Finance officials with the Office of Management and Enterprise Services said an estimated $50 million in income tax revenue projections certified last month were based on the assumption that higher federal income tax rates would take effect Jan. 1. Since most of those tax hikes were averted as a result of the deal reached in Congress, OMES spokesman John Estus said some percentage of that $50 million will not be available, although the exact amount is still being determined.
“This is because 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 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.”
Oklahoma Secretary of Finance Preston Doerflinger said last month before the deal that he would recommend that Gov. Mary Fallin consider a revenue impact between $35 million and $40 million while building her executive budget, but the Oklahoma Tax Commission will determine the final amount.
The official revenue estimate approved last month projected lawmakers would have about $7 billion to spend on the budget for the fiscal year that begins July 1, an increase of about $214 million over the current fiscal year. Included in that estimate was an increase of about $121 million from personal income taxes, a figure that will be revised downward as a result of the deal reached by Congress.
Last month's estimate is used by the governor's office to prepare the executive budget. A final revenue estimate on how much available revenue lawmakers will have to spend will be approved in February before the Legislature convenes.