OKPOLICY.ORG
As the economic downturn worsens, Oklahoma’s budget has begun to resemble a boxer up against the ropes. The news from the March revenue report released today by the Office of State Finance just dealt another blow. General Revenue (GR) collections for the month were down $93 million, or 19.1 percent, compared to the year prior. Every major tax came in below a year ago, with gross production taxes (down 40.7 percent from March 2008), motor vehicle taxes (down 25.4 percent), and personal income tax collections (down 22.3 percent) taking the worst hits.
As can be seen from the chart, this is the third consecutive month of steep revenue declines. For the year, FY ’09 revenues are a slim $33 million, or 0.8 percent above last year.
Compared to the certified estimate, March’s collections fell $81.8 million, or 17.2 percent, short. That is a slight improvement from February, when collections missed the mark by a whopping 30.3 percent. For the year, revenue collections have now dipped slightly below the certified estimate. Since the Legislature only appropriates at 95 percent of the estimate, it leaves a 5 percent cushion to avert or minimize budget shortfalls when the economy declines. Treasurer Meacham today declared that, “we expect collections for the next three months to also fall below original estimates, but they are not forecasted to fall enough to require cuts between now and the end of June.”
Returning to the drop in monthly revenues compared to the prior year, we are now able to get a sense of how this budget downturn may be comparing to the last one. Revenues performed well over the first two quarters of the current fiscal year but then plunged quickly
, coming in more than 15 percent below a year ago this past quarter. The last revenue downturn began in August 2001, during the first quarter of FY ’02. As you can see from the second chart, the decline was nowhere near as sudden or as steep in 2002 as what we are seeing now. Last time, monthly revenues fell for 21 of 22 months, before finally beginning to recover in July of 2003. It’s too soon to forecast the duration of this budget storm, but all indications are that its severity will be ferocious.
