Quick Take: Revenues rebounding but still way down from pre-downturn levels

This week, State Finance Director Preston Doerflinger announced General Revenue (GR) collections for May.  For the month, GR was $36 million, or 9.5 percent, above May 2010 and $25.4 million, or 6.5 percent, above the certified estimate. May collections would have been even higher but for the Legislature’s decision to allocate $21.4 million in oil revenues as supplemental funds for common and higher education. For the eleven months of FY ’11, revenues are $409.1 million, or 9.9 percent, above last year and $153.2 million, or 3.5 percent, above the certified estimate. In this blog post, we go a little deeper into the numbers with a series of brief observations and charts.

• May marks the 13th straight month that revenues showed improvement compared to the same month for the prior year. In each of the last seven months, revenues have come in at least 9 percent higher than the prior year.

• Through May, each of the major taxes that are deposited in the GR Fund are up compared to last year. Growth has been greatest for the corporate income tax and the motor vehicle tax, while personal income tax and gross production tax revenues are up only modestly from last year.

• Despite the recovery in state revenues, FY ’11 collections remain a full 15.3 percent  below pre-downturn heights of FY ’08. This year’s GR collections remain more than 10 percent below those of five years ago and are only six percent higher than ten years ago. During this ten-year period, Oklahoma’s population has grown some 9 percent, gross state product has increased some 60 percent, and the Consumer Price Index has increased some 26 percent.

• Nonetheless, with the exception of the sales tax, each of the major taxes has yielded less in FY ’11 than it did prior to the economic downturn in FY ’07 and FY ’08. This points to both the impartial nature of the economic recovery but also the ongoing impact of income tax cuts and tax breaks.

• The surplus in FY ’11  GR collections compared to the certified estimate means that the state is now virtually certain to be able to replenish the depleted Rainy Day Fund at the end of the fiscal year next month. However, the anticipated surplus has no bearing on next year’s budget, which was developed based on a binding revised estimate certified in February by the Board of Equalization. State appropriations for FY ’12 will be $6.511 billion, which is a decrease of $255 million from the current year and of $614 million from FY ’09. As a result, state agencies and school districts are continuing to implement deeper cuts to programs and personnel to deal with shortfalls.

You can view a brand new version of our presentation on the state budget here; review of our FY ’12 budget highlights here; and see all our current budget information here.