For the eighteenth consecutive month since May 2010, General Revenue (GR) collections grew compared to the prior year. October GR was $24.3 million, or 6.3 percent, above collections in October 2010. All major taxes brought in more revenue than one year ago.
While the monthly revenue reports show encouraging signs of economic and fiscal growth, this remains an incomplete recovery. For the first four months of the fiscal year, collections are up 17.0 percent from the depths of the downturn in FY ’10, yet they remain 15.9 percent below their pre-recession peak in FY ’09. As the chart below shows, FY ’12 year-to-date revenues remain slightly below their levels of six years ago.
Through the first four months of the fiscal year, sales tax collections ($591.1 million) are at an all-time high, but no other major tax has returned to pre-downturn peaks. Personal income tax collections through October ($653.8 million), while up 11 percent from two years ago, are 18 percent below FY ’07 and less than they were a full decade ago, in FY ’01. This reflects a combination of factors: continued fragility in the job market, the impact of the permanent income tax cuts passed in the mid-2000s, and the allocation of a growing share of income tax revenue to the ROADS fund and higher education scholarships rather than the General Revenue Fund.
Overall,with revenues remaining well below pre-downturn levels, meeting our obligations and ensuring the adequate funding of state services will remain an enormous challenge. We will have more to say on this next week, when OK Policy publishes our forecast of revenues over the coming years along with our recommendations for navigating a steady fiscal course.