OKPOLICY.ORG
Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol.
Those who rely on state funding to provide services to Oklahomans heard more good news this week from State Treasurer Ken Miller. Monthly numbers for September revenue show an increase of $141.4 million over September 2017 revenue. If monthly increases averaged, say $100 million for the year it would mean an additional $1.2 billion in state revenue. Only a portion of this goes to the General Revenue Fund from which the Legislature appropriates most of the budget, but if the trend continues it will mean a good year for next year’s legislative appropriations.
According to Treasurer Miller, revenue generated by increased tax rates approved in HB1010XX last session added $48.7 million of the $141.4 million to the monthly collections. This means approximately 35 percent of the increase in revenue came from the tax rate increases. Of the $48.7 million generated, $31.2 million came from the increase from 3 percent to 5 percent in the incentive tax rate on oil and natural gas gross production, $8.3 million came from raising the tax on gasoline and diesel fuel, and $9.3 million was generated from the $1 per pack increase in cigarette taxes.
The remaining 65 percent of the increase in the state’s monthly gross receipts presumably reflects new revenue caused by growth in the economy. As Treasurer Miller, an economist, puts it “Oklahoma’s economy continues to climb the expansion side of the business cycle.” In other words, state government revenue is riding the wave of an uptick in the economy, and this is a natural part of the business cycle. To those with a critical and experienced eye, this means as business continues to cycle there will at some time be a downtick.
The temptation for now will be to look at these numbers and conclude the state has a windfall. Nothing could be further from the truth. $1.2 billion in the budget will provide relief, but it will in no way catch up for a decade of budget cuts and deferred increases to meet new needs for schools, universities, and all the other state agencies that provide for the education, health, and public safety of our citizens. Simply relying on “growth money” from the same inadequate tax base will leave Oklahoma where it has been for many years: at the bottom of the barrel in meeting the needs of its citizens. We should be listening carefully to what the candidates for office are saying. As we’ve seen before, elections do have consequences.
