Number high after change in scholarship fund payment
OKLAHOMA CITY — A change in the payment date for a higher education scholarship fund has caused total General Revenue Fund receipts to appear artificially higher than expected at 8.3 percent above the estimate for February as corporate income tax collections remain unpredictable.
A change in the final $15.4 million payment of personal income tax collections from February to March to fund the Oklahoma’s Promise scholarship fund was made because of cash-flow concerns, said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger.
The payment change was made after monthly GRF estimates were set. Had the payment been made in February as previously scheduled, monthly revenues would be up just 1.5 percent from the estimate and total year-to-date collections would be 2.5 percent below the estimate, rather than 2 percent.
“February is a historically low month for collections so we kept the projections low,” Doerflinger said. “Being above a low projection is no reason to celebrate. We have already declared a 0.7 percent revenue failure and future declarations may be necessary. Agencies should be prepared.”
Even with receipts being above the estimate and including the 0.7 percent agency reductions, the state was still forced to borrow money from other treasury funds to make the necessary allocations to state agencies.
As state government’s main operating fund, the GRF is the key indicator of state government’s fiscal status and the predominant funding source for the annual appropriated state budget. GRF collections are revenues that remain for the appropriated state budget after rebates, refunds and mandatory apportionments. Gross collections, reported by the State Treasurer, are all revenues collected by the state before rebates, refunds and mandatory apportionments.
GRF collections in February totaled $248 million, which is $18.9 million, or 8.3 percent, above the official estimate upon which the fiscal year 2017 appropriated state budget was based and $22.5 million, or 10 percent, above prior year collections. Total GRF collections through the first eight months of FY 2017 are $3.1 billion, which is $64.9 million, or 2 percent, below the estimate and $189.1 million, or 5.7 percent, below prior year collections.
February’s collections mark the fifth consecutive month that corporate income tax collections were consumed by refunds. In fact, $10.7 million from personal income tax collections was used to pay the corporate refunds. This month’s refunds show a 159.7 percent increase over last year.
“The instability of corporate income tax collections is evident again, and the state can’t rely on them for consistent revenue,” Doerflinger said. “We should seriously consider the governor’s proposal to eliminate this volatile revenue source, add stability to budgeting and stimulate economic development.”
Doerflinger is director of OMES, which issues the monthly GRF reports.
Major tax categories in February contributed the following amounts to the GRF:
• Total income tax collections of $22.4 million were $9.2 million, or 70 percent, above the estimate and $7.2 million, or 24.3 percent, below the prior year.
Individual income tax collections of $22.4 million were $11.3 million, or 101.4 percent, above the estimate and $4.2 million, or 15.9 percent, below the prior year.
Corporate income tax collections were entirely consumed by refunds and contributed nothing to the General Revenue Fund for the fifth consecutive month. For the same month last year, $2.9 million was deposited into the GRF.
• Sales tax collections of $141.0 million were $8 million, or 5.4 percent, below the estimate and $300,000, or 0.2 percent, above the prior year.
• Gross production tax collections of $15.3 million were $10.5 million, or 219.6 percent, above the estimate and $10.3 million, or 205.7 percent, above the prior year.
Natural gas collections of $13.2 million were $9.1, or 218.9 percent, above the estimate and $8.7 million, or 192.6 percent, above the prior year.
Oil collections of $2 million were $1.4 million, or 224.3 percent, above the estimate and $1.6 million, or 331.8 percent, above the prior year.
• Motor vehicle tax collections of $14.6 million were $1.3 million, or 8.1 percent, below the estimate and $1.9 million, or 11.6 percent, below the prior year.
• Other revenue collections of $54.7 million were $8.5 million, or 18.4 percent, above the estimate and $21 million, or 62.2 percent, above the prior year.
Revenue tables can be viewed on the OMES website: https://www.ok.gov/OSF/News/February_2017_Financial_Report_Data_Tables.html
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