Declines persist, but are not as deep as recent months
OKLAHOMA CITY – Ongoing sales tax declines contributed to monthly General Revenue Fund (GRF) collections opening the new fiscal year below the estimate, albeit by a smaller margin than in recent months.
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 for July, the first month of Fiscal Year 2017, totaled $371.8 million, which is $17.2 million, or 4.4 percent, below the official estimate upon which the Fiscal Year 2017 appropriated state budget was based and $46.2 million, or 11.1 percent, below prior year collections.
FY 2016 collections ended the year 9.4 percent below the estimate.
“July was a down month on its face, but it was an improvement in comparison to the even bigger declines seen over the past several months,” said Secretary of Finance, Administration and Information Technology Preston L. Doerflinger.
The bulk of July’s decline was caused by sales tax collections, which were below the estimate by $12.5 million, or 7.5 percent, and the prior year by $14.1 million, or 8.4 percent.
Sales tax collections to the GRF have been below the estimate for 17 of the past 18 months and below the prior year for 16 of the past 18 months. Gross sales tax collections as reported by the State Treasurer have been below the prior year for 14 of the past 18 months.
“The state is clearly entering a prolonged sales tax slump,” Doerflinger said. “Sales tax declines are the most concerning for city governments that provide the daily public services the citizens rely on most often. Cities don’t have diverse revenues like the state does, so sales tax is critical to them.”
Sales tax collections typically comprise about 35 percent of annual GRF collections.
“This sales tax decline is a clear result of the economic contraction caused by energy sector cutbacks, but it also reflects Oklahoma’s outdated sales tax code,” Doerflinger said. “On top of being unable to collect sales tax from most online sales, Oklahoma does not apply sales tax to as many parts of the economy’s growing service sector as other states do. A narrowing tax base coupled with cutbacks in the state’s largest economic sector is bound to produce sales tax declines like these.”
Doerflinger is director of OMES, which issues the monthly GRF reports.
Major tax categories in July contributed the following amounts to the GRF:
Total income tax collections of $152.6 million were $559,400, or 0.4 percent, below the estimate and $26.4 million, or 14.7 percent, below the prior year.
Individual income tax collections of $147.3 million were $640,900, or 0.4 percent, below the estimate and $29.3 million, or 16.6 percent, below the prior year.
Corporate income tax collections of $5.3 million were $81,500, or 1.6 percent, above the estimate and $2.9 million, or 118.8 percent, above the prior year.
Sales tax collections of $154.8 million were $12.5 million, or 7.5 percent, below the estimate and $14.1 million, or 8.4 percent, below the prior year.
Gross production tax collections of $7.7 million were $560,500, or 7.9 percent, above the estimate and $2.3 million, or 22.9 percent, below the prior year.
Natural gas collections of $6.3 million were $814,600, or 11.4 percent, below the estimate and $3.7 million, or 36.7 percent, below the prior year.
Oil collections of $1.4 million were entirely above the estimate and prior year since the GRF received no contributions from oil tax collections in July of 2015 and none were estimated for current month collections.
Motor vehicle tax collections of $15.6 million were $2.5 million, or 13.8 percent, below the estimate and $2.4 million, or 13.4 percent, below the prior year.
Other revenue collections of $41 million were $2.2 million, or 5.1 percent, below the estimate and $1 million, or 2.4 percent, below the prior year.
Revenue tables can be viewed on the OMES website: https://www.ok.gov/OSF/News/July_2016_Financial_Report_Data_Tables.html
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