OKPOLICY.ORG
This month’s announcement of December General Revenue collections didn’t seem to provide much in the way of good news. Revenues for the month again came in around 30 percent below levels of one year ago (graph) and 30 percent below the certified estimate upon which this year’s initial budget was developed (see our Budget Hilites for an overview of the state’s budget situation).
However, amidst all the ongoing discouraging revenue numbers lie some indications that the state’s economy and revenue may have already begun an upswing. On his blog, UCO economist Mickey Hepner presents a chart looking at seasonally-adjusted sales tax collections, which he argues is the best available indicator of current economic activity. His findings:
these seasonally-adjusted sales tax collections bottomed out in September of this year, and have since risen by 8.6%, including 4% in December alone. In other words, while the State Treasurer says the state revenue report is “disappointing” is actually showing the Oklahoma economy recovering quite nicely.
This month’s revenue figures also suggest that the recent surge in oil and gas prices may be making its way through the pipeline to higher gross production tax collections. The state General Rev
enue fund received $30.2 million in gross production taxes from natural gas in December (gross production taxes from oil are allocated differently). This was $10 million more than in any month since March 2009. While prior month collections had fallen between 50 percent and 75 percent below the certified estimate, December’s natural gas collections were “only” one-third below projections.
Admittedly, this leaves a long way to go to full recovery. Both personal and corporate tax collections have yet to show any sign of resurgence, and it would be foolish to draw strong conclusions from a single month or even a quarter of data. Most importantly, even if coming months confirm and solidify an upswing, there is no chance of digging out of this year’s huge budget hole over the remaining half of the fiscal year. However, these most recent sales and gross production tax numbers may provide the long-awaited glimmer of evidence that better days are ahead.
