'Fiscal cliff' deal to have minor but immediate effect on Oklahoma's state budget
Oklahoma's projected revenue for the next fiscal year is expected to drop by about $50 million in personal income tax collections because the legislation calls for generally lower income tax rates.
The “fiscal cliff” deal will lead to a minor but immediate reduction in funds for Oklahoma's state budget, even as federal officials begin considering spending cuts that could have a bigger impact on the state, officials said Wednesday.
Oklahoma will get less income tax revenue than what was projected last month when a state budget board put together an estimate of how much money lawmakers would have available to appropriate this year, said John Estus, spokesman for the Office of Management and Enterprise Services.
“The board had to certify funds based on current law at the time of certification, and last month the law said federal taxes would be higher across the board on Jan. 1 due to the expiring (President George W.) Bush tax cuts,” Estus said.
“Now that most of those rates are going to be lower, state income tax collections will most likely be lower because the state income tax code is tied in part to the federal income tax code.”
About $50 million of the $2.1 billion in projected revenue that personal income taxes are to bring in for the 2014 fiscal year, which begins July 1, resulted from the higher federal income tax rates that at the time were set to take effect Jan. 1, Estus said. It's projected lawmakers will have about $7 billion to appropriate this year, an increase of $215 million compared with last year.
The Oklahoma Tax Commission will recalculate personal income tax revenue estimates based on the “fiscal cliff” deal before next month, when it determines a final amount that lawmakers will have to appropriate.
“We don't expect total state revenues for appropriations to change markedly, but that will depend on a number of factors, including any changes in growth projections for various revenue sources,” Estus said. “The Tax Commission will have two more months of revenue collections to take into consideration when it recalculates estimates that will be presented to the Board of Equalization in February.”
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