The Oklahoma economic report issued this week has added more discussion to the ongoing debate over the state’s gross production tax.
State Treasurer Ken Miller said Monday the state’s monthly collections of $1.32 billion are up 3.3 percent from this time last year. April’s growth brings 12-month collections to $11.6 billion, up 3.5 percent from the year-ago period.
“These numbers indicate Oklahoma’s economic expansion continues,” Miller said. “As is historically the case in April, most of the money is from income tax collections. However, the largest percentage increases this month are from gross production and motor vehicle receipts.”
Miller said higher energy prices in February helped drive gross production collections higher in April. Gross production payments are made two months following the production and sale of the oil and natural gas.
“Oklahoma’s energy industry continues to boost the state’s economic health,” he said.
Representatives from the state’s oil and natural gas industry saw the report as confirmation that increased drilling throughout the state is leading to a continued economic benefit.
Oklahoma Oil & Gas Association President Chad Warmington said the report is an example of how the state is benefiting from the current 1 percent tax on the first 48 months of production from the state’s horizontal wells.
“As the debate continues on the gross production tax incentives, I hope the legislators pay attention to the importance of the relationship between the oil and gas industry and the state’s economy,” Warmington said.
Executives from Devon Energy Corp., Chesapeake Energy Corp. and Continental Resources Inc. last week proposed a plan to set the tax rate at 2 percent for the first 48 months of production. Others, however, have said the rate is too low and should be returned closer to the historic level of 7 percent. They say the higher tax rate is needed to fund education, roads and other services during the ongoing budget shortfall.
The State Chamber on Tuesday endorsed the 2 percent tax rate plan.
“Oil and gas companies need certainty about tax rates as they prepare their drilling budgets this summer,” said Fred Morgan, president and CEO of the State Chamber. “We hope lawmakers will address the issue this session with a tax rate that continues to promote investment and drilling in Oklahoma.”