Family Expectations program.  Are there any topics you would like to see covered in an OK Policy Roundtable?

continue reading The Weekly Wonk – February 21-25, 2011

Breaking down the Board of Equalization revenue numbers

by | February 23rd, 2011 | Posted in Blog, Budget | Comments (3)

The State Board of Equalization met yesterday to certify revised revenue estimates and appropriations authority for the upcoming year’s budget. Not yawning yet? Then do we have a 6-minute video blog post for you!

For the full Board of Equalization Board packet and OK Policy’s newly updated presentation on the state’s budget situation and outlook, click here to visit our Current Budget Information page

  1. Pages:
  2. 1
  3. 2