Revenue is the money collected by governments. Without revenue, governments cannot provide the services we expect. Revenue decisions often come down to how much leaders want to spend on government services and how much residents are willing to pay. If they can agree on those most basic questions, they still must address other revenue issues, like who should pay for services and on what basis.
This section summarizes Oklahoma state and local government revenues. Since taxes are such an important and visible source of revenue, they get the most attention here. Taxes, though, are not the only source of revenue, so the primer also describes the user fees and federal grants that are needed to fully fund government services.
This section includes several important conclusions about Oklahoma government revenues.
- State government collected nearly $23 billion from all revenue sources in 2016, while local governments collected nearly $14 billion.
- Taxes are the largest source of revenue–$8.5 billion for the state in 2016 and $5.1 billion for local governments–but taxes still make up less than half of all government revenue. Federal funds, user charges, utilities, and insurance trust revenues make important contributions to funding government services.
- Oklahoma’s revenue system is very centralized. State government collects a higher percentage of taxes and of all revenues than the average state. In Oklahoma the state collects 62 percent of all revenue, compared to 55 percent nationally.
- Sales taxes are the largest tax source for Oklahoma governments, followed by the individual income tax. Together these account for 55 percent of Oklahoma tax revenue.
- In 2016 Oklahomans paid 30 percent, or $1,498 less in state and local taxes per person than the national average – and the gap has grown significantly in recent years.
- Oklahoma property taxes are among the lowest in the nation.
- Since the 1990s, the state and local taxes that Oklahomans pay as a share of total personal income has been on a consistently downward trend. In the same time period, however, the national average has remained stable, so Oklahoma’s taxes have become comparatively lower than other states.
- Oklahoma collects less per person than the national average from all revenue sources except selective sales taxes (taxes on specific goods such as tobacco and alcohol) and other revenue, including fines, lottery and many other small sources, where we are above the average.
- User charge collections help pay for services that benefit some citizens and businesses more than others. Higher education tuition, charges by state and local hospitals, and local charges for sewerage and solid waste are the largest user charges.
- The $7.7 billion in federal funds that flow to Oklahoma are essential to maintaining basic public services. More than one-third of federal funds are for health and social services.
- For Oklahoma’s local governments, intergovernmental revenue from state and federal governments is the largest source of funding, followed by user charges and property taxes.