Caution urged in forecasting Oklahoma tax revenue trends

by The Oklahoman Editorial Board Published: May 16, 2013

Although subject to a court challenge, the latest income tax cut is now law. But it's quite modest and won't kick in until 2015. The Oklahoma Policy Institute finds little to celebrate in the figures Doerflinger just released. Noting that the fiscal 2014 budget is more than $600 million below the pre-recession peak, OK Policy analyst Gene Perry says income tax cuts phased in from 2006 to 2012 “are an obvious culprit.”

Blaming tax cuts for current spending trends downplays the starring role of the national recession. States that raised taxes during the same period that Oklahoma lowered them have also faced major budget challenges. What's more, some state services are being funded at higher levels in fiscal 2014.

We see no calamitous impact from the next income tax cuts. Phase 1 of the cuts is relatively small and it won't start immediately. Phase 2 may not start at all if economic growth triggers aren't reached. For sure, though, every release of tax receipt information will be used to “prove” either the wisdom or the folly of income tax cuts.

Just as an unusually cool April doesn't necessarily mean a mild summer is in the offing, monthly revenue figures tell us little about long-term trends. Our forecast: The skies aren't as blue as the tax cutters would have us believe, but they're also not as dark as their opponents claim. Oklahoma will get through the next round of income tax cuts and likely emerge stronger economically.

But adequately funding state services will remain a looming presence, like a squall line approaching from the west.

by The Oklahoman Editorial Board
The Oklahoman Editorial Board consists of Gary Pierson, President and CEO of The Oklahoma Publishing Company; Christopher P. Reen, president and publisher of The Oklahoman; Kelly Dyer Fry, editor and vice president of news; Christy Gaylord...
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