Oklahoma collected more tax revenue last month than any July in state history and the unemployment rate remains well below the national average as the economy continues to surge.
“With apologies to Rodgers and Hammerstein, we’re still doing fine, Oklahoma,” state Treasurer Ken Miller said in a news conference Wednesday.
Gross receipts in July topped $992 million, up $68 million, or 7.4 percent, from July 2013. Gross income tax collections showed a 13.4 percent jump and the state’s tax revenue on oil and natural gas production grew by 11.1 percent.
Monthly collections have been higher than the previous year in all but six months during the past four-and-a-half years, Miller said.
The unemployment rate for June, the most recent figure available, was 4.5 percent, compared to a national rate of 6.1 percent.
While state revenue is growing, it remains exceedingly difficult to look into the crystal ball and predict future revenues. Good predictions are essential to accurately create state budgets and ensure there is enough money to fund budgeted expenditures. The last yearly estimate was too large.
General revenue for the 2014 fiscal year fell short of the official estimate by $283.8 million, or 4.8 percent. Corporate income taxes were $306.5 million for the year, which was below the estimate by $175.3 million, or 36.4 percent.
Miller said the Oklahoma Tax Commission has “a Herculean task” in trying to predict state revenue.
Corporate income tax revenue can vary widely depending on business decisions and oil and gas production tax revenue swings with petroleum prices.
Oklahoma State economics professor Dan Rickman works with the commission to estimate revenue. Miller said an additional independent forecast is to be sought from another economist. There also may be consideration of putting together a multiyear revenue forecast.
“I think the process is not bad but I think it can be improved with more of a consensus forecast, and that’s where we’re headed I think,” Miller said.
Another area where change may be considered involves tax incentives for Oklahoma’s fast-growing wind industry, now sixth-largest in the nation, the treasurer said.
Wind industry laws
“With this windstorm sweeping down the plain in time for the next legislative session, there is yet another opportunity to examine costs and benefits,” he said in his monthly economic report. “As the industry matures and structural budget problems persist, it is reasonable to expect that incentive laws evolve to ensure balance is maintained without harming one of Oklahoma’s newly recognized energy assets.”
In the report, he quotes an opponent and an advocate of these tax incentives:
“We’re facing an unfunded liability that intensifies with each blank check we write to support the development of wind farms,” said Frank Robson, founder of the Oklahoma Property Rights Association. “The taxpayers are subsidizing the cost of power for people in other states, as evidenced by recently announced agreements to sell wind power from Oklahoma to Tennessee and Georgia.”
Speaking for the incentives was Monte Tucker, a rancher from Sweetwater.
“It’s important to remember these incentives are creating development in rural Oklahoma that would not happen but for these incentives,” Tucker said. “At a time of historic drought, farmers and ranchers need opportunities like wind leases to earn additional revenue on our land. If you gut these incentives, all you’re really harming are landowners and robbing rural areas of much needed economic stimulus.”